SUGGESTIONS TO ENSURE THAT YOUR PURCHASES ARE REAL
Contrary to what some traditional investment advisers say, owning gold, silver or other precious metal coins and bars may be good for your investment portfolio. Any number of these advisers will discourage you from investing in precious metals. Why? In my opinion, there could be three possible reasons:
- They don’t receive a commission for suggesting that type of investment vehicle.
- Since precious metals do not pay interest or dividends, they don’t receive a commission on the additional income your portfolio earns.
- They don’t know or understand why buying precious metals help to diversify your portfolio.
A basic investment tenet is diversify, diversify, diversify. Buying precious metals helps you to accomplish just that. During times of financial insecurity, weakness in the U.S. dollar or inflation, investors buy precious metals as an insurance policy.
The pandemic offers a recent example of stock market volatility and gold and silver prices moving upward. But like any investment, do not place all your eggs in one basket.
So, how do you ensure that the precious metals you’re buying are genuine items and not counterfeit? Here are some suggestions to keep you safe and ensure that your purchases are genuine:
- Know your seller. If you are buying precious metal products from well-known and highly respected sellers, that is a good step toward ensuring that you are getting what you intended to buy. Reputable sellers often buy these products directly from the sovereign or private mint that manufactured them. If you buy from some online merchant that you or others never heard of, ask if that merchant will stand behind what was sold to you. If you buy metals from a non-U.S. website, such as Temu.com or Alibaba.com, you have to ask who will guarantee to help you in the event of a dispute.
- Compare, compare, compare. Compare the quality of the coins you’re buying with known genuine examples you have acquired either directly from the U.S. Mint or directly from a reliable seller. Compare the details on the coins, the quality of the manufacturing process—and compare the prices. Buying the least expensive item is not always wise; however, overpaying for readily available products is never a good idea.
- Be your own detective. The measurements for bullion coins are precise; they do not vary from coin to coin. These measurements—diameter and thickness—are published on numerous dealer websites and Wikipedia. Additionally, the exact weights are well known for all these coins or bars.
If you are going to buy precious metals, then investing in a pair of calipers, which are used to measure small thicknesses, is a good investment. Likewise, a small, but accurate, scale is invaluable. Also, you should buy a strong magnet to see if it sticks to your coin. If it does, the coin is counterfeit. Magnets stick to base metal and not to gold or silver coins or bars.
If you plan on buying a non-invasive electronic precious metals tester, buy a decent one that won’t damage your coins. A good purity testing machine costs upwards of $1,000, and it employs X-ray fluorescence (XRF) technology, which is fully non-invasive. But if you plan on buying a large amount of precious metals, it can save you many times its cost.
Some counterfeit copies are excellent copies, but some are crude and easy to discern. Buying coins that have been graded by any of the major independent, third-party grading services is a good way to ensure that your coins are genuine. But that incurs additional costs and counterfeit third-party holders also exist. So, again, knowing your seller is truly a critical element.
There are numerous examples of counterfeit coins and bars that have been “discovered” by their owners after purchase, unfortunately. Therefore, careful attention to detail is critical before you buy anything.
Take a look at the fake 2017 American Silver Eagle bullion coin pictured right. This same coin was pictured in Joshua McMorrow-Hernandez’s book, A Guide Book of American Silver Eagles, published by Whitman Publishing. The coin is described in the book by noted counterfeit-coin expert Jack Young. He runs a Facebook group called Dark Side—Counterfeits and Fakes.
Young describes the coin as “having a face that only a mother could love.” Miss Liberty’s face on this ‘coin,’ looks nothing like the real face displayed on an American Silver Eagle. Note the obvious differences in the face and in Miss Liberty’s Phrygian cap on her head. Further, the left hand of Miss Liberty displays an index and middle finger of approximately the same length, while on a genuine coin the fingers are nowhere near the same length. There are other telltale differences when closely examining this example.
Another coin depicted is a good example that could fool you if you don’t look very carefully. This is a 2021 $1 American Silver Eagle bullion coin. It was sold in a genuine United States Mint original government holder. This example looks original and has the frosty “proof” devices (part that stands out) and chromium-like fields (background) that one would expect.
There is, however, one minor flaw: If you put any magnet near it, this counterfeit sticks to the magnet. The original government packaging would cost you about $12 on eBay. Since it must be made of ‘base metal,’ the cost per coin is probably $15, including the original government packaging. With a genuine 2021 Proof American Silver Eagle being worth $125, there is a lot of upside for the counterfeiter.
In perusing online vendors over the internet, I found what was purported to be a $50 Gold American Eagle bullion coin. According to what is stamped on the coin, it is supposed to contain “1 OZ FINE GOLD.” If genuine, this coin would be worth around $2,500 for the gold content alone. So, how can it be sold by an overseas website for $5.99? Obviously, it isn’t real. The title of the coin offering states: “2024 Eagle Ocean and Silver Commemorative.” I don’t know what that means. You don’t have to look too hard to discover what is wrong with offering and coin. On the reverse of the genuine coin, the denomination is written as “50 DOLLARS.” On this “gold coin,” the denomination is actually spelled “50 OOLLRRS.” It is still for sale, last I checked.
This online offering is listed by a company that has an office in Boston, Massachusetts. Trying to obtain a refund may prove difficult. There are numerous other bullion coins offered on this website. I am happy to state that many of them bear the words “COPY” or “REPLICA” on them in order to comply with the Hobby Protection Act as amended by the Collectible Coins Protection Act.
Again, there are many other counterfeit coins and bars in the secondary marketplace, so the best advice is to buy your products from a reputable dealer and educate yourself as much as possible.
Mike Garofalo is not engaged in rendering legal, accounting or financial services. As each individual is unique, legal, accounting and financial advice should be addressed to appropriate professionals.
