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Dear Daily Crux reader, Recent reports of counterfeit gold appearing in New York City and Chinese companies openly advertising fake gold coins have many folks worried about the authenticity of the gold coins and bullion they're buying. To get the facts on this story, we sat down with Van Simmons. Van is the president of David Hall Rare Coins and co-founder of the highly-respected Professional Coin Grading Service, which revolutionized the rare coin market. Longtime readers know Van is one of the world's foremost experts on the gold coin market, and he's our go-to source of information on the industry. How serious is the risk of counterfeit gold? And what can you do to protect yourself? Read on for the answers… Good investing, Justin Brill Managing Editor, The Daily Crux www.thedailycrux.com |
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The Daily Crux: Van, there have been several recent reports of counterfeit gold popping up in the U.S. Is this something most readers need to be concerned about? Van Simmons: Yes, it definitely is… but with a caveat. Gold counterfeiting is nothing new, but reports of counterfeit bars turning up in New York have brought new attention to it. Of course, it's not just China… but much of the counterfeit gold these days does come from there. These items typically contain tungsten, which has a similar mass as gold but trades for only a few hundred dollars an ounce, versus $1,700 an ounce for gold. As for the counterfeit bars, it's usually a case of real gold bars being drilled out and refilled with tungsten. Coins and ingots – things like rounds, small bars, and non-denominated coins minted by private companies – are smaller, so they're typically tungsten with some type of gold plating. The fact is, it's not even against the law in China to counterfeit American coins, so there are many companies over there in that business. ----------Advertisement--------- Are you ready for this NEW form of terrorism? A new and unique type of terrorism could soon shock most Americans. This plot – now being orchestrated by a group known as "S.A.F.E." – has nothing to do with bombs, Islam, the Middle East, or al-Qaeda. Please take a minute to get the facts for yourself. You'll find a synopsis of this eye-opening storyhere… --------------------------------- Fortunately, I've never seen or heard of any problems with counterfeit bullion coins like Gold Eagles, Krugerrands, or Maple Leafs. There probably are some out there, but they're extremely rare. Dealers trade in these coins all day long and are very familiar with them… so any potential counterfeits wouldn't stay in circulation long. Like I said, I've been trading them for decades and haven't encountered them. Where counterfeiting is a problem is in ingots and – more importantly – rare coins. Because these items are not widely traded and dealers are much less familiar with them, they're a much bigger and more profitable target for counterfeiters. We see these coins at PCGS every so often. But it's usually a case where someone will call us and say they have some rare date coin that's worth a great deal of money… when the reality is they bought it off eBay or someplace similar, paid cash for it, and it's counterfeit. I had a complete set of Barber half-dollars, trade dollars, and Morgan dollars that were all counterfeit. A customer came in with them and was surprised to discover they were fakes. Of course, it turned out he bought them off Craigslist. If I showed you some of these Morgan dollars, you'd think they were some of the best-looking coins you've ever seen. But they don't look quite right if you know what you're looking for… And it's pretty easy for a professional to spot them as counterfeit. So there's definitely counterfeit stuff out there, and it can be a big problem if you don't know what you're doing. Crux: What's your best advice for avoiding these problems? Simmons: It's simple. First, don't buy ingots. It just doesn't make much sense to buy them today. They were popular in the past, but once coins like the Krugerrand, Maple Leaf, and the U.S. Eagle began trading in the U.S. in the late 1970s and 1980s, these coins have dominated the bullion market. These are what everyone trades… they're super-liquid… and the premiums are reasonable compared to most ingots. So it's simply not worth the risk to buy ingots to try to save a little money. Second, I suggest buying your bullion through a reputable dealer. The risks with Eagles, Maple Leafs, or Krugerrands are quite low, as I mentioned. But why take on unnecessary risks? Third, if you're going to purchase rare – and relatively expensive – coins, it's even more important to buy from a reputable dealer, and only buy those graded by PCGS. I can't emphasize this enough. If you're going to spend a lot of money on an item, you owe it to yourself to ensure you get what you're paying for. Naturally, as a founder of PCGS, I'm not unbiased here, but there's a reason we're the most trusted grading service in the world. I talk to people all day long that have sought out "really good deals," and end up hurting themselves. It's a cliché, but it's particularly true in the rare coin market: If a deal sounds too good to be true, it probably is. Counterfeit gold is a serious problem, but it doesn't have to be a serious problem for you if you take a few common-sense precautions. Crux: Great advice… Finally, if readers are concerned they may already own some counterfeit gold, what would you recommend? Simmons: Well, as I mentioned, if they own ingots – especially ingots they purchased from a third party, or got a really special deal on – it's a valid concern. If they're worried about coins, it's a different story. If they've owned the item for more than five years or so, chances are they have nothing to worry about. These realistic-looking counterfeits are relatively new. And of course, if you bought PCGS-graded items from a reputable dealer, your risk is quite low. But in any case, they can call up a local coin dealer and most would be happy to take a look. Of course, any readers with specific concerns about rare coins can also contact us at David Hall Rare Coins, and we'd be happy to help. Crux: Thanks so much for talking with us, Van. Simmons: My pleasure. |
Editor's note: Van would be happy to speak with any Daily Crux readers about making coin and collectible investments. You can reach him at (800) 759-7575 or (949) 567-1325, or by e-mail at info@davidhall.com. (We receive no compensation.) |
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