As an avid commodity investor, collector and hobbyist, when it comes to purchasing Precious Metals, I hardly ever worry about the possibility of a fake piece of Gold or Silver. In fact, in the last 20 or so years, I have only seen, with my own eyes, 1 set of counterfeit pieces. All of which were enclosed in the same case on display at the American Numismatic Associations “World Fair of Money” in Philadelphia back in 2018. (Photo below)
The display was on loan from the U.S. Department of Homeland Security who had seized the fake bullion from a man in New Jersey who was impersonating a federal officer and hawking the illegally imported bullion. Spidey senses should tingle if a man who claims to be an ATF agent approaches you with Gold for sale but then again that age old IRS scam from India is still alive and well.
Now to be honest some of these Gold coins, upon closer inspection, were totally and obviously fake. But I was absolutely shocked at the quality of some of these. Thinking back to the first few times I purchased any Precious Metals; I was very concerned with the possibility of buying something that was in fact fake. Back then, I would buy a few Silver Bars from a rather shady pawn shop in Southern California, so I think the suspicion was a natural body alarm response to the environment.
As I got more and more involved with the purchase of Precious Metals, I started realizing there was safer and more legitimate retailers so that suspicion certainly started to wear off. However, to avoid complacency in this regard, I did buy a cheap chemical test kit, later graduating to a more advanced handheld x-ray machine to be certain.
However, as of recently, I have seen Chinese based websites advertising on social media, fake and plated bullion pieces. I am honestly shocked that these websites are not being banned in the United States, but they are getting around this through some loopholes. But this means there is an inevitable wave of fake bullion bars, coins of all different “supposed” metal make up that will soon flood the market.
"Counterfeits, counterfeits!" Picture taken at coin show in Philadelphia 2018.
How to spot fake Precious Metals
By this point in my life, I have personally handled millions of dollars’ worth of Gold, Silver, Platinum, Palladium and Copper. Each metal has its own look, and each different type of bullion has it’s own feel, unique features and even sound but the best way to avoid getting a fake is to ONLY buy from reputable dealers.
Now, I know some legitimate folks who trade, buy and sell on social media, classified ads and auction websites are frowning right now and I understand completely but if you are a new comer to the world of Precious Metals stay away! There are plenty of scams and folks who hawk counterfeit bullion on these platforms, and it is best to avoid them. We wrote an article on the top dozen or so retailers so be sure to check them out and it may be a good idea to find one you really like and exclusively purchase through them. These companies (us included) source directly from the mints and have lengthy testing and verification process in place to ensure we never pass a fake onto a customer.
Another easy and inexpensive method of verification is buying a test kit for yourself. Chemical and x-ray machines have come way down, and price and you can test your bullion at home. You can also bring stuff into a Jeweler and they will likely test the product free of charge. There are also even cheaper methods such as the ting or ping sound test, ice cube test, magnet test, bleach test, visual test and dimension tests.
Precious Metal Market Manipulation
Shady Federal Agent imposters are not the only ones who can screw you over. No, men with a $250,000 LeCoultre watch and a $30,000 Caraceni three-piece suit will gladly tank your portfolio so they can jump into or get out of the market. Take [name redacted – big bank – google it] latest RICO case involving three of their executive directors over at their metal trading desk which landed them nearly a billion-dollar fine. Oops.
It was not until the 2008 financial crisis where placing massive trade tickets for Gold, Silver and other precious metals with absolutely no intentions on delivering or taking delivery of the product became illegal under RICO laws. This artificially inflates the price by increasing or decreasing demand only to then dump their holdings for a higher profit. The same can happen in reverse, placing a sell ticket so big that it artificially floods the market, driving the price down to then buy at a lower price.
These things can happen all the time and not only can it cause absolute panic for someone who has a legitimate large holding account of Precious Metals but it also throws another variable into trading and the market that comes with absolutely no warning. And often these market manipulations aren’t prosecuted and the general public are nary aware of court cases in this regard. Adding another variable to a market environment like that is frustrating for legitimate people. If metal markets tank or spike, now the question is “did someone just artificially do that?”
Precious Metals Scams and Multilevel Marketing.
Scams, as we mentioned above, we have had dozens of customers report solicitation and subsequently scammed into a trade or purchase from folks on social media. Now, of course, we urge you to follow our social media accounts, (specially to get in on our monthly giveaways!) but this sometimes opens the doors to unsolicited sales attempts from illegitimate people. Always report these solicitations!
There is a multilevel marketing/affiliate marketing and “pyramid scheme” scams for just about any consumer product but there are several in the world of Precious Metals. We always avoid naming these companies, some may be legitimate, but it is always important (specially in our industry) to remember, if it sounds too good to be true it’s because it’s a scam.
Precious Metals counterfeiting, replicas, fakes and plating.
Counterfeit Precious Metals are rare. They are rare because dealing in, manufacturing or export/importing counterfeit currency is extremely illegal. Unknown to many folks the Secret Service has two jobs, protecting high level government officials and investigating counterfeiting. And I think it goes without saying that if there is a ‘best’ federal law enforcement agency, it is probably the Secret Service.
Replicas are legitimate reproductions of coins BUT are often advertised in such a way to make it seem that it has some intrinsic value past its simple memorabilia form. These are often plated and adds to it is sleazy advertising by stating something like, “this coin is plated in pure solid .9999 gold!” Which is truthful but the actual overall weight of pure Gold is miniscule.
Plating is when a small (usually measurable by microns) layer of actual precious metals is layered over an item. This becomes more alarming in the next paragraph where we talk about fakes. Plating does have legitimate uses and much of the memorabilia coins for things like sports teams and events have plating.
Fakes are literal bars and rounds that are completely advertised as .999+ fine metal composition but are made of some other metal such as nickel. Some of these ARE plated and will pass a weak scratch chemical test. Therefore, sometimes you will come across something like a Silver Bar with a deep gouge (from a knife of drill). This is because someone cut deep to initiate a chemical test to ensure its purity.
A photo of a non-plated, real, solid Gold bar comprised of .999% Fine Gold, eligible for investment portfolios in accordance with IRS regulation.
In conclusion, do not buy Precious Metals outside of legitimate, well established businesses. Do not buy bullion from infomercial TV channels. Do not buy Precious Metals from people who solicit product over social media. Avoid classified, auction, wholesale Chinese sites as well as shady “federal officers.” Avoid pawn shops with bad reputations and if you see a news headline that some huge corporation is in the market for some Gold and Silver, do not panic too much.
This article and website are not intended to be or should be interpreted as investment advice. This article and all information of this website is for entertainment purposes only.
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