In recent years the gold bullion, silver and platinum markets have been affected by counterfeit bars and coins that have tripped up many an investor.
Unfortunately, the reality is that the increase in gold investment in the wake of the 2008 financial crisis and the unfortunate side of human nature has seen scam artists capitalise on opportunities in the most underhand of ways.
Gold bullion counterfeiters have sought to take advantage of the surge of gold bullion buyers investing their money in the precious metal. This has allowed many to turn a healthy profit to the detriment of those not-so-savvy gold bullion investors.
As technology has become increasingly sophisticated, counterfeiters are able to churn out mass produced fake coins and bars. But with a few precautions, it is perfectly possible to protect yourself and your investments and avoid falling foul of counterfeit gold bullion. Read on for our experts’ advice and guidance.
What is counterfeit gold?
Counterfeit gold bullion products mimic authentically minted gold bullion coins and gold bullion bars, which are released by genuine mints from across the globe.
When counterfeiters create fake gold coins and fake gold bars to sell to unsuspecting investors, they employ many different methods. There are several different varieties out there but the most commonly discovered are counterfeit gold coins or bars that use an inferior base metal overlaid with gold.
Counterfeiters have discovered a way to even include unique serial numbers on their fake products, where in the past they used to stamp each individual gold product with the same serial number.
Sadly we’re encountering a number of investors who have been duped by these products after purchasing them on sites like eBay.
Where does counterfeit gold come from?
The general suspicion is that factories in China are the source of the majority of counterfeit products in the market at the moment. While we can’t prove it for sure, there is talk of counterfeiting rings that are churning out thousands of counterfeit gold coins and bars on a monthly basis.
Often these enterprises are well-funded, operating as legal businesses, openly advertising counterfeit gold bullion under the term ‘gold-plated tungsten’ on marketplaces like Alibaba.
From here, it’s over to the next level of scammers buying these coins in bulk and moving them to Western markets to sell to unsuspecting investors and collectors. These sellers will typically use Craigslist or eBay and offer prices that are too good to be true for their counterfeit produce. And you know the old adage as well as we do … if it sounds too good to be true, it is.
How to detect counterfeit gold?
As many gold bullion investors know, once you receive your item it will arrive packaged in a sealed plastic container. Opening this package – even slightly– can affect its market value, which is why it’s so easy for counterfeiters to make and sell their fake gold bullion products to unsuspecting investors. With investors reluctant to open their gold’s packaging, it’s very difficult to carry out gold bullion counterfeit detection to see if anything is amiss.
As the technology and industry knowledge of counterfeiters improves over time, it’s even harder for investors and professionals to detect the genuine article from the fakes that are flooding the market. Up until fairly recently, gold bullion industry experts and dealers were able to detect counterfeit gold by simply judging it by its packaging, which was usually sold in inadequately sealed blister-pack packaging, or wasn’t sealed at all.
However, counterfeiters look to be growing in sophistication, showing that they are even prepared to invest in similar production procedures as gold bullion mints around the world in order to create their fakes. We’ve now reached the point that just about any gold product, be it bullion coins or bars, is able to be counterfeited, with these items packaged almost identically to their authentic counterparts.
However, while this might sound daunting to say the least, there are ways that gold bullion investors can protect themselves from falling victim to counterfeit gold coins and counterfeit gold bars and we are keen to make sure as many potential investors as possible know about these relatively simple steps they can take to protect themselves.
The first thing you should do is to check the price, especially if the gold bullion in question is being sold online. We’ll say it again: if the price sounds too good to be true, then it probably is and should be avoided at all costs. Authentic gold bullion is never going to be sold for less than the gold price, so check the market rate and make your decision accordingly.
Ensure that you’re buying your gold bullion from an accredited company that is as close to the mint as possible to reduce the chances of being sold counterfeit gold bullion. Companies like UK Bullion are handling and dealing with gold bullion products on a daily basis and are therefore well versed when it comes to identifying a fake.
If you want to minimise risk, then avoid buying gold bullion from unverified websites such as eBay, as these are typically the avenues that the counterfeiters use to sell their products. Once you realise that you’ve bought a counterfeit item from one of these online sellers, it’s often too late to do anything because the seller is often miles away and uncontactable for a refund.
Ultimately, our advice here is to buy from a professional to ensure you’re at minimal risk of buying counterfeit products. However, if you do want to look at making the call for yourself, read on for the specific things to look out for in gold coins and gold bars.
Gold coin counterfeit detection
Counterfeit gold coins are becoming increasingly hard to spot on the market and are even being produced with the same care and attention to detail as the originals. It’s easier to fall for a fake gold bullion coin than ever before.
At UK Bullion, we have the precise details of just how any packaging should weigh for each product and mint allowing us to assess exactly whether there is a discrepancy in the weight of the product itself.
Another method used to detect counterfeit gold is to open the packaging of an original gold coin and see if the questionable gold coin can fit inside the original package and take a look at the packaging itself in more detail. If you can see any glue marks, you’ll know that a counterfeiter has re-sealed the plastic case.
You can also check for counterfeit gold bullion coins by carefully studying and comparing the minting quality between a new coin with one that you know is an original gold bullion coin. If there are any differences in the edge lettering or in the weight, diameter, thickness and if there are any imperfections in the surface of the coin, then these are sure tells that you are dealing with a counterfeit.
In the case of counterfeit gold coins being made from an inferior metal, counterfeiters often use copper based alloy, zinc, steel or tungsten as the core and this will typically be coated in a thin gold layer, usually around the margin of less than 0.03 mm. You can spot quirks here by looking at the outer dimensions and weight of the coin.
Gold bar counterfeit detection
Common ways that counterfeiters fake gold bars is to fill the bar internally with inferior metals, of which tungsten is most commonly used. But what they don’t often realise is that this can alter the weight of the gold bar, which is a giveaway that it’s not genuine.
If you’re checking over your gold bars, make sure you measure the weight of the gold bar and compare it to what is listed on the gold bar to see if there is a marked difference.
Most authentic gold bullion bars will have individual stamps or engravings from the official mint or producer that it has come from. If you are familiar with the gold bullion producers then you can check the markings against an original to verify if you have a counterfeit gold bar or not.
You should also check the dimensions against an original bar, because all original minted gold bullion bars are produced to the same exact dimensions in the same machine. If there are any abnormalities with one of your gold bars, the chances are that it’s a counterfeit.
The easiest way to check the authenticity of your gold bar is to see if it’s magnetic by using a magnet. Gold isn’t a magnetic material, but if your ‘gold bar’ shows to be magnetic from using the rare-earth magnet, then hey presto – it’s a fake. Just remember that this test isn’t 100 per cent accurate as some counterfeit metals can get past this test.
Some manufacturers and mints are working to create their own fool proof ways to avoid problems with counterfeits. The good news for gold bullion investors looking to purchase gold PAMP bars is that it is becoming a lot harder for the counterfeiters to create fakes because of new Veriscan technology. This new authentication system devised by Swiss gold bar company PAMP is revolutionising the way that experts can detect counterfeit gold bullion bars. Therefore, if you are looking to invest in gold bullion PAMP bars, make sure you keep an eye out for the VERISCAN logo which means that it’s been authenticated.
You can verify your gold PAMP bars by downloading the Veriscan iPhone app or PC software to use with any conventional document scanner and the PAMP bullion-positioning frame on your gold bullion bar.
How to avoid buying counterfeit gold?
One of the easiest ways that gold bullion and precious metal investors can avoid the mistake of purchasing counterfeit gold bullion is to only buy gold bullion from a trusted supplier. Companies such as UK Bullion are better able to spot counterfeit gold and ensure that all of the gold bullion products that are available to purchase have been thoroughly checked and verified as original.
We handle large amounts of legitimate gold products on a daily basis making it much easier for us to detect any irregularities should a fake pass through our offices.
But with every product we buy passing through an X-ray fluorescence analyser and the hands of our experts, we’re able to guarantee our customers full safety and security when making the decision to purchase from us as traders of authentic gold bars and coins.