Guest Post: "How To Spot Fake Gold and Avoid Fraud", by Olivier Garret of Hard Assets Alliance

We've maintained an affiliation with our friends at Hard Assets Alliance since 2012 and I hope they are always on your list of bullion dealers when making a purchase.  They provide a fantastic service and you'll likely find this new post from Olivier Garret, the Founder and CEO of HAA, to be extremely helpful and interesting.

How to Spot Fake Gold and Avoid Fraud

By Olivier Garret, Founder and CEO of Hard Assets Alliance

Counterfeit products exist in almost all industries, and precious metals are no exception. However, there are many safeguards to protect yourself from buying fake gold.

The best way to ensure the authenticity of gold products is buying gold bars and coins strictly from LBMA (the London Bullion Market) approved dealers, mints, and refineries. This way, their authenticity is guaranteed.

LBMA is an international organization that sets standards for precious metals trading all around the world. They have over 150 members from 30 countries, among which are the biggest banks and financial institutions.

As long as your bullion stays in the custody of LBMA-approved vendors and vaults, there is no question about the authenticity of your metals. Dealers can bid for your coins or bars sight unseen because they know that the chain of custody is unbroken.

This is the reason all gold bullion at the Hard Assets Alliance comes from LBMA-approved mints and refineries. This is also the reason why we encourage our customers to buy precious metals for storage in one of our LBMA-approved international gold vaults.

It is much safer than storing at home or in a bank vault, and your bullion is available for delivery at all times. Even better, if you need to sell it, you can do it within a few clicks on your computer.

If you decide to take coins into your own custody (let’s say at home), dealers will have to inspect them before purchasing them. Reputable dealers use a number of tests to ensure the bullion they purchase is not counterfeit.

That should not be a real issue other than you will only get prices from dealers that have had a chance to inspect the coins.

In general, the risk of buying fake gold bars or coins is minimal as long as you stick to well-known sovereign coins like Eagles or Maple Leafs and buy from reputable LBMA-approved dealers.

The same is true if you buy sealed bars from LBMA-listed refineries. If you follow this advice, you should not really worry about counterfeit gold products.

How to spot fake gold when buying from local dealers

If you’d like to buy from a local dealer, despite the risks associated with taking possession of gold, make sure that you check the dealer’s reputation or get recommendations. In addition, I suggest that you learn the basics of how to identify fake gold.

It’s highly unlikely that a trustworthy dealer would offer you a counterfeit product, but knowing how to inspect gold bars or coins won’t hurt.

So here are a few tips.

Weight

Bring a digital scale to a local shop where you would like to buy gold. If you buy the most popular 24-karat, one-ounce sovereign coins, they should feel dense and heavy—and weigh exactly one troy ounce.

There are coins like the American Gold Eagle and the Gold Krugerrand that are made of 22-karat gold (.9167 fine) and weigh more than one troy ounce (they contain one ounce of pure gold with some alloys to increase strength.

Remember that precious metals are weighed in troy ounces. (A troy ounce is 31.1 grams).

If the coin is lighter or heavier than its actual weight, it’s a red flag.

Diameter and Thickness

This piece of advice is more suited to government-minted bullion coins (the only kind of coins you should consider), as they have standard dimensions.

Before buying coins, look up their dimensions on an official mint site. If the coin is too large or too thick, it’s almost certain the coin is a fake gold product.

Usually, fake gold coins are somewhat larger or thicker, so they are heavier and less detectable as fakes.

So always bring a set of calipers to a local shop for measuring.

Price

Trustworthy gold bullion dealers will sell gold bullion at 1.5% to 10% (or more) over the gold spot price (small fractional coins can have even larger mark-ups). This accounts for the spot price, refining and minting premium, and transportation costs, plus dealer overhead and profit.

If the dealer sells you gold at or below spot, they either have hidden fees to make up for losses or are selling fake gold.

A quick list of red flags:

  • Too light

  • Too large

  • Grainy or mottled appearance

  • Imperfect imprint or lettering

  • A seam along the rim

  • Magnetic (real gold will not stick to a magnet)

  • Sold under spot price

And once again, the best way to protect yourself from counterfeit coins is working with a reputable LBMA-approved bullion dealer.

I hope this helps you make the right decision and invest in precious metals safely.

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19 Comments

Ferd Torgerson's picture

Ferdst!

Ferdst one in a long while!

Thanks for the article.  One that is very helpful and should be read by all.

A few years back, there was a guy who opened up a storefront near my home who bought gold and silver.  I visited a couple of times to see if he'd sell me some coins.  "Nope", he told me.  He was there strictly to buy and re-sell his purchases to a person higher up in the chain who was apparently a dealer or serious collector.  He never said exactly who or what his partner was.

On my last visit, he still wasn't selling but he did show me four silver dollars he'd bought from someone which were fakes.  The fakes had some of the characteristics noted in the article.   They were lighter than expected and there were imperfections in the front and back of the coins.  He was stuck with them as his partner wouldn't buy them.  I mentioned to him that he needed to turn over the fakes to law enforcement.

Some time later when I drove by, the "We buy gold and silver!" banner had been taken down and a "For Lease" sign was in the window.

Too bad he hadn't the benefit of Olivier Garret's expertise. 

Ferd

AngryCitizen's picture

SILVER!

How sweet it is!

This kind of info is invaluable to us all, and hard to come by. THANK YOU, TURD.  Appreciate this info!

jackstar's picture

Checking for Fake Coins

For a couple hundred bucks you can buy “The Fisch”, made by a South African company.  Rather than explain it in detail here, I would suggest visiting their website.  They also sell a device called “The Ringer”, a device that holds the coin between plastic points, and then you activate a plastic striker that will cause the coin to emit a pleasant and lasting ring, proving its authenticity—or not!

A friend once came over with some Maple Leafs.  He bad bought the Ringer and the coins wouldn’t ring.  He asked to check them with the Fisch and they identified as authentic.  We did some research on line and found out that pure gold coins, i.e. .999 fine like the Maple Leaf, don’t really ring.  AGE’s, Krugerrands, and other .91 fine coins ring beautifully.  Newer Maple Leafs, however, have a tiny microchip embedded in them that proves authenticity and gives some data about date of mintage, etc.  it takes a special machine to read the chip.  My LCS has the reader, but I would think they’re probably hard to find and they are expensive.

marchas45's picture

4th

Keep Stacking

I Have The Fisch but it only verifies certain coins. So I now have the Sigma Metalytics Precious Metal Verifier and is awesome. It verifies Gold, Silver and 90% coins and bars. A little pricey but well worth it.

Markedtofuture's picture

46% of Last Year’s ICOs Have Failed Already

It has always been assumed that a large number of ICOs will fail, be it at the fundraising stage or when it comes to delivering the actual project. It’s hard to settle on a precise figure, however, as most dubious ICOs don’t exit scam: they slowly tiptoe away, like a sneak thief rather than a smash-and-grab robber. Having completed an extensive study into last year’s crowdsales, news.Bitcoin.com can report that 46% of them are effectively dead already – despite raising over $104 million.

https://news.bitcoin.com/46-last-years-icos-failed-already/

Markedtofuture's picture

Clif High This Is Not A Drill! Feb 24, 2018 NEW Get prepared for

Marcus's picture

magnets

Neodymium (super strong) magnets are the way to go for testing purposes.

Markedtofuture's picture

Re: Clif video is old

House Intel Democrats Release GOP Counter-Memo

The Democratic memo, which can be viewed in its entirety below, claims to "correct the record" on what the Democrats say is a "transparent effort to undermine" the FBI and Justice Department, as well as the Russia investigations, on the part of the committee's GOP members.

Ronnie 666's picture

Precious Metal Verifier

http://www.sigmametalytics.com/

I have used this for 3 years without problems. Saved me on at least 3 occasions. Once was offered 2x US AGE 1oz gold coins. Looked perfect in weight and size but failed the PMV test. Apparently the dealer who had these coins took my PMV  results seriously and took them to the Perth Mint where they passed the Perth Mint XRF test. They were happy to buy them back as accredited bullion. He knew they were likely fake and asked them to use a bolt cutter and cut them in half. They agreed and as the coins were to be melted down it would not reduce the payback value. They couldn't cut the coins with a large bolt cutter as a tungsten core is hard to cut..surprise... They still continue using their surface XRF system....surprise

jackstar's picture

Magnets

I use neodymium magnet drainplugs in all my cars and motorcycles (drainplugmagnets.com).  Since tungsten seems to be the most frequent metal used for counterfeiting coins, can I assume that tungsten has magnetic attraction?

Marcus's picture

neodymium

I use these magnets for silver only.

phoenixphoenix's picture

With rates low, Fed officials fret over next U.S. recession.

“We want more shock absorbers out there and really ... the main shock absorber is the ability to reduce the fed funds rate, which means that you want to get to a higher inflation rate so that the pre-shock fed funds rate is 4 (percent) and not 2,” said Paul Krugman, the Nobel Prize-winning economist and professor at City University of New York.

..................

Some see this month’s succession of Fed Chair Janet Yellen by Jerome Powell as ideal timing to consider new frameworks that could help drive inflation, and rates, higher.

Cleveland Fed President Loretta Mester, whom the White House is considering naming Fed vice chair, told the conference the central bank could begin to reassess the framework later this year, though she said the threshold for change should be high.

https://www.reuters.com/article/us-usa-fed/with-rates-low-fed-officials-fret-over-next-u-s-recession-idUSKCN1G72PI

gold slut's picture

Great info...

This is a great article for anyone newly 'red pilled' and checking out the site.  This is exactly what I was looking for when I stumbled across TFMR in 2012.yes

chocolatechiphorses's picture

NRA Statement

View image on Twitter

ABC News @ABC

NEW: The National Rifle Association responds to the growing number of companies ending their corporate partnerships since the Parkland school shooting: "Some corporations have decided to punish NRA membership in a shameful display of political and civic cowardice."

3:53 PM - Feb 24, 2018

chocolatechiphorses's picture

This little blip was 2008 crisis

 

Remember, as we all postulate the causes and detriment of 2008, this little blip of nearly took down the system. What happens when it really drops?

J Siefert's picture

Grant Williams talks about Bitcoin

Markedtofuture's picture

Flappening Watch LITECOIN - BITCOIN CASH

http://flappening.watch/

Charlie Lee [LTC]‏Verified account @SatoshiLite 21h21 hours ago

  1. The flippening (ETH>BTC) will never happen. But the flappening (LTC>BCH) will happen this year.

abundance's picture

is it my imagination but it seems like the Dow is

always up 200 pts first hour or so in the morning lately?

abundance's picture

new TD not easy to traverse...ugh!

another ugh!

got my tax info Sat..thanks for people's responses, that was helpful.

called about it..took 10 days, mailed from Texas to SF Bay area

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