While the risk of buying counterfeit gold may be minimal if you stick to recognized sales channels, the knowledge of how to avoid counterfeit gold could literally be worth its weight in gold.<\/p>\n
Physical Properties of Gold<\/h2>\n
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<\/p>\n
The physical properties of gold are one of the reasons it has served as money for millennia. Some of gold\u2019s properties are that it is:<\/p>\n
- \n
- Durable<\/li>\n
- Portable<\/li>\n
- Easily divisible<\/li>\n<\/ul>\n
Unlike silver, copper, or zinc, gold does not tarnish. And once it is alloyed, it is relatively hard-wearing, which is why so many gold coins that are centuries old are still in such good condition.<\/p>\n
Most importantly, gold is dense. It is the eighth-densest metal in the world, with a density of 19.3 grams per cubic centimeter. If you\u2019re familiar with lead and know how dense a piece of lead feels, imagine that same piece weighing 70% more and you\u2019ll get an idea for how dense gold is.<\/p>\n
The only heavier metals are some in the platinum group such as platinum, iridium, and osmium, or radioactive metals such as plutonium and neptunium. And the metals with the closest density to gold are tungsten and uranium.<\/p>\n
Many of the metals with densities similar to or higher than gold have only been discovered in the last 200-300 years , and their rarity and expense makes it difficult to use them to produce fake gold. Many of them also have higher melting points than gold, making it more difficult to use them to produce fake gold.<\/p>\n
For instance, tungsten, which has featured in recent stories about fake gold, has a melting point nearly 4,000 degrees Fahrenheit higher than gold, which means that relatively few people have the ability to create fakes from tungsten.<\/p>\n
For the average investor worried about counterfeits, cheap copies made from lead, silver, or even steel have been some of the primary coins to be concerned about. But if you\u2019re worried about how to tell if gold is real, counterfeits made from those metals are relatively easy to spot.<\/p>\n
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<\/p>\nTypes of Counterfeit Gold<\/h2>\n
It\u2019s important to distinguish between different potential types of counterfeit gold, as each type of counterfeit gold targets different types of gold buyers or gold users. Let\u2019s focus on looking at four types of potential counterfeit gold:<\/p>\n
- \n
- Counterfeit Good Delivery bars<\/li>\n
- Counterfeit Bullion Bars<\/li>\n
- Counterfeit Collectible Coins<\/li>\n
- Counterfeit Bullion Coins<\/li>\n<\/ul>\n
1. Counterfeit Good Delivery bars<\/h3>\n
Good Delivery bars are those that satisfy certain physical requirements specified by the London Bullion Market Association (LBMA) and that are held in warehouses approved by the LBMA.<\/p>\n
Gold bars have to meet a minimum fineness of .995 (99.5% gold) and must weigh between 350 and 430 troy ounces. Bars that don\u2019t comply with these requirements, that are similar but not fully compliant, or that leave the Good Delivery system are termed Non-Good Delivery.<\/p>\n
The purpose of the Good Delivery system is to ensure that there is both a guarantee of purity and a recorded chain of custody. This is done to minimize the ability of bad actors to pass counterfeit gold bars into the world gold trade.<\/p>\n
Those involved in the gold trade want to minimize the amount of work that has to be done to determine if gold is real. Good Delivery bars play a very important role in the gold market, and their authenticity needs to be unquestioned.<\/p>\n
2. Counterfeit Bullion Bars<\/h3>\n
Counterfeit bullion bars are counterfeits of smaller gold bars that are more commonly in demand from retail buyers. These can range from one gram in weight all the way up to one kilogram.<\/p>\n
Many of these bars are produced by prominent refiners. They\u2019re often stamped with a unique serial number, and smaller bars sometimes come in plastic packaging with serial numbers or holographic certificates of authenticity.<\/p>\n
Because these bars don\u2019t follow the same chain of custody as Good Delivery Bars, there can be a greater risk of coming across a counterfeit. That\u2019s why it\u2019s important when buying these bars to deal with sellers who have close relationships with refiners or wholesalers, thus minimizing your risk of buying a fake.<\/p>\n
3. Counterfeit Collectible Coins<\/h3>\n
Counterfeit collectible coins won\u2019t matter much to gold IRA investors, as collectibles aren\u2019t eligible for acquisition by a gold IRA<\/a>. But to coin collectors, these counterfeit coins are a big deal.<\/p>\n
In many cases, counterfeit collectible coins may actually be made of real gold, with the proper metal content. But because they\u2019re intended to fake a collectible year, mint mark, or design of coin, it\u2019s a cost the counterfeiter is willing to risk.<\/p>\n
Using $3,000 worth of gold to mint a coin that can sell for $10,000 or more on the collector market can provide counterfeiters with a high return on their investment. Unless you\u2019re a coin collector, though, this won\u2019t affect you too much.<\/p>\n
4. Counterfeit Bullion Coins<\/h3>\n
Bullion coins are coins whose primary value derives from their metal content, not their rarity or collector interest. Counterfeit versions of these coins may not be made out of gold, or if they have any gold it might be a significantly smaller portion than the real coins they\u2019re trying to copy.<\/p>\n
Sources of Counterfeit Gold<\/h2>\n
China is alleged to be one of the world\u2019s top sources of counterfeit coins<\/a>. Stories abound of markets in China filled with counterfeit coins, which has been a problem for years.<\/p>\n
While some of those coins may be intended as curiosities to sell to tourists or those who just want to brag that they own a gold coin, the sophistication with which they are produced can sometimes fool even experienced purchasers. And with the ability to purchase those coins and import them easily into the United States, there is no telling how many counterfeit coins have made it to our shores.<\/p>\n
Certain counterfeits are easily recognized. Since the United States government requires copies of coins to have \u201cCopy\u201d prominently placed on them, some unscrupulous sellers may try to remove that mark, something that should be easily noticed when looking at the coin. But other fakes are of better quality, and fraudsters may attempt to sell them on online marketplaces.<\/p>\n
7 Ways to Tell If Gold Is Real<\/h2>\n
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<\/p>\nThere are numerous ways of being able to tell if gold is real, both through destructive and non-destructive means. These include:<\/p>\n
- \n
- Weighing and measuring<\/li>\n
- Magnet test<\/li>\n
- Listen to the sound<\/li>\n
- Acid testing<\/li>\n
- Cutting or clipping<\/li>\n
- Melting<\/li>\n
- XRF or ultrasonic analysis<\/li>\n<\/ul>\n
1. Weighing and Measuring<\/h3>\n
Every gold coin minted is minted with certain specified dimensions and weights. Knowing the diameter, weight, and thickness of these coins can help you determine whether a gold coin is genuine or not.<\/p>\n
If a coin has the right diameter and weight, but is twice as thick, then it\u2019s not made of gold. Rather, it\u2019s likely made of some less dense metal. If a coin has the right diameter and thickness but weighs too little, it again is not gold, but some less dense metal.<\/p>\n
A small digital scale and a ruler or calipers can help you weigh and measure your gold coins to help you check to make sure they\u2019re genuine.<\/p>\n
2. Magnet Test<\/h3>\n
Another way to test if gold is real is by conducting a magnet test. Gold is not magnetic, and no gold coin will ever contain iron or ferrous alloys.<\/p>\n
So, if your \u201cgold\u201d coin is attracted to a magnet, it\u2019s not really gold. This can be important when it comes to alleged fakes made from tungsten, as some tungsten alloys contain small amounts of iron and are mildly magnetic.<\/p>\n
If you have a gold coin that has the right diameter, thickness, and weight but is attracted to a magnet, it\u2019s likely a fake.<\/p>\n
3. Listen to the Sound<\/h3>\n
If you let a gold coin fall on a table and then let a base metal coin such as a quarter or half dollar fall to the table, you\u2019ll be able to tell instantly that there\u2019s a difference in the sound between them. Precious metal coins have a pleasant and long-lasting ring to them, while the sound from base metal coins is more of a dull thud.<\/p>\n
So if your gold coin falls to the table with a thud instead of a nice ring, it could be a fake.<\/p>\n
4. Acid Testing<\/h3>\n
Acid testing of gold is often done in an inconspicuous place on a piece of jewelry, or using small pieces or flakes removed from a coin. The two main types of acid used are nitric acid and aquia regia, which is a mixture of nitric acid and hydrochloric acid.<\/p>\n
Gold will not dissolve or react when exposed to nitric acid, while other metals will react and create salts and gases. Aquia regia, on the other hand, will dissolve gold.<\/p>\n
Because these acids are incredibly strong and dangerous to work with, they\u2019re not recommended for individuals to use. They\u2019re more the purview of jewelers and other professionals who work with precious metals.<\/p>\n
5. Cutting or Clipping<\/h3>\n
Cutting or clipping coins can be one way to determine whether they\u2019re made of real gold. Since tungsten is one of the hardest metals there is, you won\u2019t be able to clip or cut a gold-plated tungsten coin.<\/p>\n
The downside to cutting or clipping, of course, is that you damage or destroy the coin, which negates the reason you bought the coin in the first place. This again is a method that should be left to the professionals.<\/p>\n
6. Melting<\/h3>\n
Melting is another test that can determine whether a coin is gold or not. Since tungsten and other heavy metals melt at higher temperatures than gold, a gold-plated tungsten coin or bar wouldn\u2019t melt in a furnace that\u2019s only hot enough to melt gold.<\/p>\n
This obviously is another test that should be left to professionals, and only makes sense to do if you\u2019re melting down existing gold to turn it into new bars or ingots.<\/p>\n
7. XRF or Ultrasonic Analysis<\/h3>\n
Two recent methods to test if gold is real in a non-destructive manner are X-ray fluorescence (XRF) and ultrasonic testing. These can be done with handheld scanners and can determine not just the authenticity of gold but even its gold content within seconds.<\/p>\n
Due to the cost of these devices, however, these are methods used mostly by refiners, custodians, or large gold wholesalers.<\/p>\n
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<\/p>\nHow to Avoid Buying Counterfeit Gold<\/h2>\n
As with purchasing any other asset, figuring out how to tell if the gold you bought is real shouldn\u2019t have to be difficult. You shouldn\u2019t have to resort to complicated testing of your gold to ensure that it\u2019s real.<\/p>\n
It just requires some common sense and adherence to basic principles common to every purchase. Remember, with hundreds of millions, if not billions, of gold coins produced over the years and now in private hands, the odds of purchasing a counterfeit coin are slim if you exercise caution and discretion.<\/p>\n
So just keep a few key things in mind:<\/p>\n
1. If It\u2019s Too Good to Be True, It Probably Isn\u2019t True<\/h3>\n
You may think you\u2019ve found a great deal on gold coins, or maybe you\u2019ve found someone offering gold coins for less than the spot price of gold.<\/p>\n
What a great deal! Or is it?<\/p>\n
If the price seems too good to be true, it could be a scam. Rather than waste your time trying to find out how to tell if the gold is real, it\u2019s better just to walk away rather than fall victim to a potential fraud.<\/p>\n
2. Be Wary of Online Marketplaces<\/h3>\n
With gold available for sale all over the internet, it can be tempting to look for the best price possible. Sometimes that means heading to online marketplaces where gold coins can be found in abundance from private sellers.<\/p>\n
But purchasing from those online sites, you\u2019re at the mercy of sellers and their photos and descriptions. How do you tell if that gold is real?<\/p>\n
What if the person you\u2019re buying from is reselling counterfeit coins from China? And what do you do if you end up buying a counterfeit coin?<\/p>\n
At least with some online marketplaces you stand a chance of being able to file a complaint and get your money back. But what happens if you buy gold coins locally, through online ads, at estate sales, or from coin shops and purchase a counterfeit? Then you may very well be out the money you\u2019ve spent.<\/p>\n
3. Work With Trusted Vendors<\/h3>\n
It can be important to work with vendors who have established relationships with the mints that provide the retail gold market with its coins. At Goldco, we have agreements with mints around the world to purchase their coins directly, passing on to you coins that are guaranteed to be authentic products.<\/p>\n
The depositories we work with can also ensure that the gold coins you purchase for investment aren\u2019t mixed with other coins, so that the coins you purchase will always remain yours.<\/p>\n
If you\u2019re looking to invest tens of thousands of dollars of your retirement savings in a gold IRA<\/a>, you\u2019ll want to make sure that the coins you\u2019re getting are authentic. And even if you don\u2019t know for certain how to tell if gold is real, choosing a partner who can provide authentic gold for you can take some of the pressure off your shoulders.<\/p>\n