Counterfeit silver and gold products are by no means a rarity, but in light of the recent commodities market crash, most investors have had other things to worry about. However, CBC’s late-April announcement that fake US Silver Eagle coins have been circulating in Hamilton, Ontario has brought concern about fake bullion products to the fore once again.
Constable Mike La Combe of the Hamilton Police Service was quoted by CBC as saying that high-quality fakes have been sold to various establishments, such as pawn shops, during busy times or when few staff members are working, “giving criminals the chance to sell fast without getting caught.”
The fakes are “silver and nickel-plated … [but] when you cut them open, you can clearly see on the inside, they are brass filled,” La Combe explained. Unfortunately, it is not possible to tell the difference using just the naked eye.
As of April 25, about 500 fake coins had been confiscated.
How to avoid fakes
A key way to avoid purchasing counterfeit coins, according to La Combe, is to “[o]nly buy [coins] from reputable dealers, a place that is established.” Purchasers should avoid the internet as well as sellers who are not considered experts.
Gold and silver dealer GoldSilver expands on these tips in a recent article, cautioning potential buyers to find a dealer who has counterfeit-proofing measures in place and guarantees the authenticity of the products they sell.
On the same note, it’s a good idea to find a dealer who cuts out the middle man by sourcing their supplies “directly from official mints and offer uncirculated coins or bars,” according to Market Daily News. Further, investors should be aware that there are a variety of tests that can be done to ascertain that a product is not a fake. These include:
- the ring test: silver coins and bars make a specific sound when hit; fakes make a thudding noise
- weight: investors should bring a gram-based scale to check the weight of the metal they are purchasing
- the nitric acid test: while real silver is essentially unaffected by nitric acid, fake silver will react to it by fizzing
- coin calipers: calipers can be used to check the diameter and thickness of coins and compare them to mint specifications — all minted coins adhere to specific dimensions
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.