Wednesday, May 14, 2014

Reply: "Five Reasons for Gold & Silver after SHTF"

Don Williams said...
    Some fakes are not that simple to detect:
    1) http://www.dailypaul.com/256078/more-fake-gold-bars-found-in-nyc
    2) http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungsten-filled-gold-coins-here
    3) Even if you managed through expensive measures to verify that your gold is all genuine (e.g, ultrasound) , that will not help its sales value in a disaster situation if a lot of fake gold has become commonplace --bad money drives out good.
    Potential buyers will assume your coins are fake.

I’d say potential buyers will be careful about what they buy and who they deal with, as any experienced dealer does now.
Knowledge is the best defense again in this case. 
First, there’s no such thing as “fake” gold, either it is gold (24k, 18k, 14k..) or it is not. If the coin is made of some other material and only gold plated, then it is somewhat easy to detect. Even with the naked eye gold plated jewelry is easy to identify with limited experience in gold.
Something we’ve seen recently happen was original certified gold bars being emptied on the inside or drilled on the back, refilled with some other alloy of similar weight and then coverd with gold and polished. They sell the refilled bar and they also profit on the gold they removed. This isnt gold-plated, because it leaves a thick layer of real gold outside.
A couple points worth mentioning here: 1) This usually happens with bigger gold bars, because its more profitable and they have the mass and size to actually do it. With smaller coins its impossible to drill them and empty them in such a way. What they do with smaller coins is to gold-plate materials such as tungsten but this is fairly easy to detect. Gold-plated looks awful compared to the real deal, and of course the most simple scratch test will reveal what’s underneath. 2)The technique would ruin the engraving on coins such as American eagles. If you know these coins well, (Eagles, Maple leafs, Krugerrands) you wont be easily fooled by an altered coin, or a “fake” coin made of gold plated non-precious metal alloy.

Anonymous PompompomPooom said...
  ... and one drawback : easily detected at airport doors.
    If a government prohibits possession of gold, it will quickly place metal detectors at various checkpoints and confiscate it.
Still, gold is a very good hedge.

I’d say that this is yet another good example as of why smaller coins are better: You can put several of them in a wallet or pouch with some pocket change and it will be impossible to differentiate on xrays. Unless you have large quantities of 1oz coins, chances are you wont be detected.

Blogger TampaMark said...
    As for fakes there are simple tests and proofs to handle most situations. A rare earth magnet for one, as gold and silver are diamagnetic (repels) while substitutes such as magnesium are para magnetic (attracts weakly) and will attract a rare earth magnet. Coins can be weighed and measured for correctness with a Fisch or Gold Coin Ballance products. Or get a small weight scale and calipers. Also educating oneself on coins with the classic 'Red Book' by Whitman Publishing and others will go a long way to prove and determine fake coins and bars.
As for airports, one never has to carry it with you. Go through reputed international bullion vaults like Brinks and just exchange it for some outside your country. There are several companies besides Brinks which provide such storage. Also keeps it out of local government hands but allows for conversion into currency of choice.
Jose Garcia said...
    What do you recommend as far as exiting the country with wealth. The Cubans that fled the Castro regime were forced to leave with just a small suit case and no material possessions. Is it better to cache some gold in a foreign, stable country?

I think that having too much gold would be a nice problem to have. :)
If you have just a few coins you can carry them on you or on your luggage along with some other common metal “junk” (a few quarters, a metal pen, etc) especially the smaller gold coins such as 1/10 of a ounce, would require visual inspection, and most airport security just dont go around checking pocket change coins. If you have more then you can use one of the exchange firms, or you can sell it and transfer the money to an off-shore account with a broker before leaving. It wont be cheap, but then again if you have that kind of money to worry about you probably can afford the fees.



Don Williams said...

1) Rare coins have been counterfeited for decades and you are correct that sharpness of engraving, tooling characteristics,etc is one of the things appraisers have always looked at to see if a coin is genuine.

2) However, a group that specializes in fighting counterfeiting of branded goods -- Global Piracy and Counterfeiting Consultants -- has put out a press release warning of the high quality of some Chinese counterfeits. Their recommendation --to only buy from a brick and mortar store with 5 years of good reputation -- may help but the store could have been fooled as well.


3) Global Piracy and Counterfeiting Consultants was formed by a US consumer protection group called Americas Watchdog. Yeah, I know --it's somewhat of a ridiculous name but they do fight against counterfeiting of brand name goods. And while that is their business, I don't see where coin appraising is part of it or where they would have a conflict of interest.

4) Even if one's gold coins are genuine, counterfeiting on a significant scale in the future could hurt their value by causing a significant percentage of buyers to lose faith in gold, thereby making its spot price decline.

Don Williams said...

Here is a notice from the US Mint warning about Chinese copies of pre-1950 US silver coins.


TampaMark said...

John Sinclair states he always carries gold coins with time when he travels worldwide. He does not mention ever having them confiscated, even in such diverse places like Tanzania, Republic of South Africa, Singapore, Hong Kong, Canada and the US.

So he must be carrying small denominations such as the 1/10 oz. coins and up. British Sovereigns and 2 Rand coins from RSA are .2354 oz. and quite common so that it would be easy to carry $3000 in 10 small coins on your person.

Jim also states it is foolish to transport large amounts of gold over borders and frontiers. Like I said, he recommends getting a bullion vault account and transfer it outside your country in a safe jurisdiction that respects precious metals.

Anonymous said...

Hand-held ultrasonic testers are inexpensive off ebay if you are buying large bars (e.g kilo bars) of gold.

Coins - tungsten cannot handle the pressures used in coin making, so nothing more than a 'gold coin balance' is needed to test common 1 ounce bullion coins:


Don Williams said...


1) I can see how a tungsten disc itself would resist impression , but what about a tungsten disc coated with a layer of gold , with the gold taking the impression? That apparently has been done with gold bars made to look like the Credit Suisse bars:

2) Have you taken a look at these?


( I have not -- I am still checking into US law re such coins. I would never sell such but think samples would be helpful to evaluate against genuine coins.)

I think the US Secret Service would go after anyone selling copies of US coins -- not sure what they would do about fake Chinese panda coins like these: