One day a friend of mine came to my office at Bullion Trading LLC. He informed me that he was doing business with someone offering to sell him a bag full of Krugerrands. He handed me one and asked me if it was real. There are multiple ways to check if gold coins are fake or not, but in my case, having been doing this for many years, I can say I’ve reached a level where I can make the distinction just by sight. I looked at the coin and confirmed that it was real. He happily left my office to proceed with the sale.
About fifteen minutes later he returned carrying a bag of coins. I saw him enter from across the hall and said: “By the way, those are fake.”
The sad thing about this tale is not only that my friend was duped, but also how rookie a mistake he made. The dishonest dealer had lulled him into a false sense of security by giving him a real Krugerrand that he could evaluate, only to give him a bag of fakes; when my friend returned with that original gold coin, the dealer apparently switched that one out as well when he wasn’t looking. So he didn’t even get to keep that one real coin. And as someone who can tell the difference between a fake coin and a real one just from looking at them across the hallway, it came across as doubly sad.
So how can you know if the gold bullion you wish to purchase is fake or not? Chances are, you’re already familiar with the various tests to conduct once the item is in your possession. These include using nitric acid, seeing if it leaves a gold streak on a ceramic plate, checking the density, checking for discoloration, or seeing how it reacts to a magnet (real gold is not magnetic). But these tests will not do you much good if you cannot inspect the item until after the sale would be complete. So, as we made clear in the previous article, avoid sites like Craigslist and Ebay and make all final sales in person. When you meet with this dealer, you should enter the sale prepared:
1) First, be prepared to ask the dealer as many questions as you can. How does he know it’s real and how did he come to his estimation of the value? Most important of all, does he has any papers or proof of sale from when he originally purchased it? Ask if you can take pictures of the gold.
2) As long as you’re speaking to them, be sure to get all details of the proposed sale in writing, and it never hurts to throw in a little fib and say that you have a relative who is a bullion dealer and another one who is a lawyer, and that you want to double-check with both of them before finalizing the sale. This will probably make any scammers rethink their strategy with you.
3) Then, go to other dealers and tell them the details of this proposed sale. Is there something about it that doesn’t sound right? Show them the pictures you took and ask to see their equivalent pieces of gold to compare. Does it look the same or not? And if you do notice any subtle differences, ask what might cause that.
4) Next, after returning to your prospective dealer, tell them that you would like to test the gold’s authenticity. Don’t fall for the trap my friend did; instead of being satisfied with one coin, ask the dealer to come with you and to bring the whole of the item. The person you go to who will conduct this test should know all the right questions to ask and can grill this dealer better than you can.
5) Lastly, even once it is confirmed that the gold bullion is real, insist on conducting the sale right there in front of the third party, so that the item does not have a chance to leave your sight.
Perhaps one of the most popular coins collected today is the 21.6 Karat St. Gaudens Double Eagle $20 gold coin. President Theodore Roosevelt commissioned sculptor Augustus St. Gaudens to design these coins in 1907. Unfortunately, there have been a lot of counterfeit double eagles. The real coin should exactly have a weight of 33.43 grams and a diameter of 34 mm. Some poor counterfeits of double eagles have a slightly mottled appearance and the gold and copper alloys have not been thoroughly mixed. Coins that are uncirculated will have letters that are flat on top. If slightly rounded, and the coin is uncirculated, it is a counterfeit.
Maybe the best advice of all that I can give would be that if you’re new to purchasing gold in New York, start small. Don’t start out with a shady dealer who wants to sell you a bag of Krugerrands or American Eagles when you yourself are not even sure what a real one is supposed to look like. Start with a small piece of gold from a trusted bullion dealer and then work your way up. Bullion Trading LLC is a great place to start as it has been a trusted business for over thirty-five years! Once you start to become familiar with the process, you will make contacts and know who is reliable and who is not, and who you can trust to be your third party witness. And if you start to look at gold coins frequently, perhaps you will also reach a stage where you too can recognize a real one from a fake just by looking at them from across the room.