Bullion or coins?

This question is often debated by investors when deciding the most secure and cost effective method to invest in precious metals.  Here are five assumptions people make when they say they prefer to invest in coins over bullion.

1.  Counterfeiters are more likely to make fake gold and silver bars than coins because they are larger, easier and therefore more profitable.
2.  It is difficult to precisely replicate fake coins with exact dimensions and weight.
3.  Governments have very strict laws about counterfeiting currency, making bars a              lower risk proposition for counterfeiters.
4.  If you buy coins direct from the mint you needn’t worry.
5.  Coins are more affordable and appreciate faster.


1/4 oz US Gold Eagle, counterfeit or genuine?

Reasons why those five assumptions may be wrong

Anything of value that can be faked is being faked in China. From European wines, aircraft parts, handbags, chocolate, software, even condoms. You name it, if it can be copied it has been, and most probably on an industrial scale in a number of forgery factories. Coins are by no means exempt to the epidemic of knock-offs from the Far East. Faking coins is not a modern phenomena. However, the problem today is that the latest industrial imaging and die casting technology mean that the best fakes are becoming more exact, and extremely hard to detect.

Fake silver and gold eagle coins are being struck and sold for as low as 50¢ a piece. The very highest quality fake coins are a serious threat to coin shops, dealers, and all coin investors. Perfect gold and silver counterfeit coins have exact weights and dimensions, and can easily be passed off as bonafide to unsuspecting investors.

Counterfeit coin and bullion factory in China

An industrial scale coin counterfeiting factory

A check of coin supplies on online trade sites reveals a plethora of fake Eagles, Maple Leafs, Kangaroos, Krugerrands and other investment coins ready to be distributed into retail markets. Of greater concern is that the most perfect copies would likely bypass the low-end online retail market to be distributed by organised criminals into dealer networks. Counterfeiters do not fear harsh penalties risked by faking currency and it is evident that governments are doing little to address the problem. In fact, the counterfeiting industry operates freely in the industrial centers of China.

This video  interview with Mike Maloney and James Anderson at Goldsilver.com discusses the shifting dynamics and risks in gold and silver investments due to the increasing sophistication and industrialisation of fake coin production. They discuss the effectiveness of ultrasound testing, and benefits of investing in bullion instead of coins.

Coins bought direct from the mint have safeguards for authenticity. However, even with minimal numismatic value there is usually a premium paid to the mint for such investments.   Typically  in the realm of 4-5% per oz of gold, or more for smaller denominations or silver coins. But what happens when it is later decided to sell gold or silver investment coins? Is the new buyer now going to pay a premium for a coin that is already in the retail market? There may very soon come a time, due to the sheer mass of exact replica counterfeit coins in the market, that dealers will only pay scrap prices for gold coins confirmed by assay at the point of sale. Apart from the lost premium paid at purchase, the investor may also bear assay and refining costs as well.

However, gold and silver bullion investments have lower premiums above spot price and can be quickly authenticated by the non-destructive ultrasound technology of the GT-Ultra detection meter. Purchases are safeguarded, and even in the unlikely event that destructive testing is requested upon sale, there is little premium to be lost.

By using a GT-Ultra detection meter and buying bullion, more of your wealth is contained in the precious metal needed to safeguard your finances and the future of your family.  The amount saved by buying  just one 5 oz gold bar instead of 5 Gold Eagles will cover the purchase price of the GT-Ultra detection meter needed to guarantee the authenticity of the investment.

In this news video, a coin dealer from Portland discusses how the epidemic of counterfeits is plaguing the coin industry. The report highlights that bars can be easily verified by ultrasound technology whereas fake coins are becoming increasingly problematic to detect.