We have written numerous articles warning people not to buy gold bars and gold coins from the internet. We expanded that also to the crypto community and gave given you all some pointers to what you need to pay attention if you do want to buy gold/silver coins as an investment.
A good friend of ours – Jason De G. – bought some gold “bars” that were authenticated and from reputable sources. He bought about 5 of these “bars”, all paid with Bitcoin. He bought them at an auction site and though he didn’t buy from someone who hadn’t bought or sold anything, he thought it would be Ok since the necessary documents and identifiers were present.
After a thorough examination 3 of the 5 bars were forgeries. He did buy from different sellers on said auction site but still it is a very high amount of forgeries floating around. However it is partly his own fault that he did get scammed. He knew that the risk of getting a fake bar can be high and buying from a reputable seller isn’t always a good option either since a gentleman that bought gold bars at a trusted and highly respected gold shop got scammed.
So how is it that these fake bars find their way into the Bitcoin community? Well because there isn’t a regulation or a law in place to protect the consumers. With every purchase you need to trust the person that you are doing business with, basically the same as in the real world. Bitcoin doesn’t have a police force that can react to people that are selling these hard to spot fake gold bars.
How is it so hard to spot these fakes from the real deal? It is so hard because the scammers and criminals are very crafty. Usually they buy a real gold bar, directly from a manufacturer. That way they have the necessary documents and every logo and serial number will be genuine.
The criminals will bore out the entire brick or “bar”, regardless how big or small it may be and replace the holed out places with Tungsten, which is also known as wolfram. Once most of the gold is extracted and replaced with tungsten, the gold bar is neatly sealed so there are no visible signs of tampering. The fact that a gold bar hasn’t many marks or special features on the sides of the bar, makes it that much easier for forgers to hole out the bar.
Some people claim that you can “detect fakes” if you weigh them. What they do not tell you is that you need to have a perfectly tuned scale and even then the probability that you can detect a “fake holed out gold bar” that has a tungsten core is quite low. If it was so easy to use an ordinary scale, many more fakes would be discovered by the professionals.
Another of the common claims is that you can use a magnet to go over the gold bar. That would work great if every metal would be magnetic. There are many other claims that are also being put forth that says how “easily you can check if your gold bar is genuine or not”. Nearly every single one of these “easy ways to check” do not work so don’t be fooled by those people.
There are a couple of different ways you can check your gold bars. X-rays, infrasound and the “scanning lasers” (handheld) are a couple options but they are quite expensive if you want to buy that equipment yourself. So the best way is to visit professionals that have the expertise and equipment to test your bars for you. Personally I wouldn’t let my bars out of sight during the testing procedure. You can’t be careful enough with your investment.
Some readers might now think that buying gold bars is a big “NO”. Well you can still buy gold bars but that is at your own risk. The rule of thumb is that the smaller bars you buy the lower the probability will be that you will buy a fake one. To further limit the risk, you can cut out the middle man and buy directly at the gold smiths or the places that produce gold bars ( like the Canadian or Australian mint). So people, be extremely careful when buying gold bars, regardless how big or small the gold bar is.
So if you want some security and still want to buy some gold, you should consider buying gold coins or even antique coins. Why invest in gold coins? They are pretty tamper proof, have a certificate from the issuers ( the official mint from a country) and have built in securities that are very hard to duplicate. The gold coins can’t be easily holed out because you either have to drill into the top or bottom, which will be noticeable. The sides of the gold coin aren’t an option since there are usually special engravings on the sides. Add to that a limited amount of coins being minted (from 50 to 10 000 or more) the price will shoot up exponentially. For example I bought a small 5 Euro gold coin from the Belgian mint. At purchase time it was 89 euros and now it’s nearly 450 euros (even at auction I could get a little bit more if I wanted to sell that coin).
Of course everything can be faked but the gold fakes can be much faster exposed than gold bars. This is because there are a huge array of experts, myself included, that are members of numismatic groups, located all over the world that are actively working together and exposing gold and silver fake coins. If a fake coin is found it goes through a whole process and that information is shared with the community.
Now I also spoke about antique coins. These ancient coins can also be very profitable but the probability of fakes can also rise if you do not know what to look out for. Now there are about 3 types of fakes which I will not elaborate on. If you want more information on that you can always get in contact with me. The “common sense” rules apply here, which means if you want to buy something, you need to do adequate research. If you buy from the internet, ask a the seller where he got the coin from, (auction house or not, he could have found the coin if he/she is a metal detecting enthusiast)etc.
When a coin is bought from a reputable auction house, a certificate of authenticity is provided. This means that the auction house guarantees that they are providing genuine items and that the coin is a genuine coin from said period. This adds another layer of validity to said coin.
On that note I would like to say that if you want to invest in precious metals, please do excellent research before you buy or place an order. It isn’t that hard to do and you will be a bit safer if you do the research. Now if you discover a “fake” on the internet or on the auction house, don’t chew out the person that is selling the coin. It is possible that he or she doesn’t know that it is a fake but on the other hand it could be that they are the forgers themselves. So use your brains and think before you buy. When something is too good to be true (like a gold coin from the 1900’S for 50 US Dollars) it usually is.