As the price of precious metals sky rockets the world over, enterprising counterfeiters in China are jumping on the bandwagon. Being proponents of owning precious metals, especially in smaller denomination recognizable coins and currency, we wanted to alert our readers about what’s happening in the physical silver and gold markets and how taking some extra precautions may be warranted now that everyone’s getting gold and silver fever.

The following alert was sent to us by Sherri Questioning All and has been republished with her permission:

(Video report available below)

I had posted about how Tungsten is up 70% in the last year and inserted a video showing fake gold and a video with David Morgan of Silver-Investor discussing fake gold and silver.  Last week during the interview David Morgan did with me, he talked about fake gold and silver possibly being on the market, besides other information about it.  He also said in the interview, if there will be any fake silver coins they will fake the old coins and not new ones.  WOW – he got that one exactly right!

Gold  has been a given in regards to possibly being fake due to the price of it!  It is well worth an organization (ie: Fed, govt) to fake besides the price, they are pretending there is much more gold than there really is.

With silver, the cost of faking it compared to the cost of the metal itself has not made it such a likely candidate as gold is.  But times have been changing and in my opinion will be really changing in the not too distant future!  In fact this next month – March, there will hopefully be fireworks going off at the Comex. The physical Silver market is tight, all the experts are saying that.  So it was simply a matter of time before fake silver began getting on the market.

We did not have to wait too long, Fake Silver is now here!

There is Fake Silver on the market now! The coins are Morgan Silver Dollars dating all the way back to the 1880’s and are in pawn shops, besides who knows where else!  I would assume it is not just the U.S. that has Fake Silver but also other places in the world too.

A pawn shop in Washington State got a shipment of Morgan Silver Dollars in and felt something was not right about them.  They called in a policeman, who could not tell what was wrong with them, until he was told they were fake.

The silver has an iron core and so people WILL be able to tell a Fake Silver coin by using a magnet! If a strong magnet is attracted to the coin it is fake! A real silver coin will not attract a magnet but fake ones will!  Also a Fake Silver coin will thud when dropped compared to a high pitched ring of a real one, dropped!

Also see: The original Video report about counterfeit coins at Komo News

The fact that these fakes are popping up in Washington may explain why the Washington legislature is considering a misguided bill that would require a host of personal data to be provided to dealers when buying or selling precious metals:

…seeks to capture “the name, date of birth, sex, height, weight, race, and address and telephone number of the person with whom the transaction is made.”

…

If a transaction is made for an amount over $100, which means one tenth of an ounce of gold, also required will be a “signature, photo, and fingerprint of the person with whom the transaction is made.”

They’re the government and they’re here to help. But the fact of the matter is that it will not stop the counterfeiting, so it’s a useless preventative measure if this is the bill’s purported intention.

As we know, the Chinese are experts at counterfeiting, and as the precious metals markets heat up in the future, we can expect to be inundated with more fakes. At $12 an ounce it may not have been worth it for Chinese counterfeiters, but at $34 it’s a whole different ball game.

This is where personal responsibility and due diligence come into play. If you are making investments, take steps to reduce the possibility of being scammed.

Spotting Fakes

Fakes may already be showing up on Ebay.com and Craigslist postings, so even if you are meeting up in person, be sure to examine the coins closely. Some recommendations from Sherrie:

Personally, I would beware of buying any metals on Ebay or any place I can not touch and feel the metals and completely check them out before purchasing them!  Buyer Beware!  Take precautions, check out listings on Craigslist in your area. Buy from local people and online metal companies who get their coins directly from the mints and guarantee the Silver content!

I just looked on my local Craigslist and I believe there is an ad there for Morgan Silver dollars that are possibly the fake Morgan Silver Dollars.  The coins are in plastic holders and they are very shiny!  So, people will be selling them on Craigslist too – when looking at any coins in person – Take them OUT of the holders!  If the owner does not want them taken out of the holders so you can check them out more thoroughly – then WALK AWAY!

Though it won’t work for all fakes, one initial step to take when looking at coins is to use a magnet – you can pick up a good one at the hardware store for under $10. If the coin, bar or ingot sticks to the magnet, then you’ve got a fake likely made of iron ferrite.

Not all fake coins will stick to magnets. Tungsten filled gold bars, for example, will not be magnetic and will require other testing to detect. Silver plated lead will also not stick to a magnet.

Chances are that those responsible will be promptly switching over to non-magnetic metals. This means that for those buying coins, it will become even harder to detect. If you are investing any significant amount of money into precious metals, become familiar with testing techniques to make sure you have not been ripped off:

• Ring Test (video) – A silver coin or bar will have a distinct ring, as opposed to fakes which will have a thud when struck or dropped.
• Weight (video) – Understand that a “Troy Ounce“, which is how we generally weigh precious metals, is different from the popular “Avoirdupois Ounce” used as a more traditional unit of measure in the United States. Just because a coin or bar says it weighs a certain amount doesn’t make it so. If you have a gram-based scale, bring it with you to the coin shop or Craigslist exchange. If you don’t have one, spend $30 and pick one up before you spend thousands on precious metals.
• Nitric Acid Test (video) – You may not be able to test every coin or bar with nitric acid, as it requires a little bit of filing down to get under the “plate” but if you are buying in bulk, the seller may allow you to test a random piece of your choosing after you’ve performed a magnet, weight and ring test.
• Coin Caliper – If a counterfeiter uses a metal other than silver, chances are that the coin dimensions will have to change – or the coin will weigh more or less than it is supposed to with the specific dimensions. Every minted coin has a specific diameter and thickness. A caliper, usually available for $15 – $50, will give you the ability to measure the specific inches/millimeters of a particular coin. Cross compare this information, along with the weight, to the mint’s coin specifications and if they match up, then the likelihood of a fake is extremely low – especially if it “rings true.”

Hat tip Sherri Questioning All