Got Gold? Want Gold? Beware of Counterfeiters

With gold prices vaulting 30 percent this year pawn shops and rare coin dealers are doing a land office business ... and close behind are the bad guys.

While this year's price hike is giving honest folk who own an antique gold watch or jewelry or anyone holding real gold a shot at a windfall, it also can make them a target of counterfeiters and con men.

There are bad people out there, I'm sure of it, Max Lax, owner of the Pawn1 group of stores in Spokane, Wash., and Idaho, told the Spokane-Review. He added that the price of gold brings out gold pirates in the market.

It's America, good or bad. In good times we have people pulling Ponzi schemes. In bad, we have people scheming to buy gold on the cheap.

Up the road in North Spokane, Isaac O'Bannan, manager of Coins Plus, a coin shop and gold seller, told the newspaper he's seen the same gold chain come back three times to the store. Each time, a different owner came in convinced the chain was valuable because it had a tiny mark reading 18 karats.

I could instantly tell it was brass, since it was tarnished, and 18 karat gold will not tarnish, said O'Bannan, who took a file and removed the 18-karat mark.

It was just like counterfeit money, so it really should have been taken out of circulation.

Sellers aren't the only ones who can get hurt in today's high-priced environment; buyers can, too.

Ensuring authenticity is critical, says the Numismatic Guaranty Corp., one of the nation's two most respected gold grading services.

NGC says early silver dollars are frequently faked and the quality of these counterfeits varies from extremely crude to superb. The most common counterfeit involves changing the date of a 1804 silver half dollar so that the dates appears as 1801.

These are primarily made in Asia for sale to unsuspecting tourists, NGC says on its Web site. While counterfeit dollars are plentiful, fake half dollars are seldom seen. We did find one, however, in a submission that included several genuine half and silver dollars.

NGC recommends buyers look up the die variety of any rare coin they are considering buying in one of the many specialized references that have been written. Identifying a coin as one of these known varieties can help confirm authenticity.

Many fakes were struck from dies made by the counterfeiter and therefore do not match any known varieties. If your coin is not listed in one of these variety references, you should probably take a second look, NGC warns.

Both the Professional Coin Grading Service, the other major coin grading service, and the NGC offer certificates of authenticity for genuine rare coins.

California-based Aurum Advisors, which sells gold coins as investments, just issued a pamphlet warning potential customers to make sure they use either PCGS or NGC.

It's important for investors to feel confident when they purchase gold coins, so we felt it was important to add something to our free gold guide that shows them what they can expect to purchase before they decide to buy, said Marc Lubaszka, president of Aurum Advisors. Even if a consumer doesn't buy from us, after getting our free gold guide they will be more prepared when purchasing gold from another dealer.