In a World of Counterfeits, Is Yours the Real Thing?

Although investing in precious metals isn’t always as straight forward as we’d like, there are some steps you can take to make sure you’re getting your money’s worth. If you buy precious metals through a reputable dealer like ASI, you can trust that your metals are authentic, but what should you look for when identifying a sound purchase? Identifying counterfeits has become a lot more difficult than it used to be—and it’s more than just coins that are counterfeited.

In today’s interview, Beth Deisher, Director of Anti-Counterfeiting at the Industry Council for Tangible Assets (ICTA), discusses the history of counterfeiting, how it has evolved, what steps ICTA and other industry professionals take to prevent counterfeits from entering the market, and how you can avoid purchasing counterfeits.

Rich Checkan: How prevalent is counterfeiting in the bullion industry?

Beth Deisher: We have encountered counterfeits of virtually every country’s bullion coins, as well as counterfeits of bullion bars produced by government and private mints. Chinese counterfeiters, for example, tend to target the most well-known brands, and the higher the brand identity in the marketplace, the higher the probability of encountering a counterfeit.

Because the U.S. Mint is the world’s market leader in terms of sales of gold and silver bullion coins, its products seem to be the biggest targets. Other government producers of bullion coins and bars, such as the Royal Canadian Mint, the British Royal Mint, the Royal Australian Mint, and The Perth Mint, have become proactive in recent years and have begun using anti-counterfeiting technology in their bullion coins and bars in attempt to sidestep counterfeiters.

Rich: Everything from coins to packaging, certificates, and signatures can be counterfeited. What measures do you suggest people take to avoid counterfeited products?

Beth: The best way to avoid counterfeits is to know the characteristics of the real coin, packaging, certificate, or signature. Most buyers, especially investors, lack that kind of knowledge. Often the fakes are highly sophisticated, and it takes a knowledgeable expert to spot them. Major coin grading services such as the Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC) have experts on their staff that authenticate and grade coins.

Because the Chinese counterfeit both the holders used to encapsulate coins and the coins in them, major grading services maintain a section on their websites where one can enter the number on the holder and view an image of the real holder bearing that number and the genuine coin in the holder.

On a practical level, it is best to purchase from established companies, whether online or in a retail store where you can deal face-to-face. You can check a company’s credentials, and you can also inquire as to whether it has an authenticity guarantee regarding the products it sells.

Beware of online auctions in which individual sellers offer bullion coins at below market price or offer items “as is” with no statements about authenticity. Also, avoid meeting with individuals that have made contact via the Internet, offering to meet you at a designated location to trade their coins for your coins or bullion bars. Your coins are real, but you have no way of checking the authenticity of the coins or bars offered in exchange.

Rich: ICTA formed the Anti-Counterfeiting Task Force (ACTF) earlier this year. What kind of relationship does ICTA have with ACTF? How do they work together to address counterfeiting?

Beth: ICTA, in conjunction with the Professional Numismatists Guild and the American Numismatic Association, held an industrywide summit in August 2016, bringing together more than 60 industry leaders. Summit attendees decided ICTA was best suited to supervise the creation of a task force to deal with the threat counterfeiting poses to the entire marketplace. The Anti-Counterfeiting Task Force was formally established on January 6, 2017.

Rich: In your cover story for the Summer Issue of the Centinel, you talk about how modern technology has changed the way people counterfeit. Can you elaborate?

Beth: For centuries, coin counterfeiters worked in secret, and their enterprises were small, usually one- or two-man shops. It took artistic talent to hand-carve dies and skill to hand-strike presentable coins. The invention of the steam-powered coin press in 1833 and the U.S. Mint’s introduction of the French portrait lathe in its die making process in 1836 mechanized coin manufacturing to a new level. Counterfeiters rarely had access to the die-making equipment or production presses necessary for large-scale counterfeit coin production.

Technological changes at the beginning of the 21st century moved coin manufacturing to a new dimension. Most government mints around the world began embracing computer technology and robotics in their die-making and coin production processes. It was not a matter of simply installing and adapting modern manufacturing methods. Rather, competition —especially in the commemorative coin sector—demanded cost-effective manufacturing and innovative features in design and metallurgy.

Also in the late 20th century and early 21st century, competition among manufacturers of coin presses and other coin production equipment led to lower prices, thereby lowering the barrier to entry at the same time manufacturers were expanding their markets around the world. These changes coincided precisely with China’s transition from a planned economy to a socialist market economy.

Growth in exports during the last 30 years has led the Chinese economy, which was fueled significantly by the launch of Alibaba, the e-commerce company that entered the marketplace in 1999, to connect Chinese manufacturers—including coin counterfeiters—to buyers worldwide. In April 2016, Alibaba.com became the world’s largest retailer and one of the largest Internet companies, reaching into 200 countries.

Counterfeiters in the 19th and 20th centuries rarely had access to more than one or two coining presses. Now, Chinese counterfeiters brazenly show images of workers operating rows and rows of modern die making equipment, coin blanking machines, and coining presses on their websites. Because China does not recognize trademark infringement and copyright laws, Chinese “entrepreneurs” operate openly and at will “replicating” (their euphemism for counterfeiting) virtually every country’s coins.

Rich: How prevalent are foreign counterfeiters and what kind of impact do they have on the marketplace?

Beth: The majority (estimated 90% to 95%) of counterfeit coins and bars in the U.S. market today were manufactured in China. A few, primarily fake modern commemoratives, are believed to have been made in Russia. Some fake ancient coins are being produced in the Middle East. So far, the impact on the U.S. market is modest, but the volume of counterfeits emanating from China continues to grow.

Rich: Can you discuss the influx of high-grade counterfeit coins from China? What efforts has ICTA taken to prevent these coins from entering the marketplace?

Beth: During the past three years, we have seen the number of highly deceptive counterfeit coins—particularly silver and gold bullion—from China increase exponentially. ICTA, through the ACTF, has developed working relationships with U.S. Customs and Border Protection and other federal law enforcement agencies.

Our objective is to help identify and stop counterfeit coins and precious metal bars from entering the country. At the same time, we also focus on the fakes that have already entered the United States. We are working to mobilize U.S. law enforcement at all levels to investigate and prosecute those who are buying and selling counterfeit coins, bars, and paper money within our borders.

Rich: What should I do if one of my coins is a counterfeit?

Beth: It is illegal to possess (own) or pass (sell) a counterfeit coin. If you think you may have unwittingly purchased or obtained a counterfeit coin, you should first have it examined by an expert or submit it to a third-party professional grading service to determine its status.

If it is determined to be a counterfeit, it should be turned over to the United States Secret Service. Often local or state law enforcement officials will assist in contacting the Secret Service. You can also use Google or other search engines to find the nearest Secret Service field office. Be sure to retain any receipts and or information about where or from whom you purchased the counterfeit(s). Law enforcement authorities will need that information to investigate.

Rich: How does ACTF work with law enforcement to identify counterfeits?

Beth: ACTF monitors and identifies counterfeits sold online through various websites. It also receives information from dealers and individuals across the country who report those attempting to sell counterfeit coins to them.

The primary mission of ACTF is to educate law enforcement authorities and policy makers and make them aware of the rising threat of counterfeiting. Moreover, ACTF seeks to mobilize law enforcement to attack counterfeiters where they are most vulnerable, and provide expertise and other resources in the investigation and prosecution of counterfeiters and those involved at all levels of their distribution networks.

ACTF has established an Experts Network Group comprised of more than 80 knowledgeable volunteers across the country who work with law enforcement at all levels to identify counterfeits seized during investigations.

Rich: ACTF receives funding entirely through donations. Can you discuss how important these donations are to anti-counterfeiting efforts?

Beth: The ACTF’s work is funded entirely through donations. Our working budget for 2017 is $210,000. To date, donations total $138,000. To continue operating and expanding our scope of work, we will need $300,000 for 2018. For information about donating to support the work of the task force, visit www.ictaonline.org/actf or contact Beth Deisher at 567-202-1795 or via email. You can make checks payable to ICTA Anti-Counterfeiting, P.O. Box 237, Dacula, GA 30019.

Navigate a Sea of Counterfeits

Counterfeiting is an incredibly challenging arena to navigate, and oftentimes, counterfeited precious metals products can look almost identical to the real thing. Because of this, it is absolutely necessary you purchase your precious metals only from trusted dealers, like ASI, whose products undergo an extensive verification process. For example, all of the metals you purchase through ASI arrive either directly from government or private mints or graded from professional coin grading services like PCGS and NGC. In most cases, these products are tested again before you receive them in person or in your storage account.

As an ICTA member, ASI is in compliance with all of the laws, tax requirements, and regulations enforced by ICTA. If you have any additional questions about counterfeited products, please call us at 800-831-0007 or email us.