Beware
of fake gold being sold on eBay. I received this email from a reader
yesterday:
Hi FOFOA,
I purchase the vast majority of my gold coins and (in-assay only) bars on
eBay. I have had much success. eBay buyer protection
has saved my butt on occasion, not just for gold purchases. I authenticate
every coin I buy. For every purchase, regardless of source, I use a Fisch for Eagles & Krugerrands
and a jeweler's scale and calipers for other coins, plus a detailed visual
comparison to known-genuine coins (and bars). Anyway...
About a year ago I purchased a 1/10 oz. gold Philharmonic (10 euro). It was
an obvious counterfeit. When I reported this to eBay it stirred up a brief
hornet's nest: there were other buyers who got taken...they actually traced
discovery back to me and thanked me. I remember someone asked you, a year or
so ago, whether forgers would consider counterfeiting small gold coins.
Answer: Yup!
But what happened earlier this week has, I believe, the potential to
compromise the integrity of the slabbed coins
certified by the major numismatic coin grading companies. I, for one, will
never again knowingly purchase a slabbed coin. If I
can't personally authenticate the actual coin (per the above) I don't want
it. I purchased two generic 1/4 Krugerrands from a
seller with 100% positive feedback (mostly small, non-gold transactions). The
seller also sold at least 7 other 1/4 Krugerrands
(I watched). The seller stated the coins were located in California. A few
days later I received the tracking information: the shipment originated in
Shenzhen, China. Hmmm! On Monday (12/2) I received the coins. They were NGC slabbed:
http://www.ngccoin.com/certlookup/index.aspx?CertNumber=2771828-004
http://www.ngccoin.com/certlookup/index.aspx?CertNumber=3676849-005
Wow! NGC certified proof gold coins a great price! To the casual observer,
everything would look fine. Except, they are counterfeits! The obverse and
reverse sides are supposed to be perfectly aligned. These coins were offset
about 20 degrees (I could tell based on prong locations). Ooops!
Then I examined both coins under 5X magnification next to a known-genuine 1/4
Krugerrand: there were many engraving quality
discrepancies, especially with the border engraving shapes and overall
lettering crispness and shapes. Bummer! I also compared the NGC slab to the
website photo and another NGC slabbed coin I owned.
Results: the slab was either stolen or (more likely) an incredibly accurate
forgery, including holograms. I could not discern any defects whatsoever.
Very disturbing.
I then 'opened a case' with eBay buyer protection for both coins, describing
what I had found, including the above links to the NGC website. That's when
things started to get really interesting! The next day I received a message
(for each coin) from eBay stating that the seller had agreed to provide a
full refund when I returned the coins. Then, within an hour, I received
another message (for each coin) from eBay stating that I would immediately
receive a full refund with no strings attached, which was done. Then
something happened that I have never experienced with eBay before. Everything
about the purchases (purchase history and seller account information)
completely disappeared (poof!), as if the transaction had never occurred and
the seller never existed. Bizarre! So, as of now I have possession of two
forged NGC proof 1/4 Krugerrands until someone (?)
tells me what to do with them. In the meantime I will play some show-and-tell
guessing games with friends.
FOFOA, please warn your readers that buying certified slabbed
coins no longer assures authenticity. Apparently the Chinese have started
producing high-quality forgeries of the coins and slabs.
Take care. Merry Christmas and a happy and golden New Year.
God bless you and thank you for your efforts,
XXXXX
I asked him a few questions and also if he could take pictures of the actual
coins he received. Here are the pictures, front and back, which you can
compare to the photos on the NGC website:
The most obvious difference is that the coins seem to have shifted
orientation inside the fitting, which shouldn't happen. But more remarkably,
it seems that the reverse side of the coins shifted more than the obverse. Imagine that!
And if you look closely at the labels, they are clearly not the same labels
as in the pictures on the NGC website. Look at where the printing intersects
the background watermark. Notice how the P on the real one just butts up
against the scale bowl, and on the fake one it overlaps the bowl. The M on
the real one rests on the inside of the bowl, and on the fake it rest on the
edge of the rim. Above the KR on the real one, there is a gap between the KR
and the scale arm. On the fake there is no gap. And look at where the point
of the 2 intersects the circle on the left.
Here is how he answered a few of my questions:
Were they advertised as slabbed? Did he include a
picture of them?
"They were not advertised as slabbed. Just a generic (obverse) picture, which I can no
longer access. I was surprised and very briefly (very briefly!) pleased that
that they were slabbed...I paid $319 for each
(including S&H). He had listed 3 at that BIN price; one had sold, so I
bought the other two. He advertised later coins (3 at a time) at $329 BIN. I
tried to buy more, but for (again) some strange reason I never encountered
before on eBay, I was not allowed to buy any more for at least 10 days...the
message said only a single purchase of up to 3 coins/buyer allowed per 10 days.
Very strange."
Was the 3 coin limit imposed by the seller or by eBay? And was the limit
apparent before you bought your first coin, or only when you tried to buy
more?
"I don't know who imposed it or how. I did not
know about the limit until I tried to make the second purchase (I tried again
over several days to see it it was
real...yup.)"
Did the seller appear to be an individual or a business?
"The seller is an individual (I even have his
name & address in California). I have not tried to contact him. I don't
know what would happen if I did. I'll let eBay worry about him."
What advice would you offer for people shopping for gold on eBay?
"My advice for buying coins
from anyone, not just on eBay...immediately authenticate your
purchases like I described earlier. For eBay, 'open a case' with Buyer
Protection immediately for any perceived irregularities. Stay clear of slabbed coins unless you have the necessary expertise to
evaluate them, since they cannot be weighed and measured.
eBay is quite diligent about tracking down
forgeries, especially with regard to precious metals. I had several
discussions with their precious metals fraud team after I discovered the fake
1/10 Philharmonic I told you about. They traced all the eBay purchases of
that batch of coins (~200; some were resold several times) back to the
original seller, shut down open listings, and contacted buyers. I think
everyone got their money back. As I said, buyers traced discovery back to me
and I got thank you's for
identifying the fakes. What really surprises me is that so many buyers didn't
realize the coins were poor quality fakes...they only weighed 2.4 grams.
Scary."
I have always advised people against buying gold on eBay, and I have never
done so myself. Stories about fakes originating in China and sold on eBay
have been around for years. My advice is to buy your gold from a reputable
dealer. If possible, I prefer to buy in person from a local dealer who has
been in business for a long time, but I have also had good experiences with
APMEX.
I also think that coin shows are a good place to buy bullion coins. I can
usually negotiate a great deal, often better than what's offered online, and
meet lots of local dealers at the same time. It's also an easy way to swap
your silver for gold! ;D Here are a couple of websites to help you find coin
shows scheduled in your area:
http://www.numismaster.com/ta/inside_numis.jsp?page=CoinShowsCalendar
http://www.coinshows.com/
As for slabbed and graded coins, I prefer to avoid them, for precisely the
reasons above. I do have a few, but only because that was all
my local dealer had at the time, and he sold them to me at the bullion
price.
Sincerely,
FOFOA
