It’s every gold owner’s biggest fear—their gold is fake.
U.S. Money Reserve is here to equip you with the information you need to help make sure that doesn’t happen to you, no matter where you choose to buy gold. Here are six tips to help prevent you from being victimized by a gold scam.
Tips for Avoiding Fake Gold
1. Know the source
Not all companies sell official legal-tender precious metals that have been minted at the U.S. Mint or other government minting institutions. U.S. Money Reserve does. The U.S. Mint is a gold standard, if you will, for producing legal-tender coins. The Perth Mint of Australia, the Austrian Mint, the Royal Canadian Mint, and the Shenyang Mint are some other trusted minting facilities around the world.
Buying gold coins or bars that were minted at a trusted facility can help eliminate many concerns. Buying these gold products from an established, well-known company can help even more.
If you buy from a private seller—who likely won’t have the qualifications or connections of an established distributor—check around before you buy a single piece of gold. Ask for recommendations from friends, relatives, and colleagues—and also read the seller’s online reviews.
When you’ve found a company you’re interested in working with, contact them and consider the following:
- How easy is it to contact the company?
- Does the representative take the time to get to know you and understand your financial goals?
- Do you feel like the representative is educating you? Or are they pushing you to buy before you’re ready?
- How long has the company been in business?
- Does the company have a positive online reputation?
The bottom line: Know who you’re buying from and where the gold coins and bars were minted before you spend your hard-earned money. And beware if a deal sounds too good to be true. Such deals could be fraudulent.
2. Size things up
When it comes to gold bullion coins, familiarize yourself with a coin’s weight, size, and inscriptions.
For example, popular 24-karat coins weigh precisely one troy ounce each. Coins like the 22-karat American Gold Eagle and Gold Krugerrand weigh more than one troy ounce because they’re made with alloys.
If you’re buying from a private party, be sure to weigh a coin before handing over your money. If it is heavier or lighter than it should be, that could mean the coin is a phony.
Diameter and thickness are two more things to watch for when you buy a gold coin from a local source. This applies mostly to coins that are minted by governments, as these coins come in standard sizes. Be sure to find out the diameter and thickness of a government-minted coin before you head to a local dealer. The specifications for government-minted coins can easily be found online.
If a coin comes in an unusual size, it’s probably not a coin at all. It’s likely a round. No round can have the exact same diameter, thickness, and mass as a legal-tender coin. Size regulations help prevent counterfeiting and make it harder to defraud coin-operated technologies. Regulations can also lead to some unusual weights, like 1/20-ounce, 2-ounce, 5-ounce, and 10-ounce rounds.
Beyond a gold coin’s size, look at the inscriptions.
For instance, the word “LIBERTY” and the year of minting appear on the front of the immensely popular Gold American Eagle Coin. On the back are “UNITED STATES OF AMERICA,” “E PLURIBUS UNUM,” and “IN GOD WE TRUST.” If a coin you are looking at buying has imperfect lettering or numbering, or if the words and numbers don’t match what’s reported online by the minting facility, those may be signs of a fake coin.
3. Examine the registration number
When you’re considering the purchase of a gold coin, find the registration number (if the coin is certified or graded). If the coin’s plastic packaging displays a registration number from either the Professional Coin Grading Service (PCGS) or Numismatic Guaranty Corp. (NGC), then it’s been deemed authentic.
4. Study the mint markings
When buying a gold bar, be sure to identify the mint markings. These include:
- Mint logo or “mark”
- Indication of purity
- Indication of weight
- Serial numbers (only with some bars)
If these elements are missing or don’t look right, you could very well be dealing with a fake bar. Our blog post on how to buy gold bars includes helpful information for “reading” gold bars.
5. Perform the magnet test
Gold (.999 fine) is not magnetic. Fake gold is, though.
Using a strong magnet, you can test gold to see whether it’s legitimate or not. If a magnet is attracted to what you’ve been told is a gold bar or coin, then it’s not .999 fine gold (or 99.9-percent pure).
6. Pay attention to price
A reputable seller will almost never offer a gold bar or coin obscenely below its market price, known as the spot price. So if the spot price of gold is $1,400 per ounce but a dealer is promoting a gold bar for $500 per ounce, you want to do your research on both the product and the seller before making a move. Rushing into a purchase could mean you get ripped off.
Buy government-issued gold coins from U.S. Money Reserve. Many of our gold coins are designated official legal tender and are guaranteed for their gold content, weight, and purity. Shop precious metals online or call 1-844-307-1589 to speak with an Account Executive today.