Silver Stackers on Alert as Sophisticated Fakes Hit Market

As if physical silver stackers didn’t have enough to worry about these days, with Cartel manipulation and all, now we are seeing increasing reports of sophisticated fake silver coins and bars hitting the market. I recently went through a batch of about 1,000 Morgan Silver dollars and spotted about 30 fakes out of that batch. The fake Morgans were fairly easy to spot, all them were key date or Carson City issues and all were at least 5 grams underweight. Given how easy they were to indentify, it wasn't much of a concern.

However, the sophistication of the counterfeiters has been increasing in recent years and their shift in focus from high value numismatic coins to low value bullion is raising alarm bells throughout the industry. OzCopper has been doing some outstanding work acquiring some of these high quality fakes from China and exposing them on their website and on Youtube videos.

Their most recent video shows some fake silver Canadian Maple Leafs that they acquired for $2 each in China. The fakes are the best we have seen yet. The weight is only slightly under by about 0.5 grams, which wouldn’t be noticeable unless put on a scale. Furthermore, the details of the coins are quite good with the flaws being in the details of the leaf which wouldn’t be noticed on a quick inspection (be sure to visit OzCopper’s site for pictures of these details).


The good thing is that although the fake Maples are fairly good, they are easily identified with close inspection. Nevertheless, investors dealing in physical silver must dramatically increase their diligence when buying physical and remain a step ahead of the increasingly sophisticated counterfeiters.

16 comments:

Kid Dynamite said...

I can't wait to hear the Silver Mafia try to spin this bullishly - make no mistake - this is terrible news. Counterfeits make prospective investors run away from the market, ie, not deal with the risk of getting ripped off. It is indisputably negative.

GM Jenkins said...

It is indisputably negative in the short term. If this becomes a more widely known phenomenon, it might push people into buying the more numismatic coins.

If any reader knows enough chemistry/engineering to get a patent for a quick, harmless, affordable assay of actual silver vs. fake silver, i think if/ when this bull market gains steam, there's a ton of money to be made there.

Brian O'Flanagan said...

that's one of the reasons why gold is money and silver is not. Gold's density of 19.282 g/cm3 is one of the highest of non radioactive and/or malleable metals. As such, it is extremely difficult to fake a gold coin without obviously failing a density test. In fact, I have yet to hear of any fake gold coins in the market that were not extremely underweight or oversized.

However, silver's density is only 10.5 g/cm3, actually lower than lead, at 11.342 g/cm3. As such, it is much easier to make a fake silver coin that passes the density test. Thus, physical silver traders have to be much more diligent in watching out for counterfeits than those trading gold.

GM, the first test would be density. If it passes density, one could acid test the exterior of the coin. However, if it were plated it would still pass. The only way to know for sure would be to cut it in half and acid test the core. That said, I believe there are some devices that use x-ray or ultrasonic technology to analyze the metal, but that would be cost prohibitive for most people.

John Fry said...

http://www.fisch.co.za/operation.htm#fakesilver

Brian O'Flanagan said...

John, thanks for the link. The Fisch is a fine device, but it is nothing more than a density test. A sophisticated silver fake would be able to pass that test.

Aaron Krowne said...

probably the quickest, least destructive, most reliable test would be a diamagnetic test. Silver is the highest diamagnetic material besides pyrolitic carbon (and has a considerably different diamagnetic level).

Setting this up would be as simple as putting a rare earth magnet on a needle gauge a fixed distance to the coin being tested, and then compare the deflection to a known good silver coin.

The Big Setup said...

Tungsten gold, fake morgans, they've been doing it for years..no news here. Sorry. Chinese have been faking everything from golf clubs to purses.

GM Jenkins said...

Good stuff, Aaron, thanks. What would stop an entrepreneur from creating such a diamagnetism-based touchstone device? Perhaps the "rare earth magnet" would be the cost-prohibitive part that Brian mentioned?

Very interesting website btw

MICHAEL said...

If a silver coin is faked it would not have that distinctive ring to it. That's why the finest bells are made from silver. Place a silver coin balanced on the tip of your finger and strike it with a pencil. That sound would be pretty hard to duplicate.

GM Jenkins said...

@The Big Setup, I agree in the long term this is probably a non-issue, since any cost of checking for counterfeits would just be absorbed into the price. Still, it would suck to buy a sealed monster box full of zinc.

GM Jenkins said...

@MICHAEL, I think a silve rplated coin would probably lose that awesome ping, but what about a 75% alloy or something? Coudl that be easily discerned from a ping (assuming you dont have perfect listening conditions?) Also, what about stuff you don't want to take out of its numismatic case, etc.

I say if counterfeiting becomes more widely practiced/feared, it could lead to a lot of the NGC rated stuff rising in value

MICHAEL said...

Does anybody out there have a fake silver coin that they could do a "ping" test? I can't imagine any fake coin passing. Counterfeit numismatics is another story if it is pure silver. But if they are going to fake a numismatic it would most likely be a copy of a very expensive coin. As nanotechnology evolves holders of expensive numismatics might be screwed.

Brian O'Flanagan said...

While silver fakes are going up, the number of counterfeit Euro bankotes are going down! Even the counterfeiters are losing faith in fiat.

http://www.ecb.europa.eu/press/pr/date/2012/html/pr120116.en.html

Brian O'Flanagan said...

@ GM - regarding NGC, the Chinese are faking them too:

http://www.ngccoin.com/news/viewarticle.aspx?IDArticle=954

@ Michael - I think fake silver generally would not pass the "ping" test. It's just that its a subjective test that requires a lot of experience to master.

MICHAEL said...

I think anybody who is not tone deaf would find it pretty easy. You don't have a thing if you don't have that ping.

Larry said...

The first test for fake silver is not density, it is simple magnetics.

The Chinese fake silver Chinese Qing Dynasty and early Republican coins i have will all stick to a small magnet, even the ones that really look good.

This little test can be unobtrusively done with a modicum of slight of hand at coin shops and coin shows.