A Lesson from History - Counterfeit Gold
"It may be safely stated that the art, as pursued in the United States, is without parallel, and that without vaunt or hyperbole, we can 'beat the world' on this our national 'specialtie'- counterfeiting." (An anonymous writer in 1863).
The detection of fakes was a serious business as the buying power of even a minor coin was great. The businessman of the time depended on a variety of checks, plus personal observation, to determine if the offered coin was genuine. These checks included spitting on the coin, or scraping it and then rubbing it against the short hairs on his head to make the base metal in a counterfeit show through. The coin was also dropped on a hard surface-a counterfeit having a different 'ring' to a genuine coin. Considering these methods, it is not surprising that the fake detector soon became as common in business as the electric calculator is today. The Gold Prohibition Act of 1934 calling for the confiscation of all gold coins, except those considered 'rare', marked the disappearance of the fake coin detector.
The money in everyday use changed from coins of intrinsic value such as gold, silver, and copper to paper, coins of the cheaper metals and plastic cards. The low buying power of everyday metal money eliminated the danger of counterfeiting and the lesson of history has been forgotten by many.
The metal money counterfeiter has not gone away and neither has his target changed: It is still the coins of high intrinsic value and buying power. These are the gold bullion coins owned by an estimated 5 million Americans. The risks to investors are great: He or she mostly knows little about gold coins (how often have you handled a gold coin?), and the quality of the fakes has improved tremendously. Counterfeiters, using modern technology, are able to produce fakes visually identical to genuine coins. Newspapers report of dealers, jewelers, and bankers all being fooled by good quality fakes.
No honest dealer wants to sell you a fake. But he can make a mistake. Don't be part of someone else's mistake-check every coin you buy. After all, who can look after you better than yourself?
First published in “The Financial Security Digest”, August/September 1983. P.O. Box 1928. Cocoa. FL 32922