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New Push to Combat Counterfeit Bullion
The scourge of counterfeit bullion coins and bars, which have become increasingly sophisticated in recent years, has long plagued the numismatic industry.
The issue has received renewed attention in recent months due to a combination of several well-publicized incidents of counterfeit bullion sold in North America as well as a push by members of the U.S. Congress to get the U.S. Mint and another government agencies to devote greater resources and attention to this problem.
In October, a jeweler in Ottawa, Canada purchased a 1 oz. gold bar with the markings of a product from the Royal Canadian Mint from a local branch of the Royal Bank of Canada that turned out to be fake.
After tests were done on the bar, it was determined that it contained no gold. In the past, gold bars that turned out to be made of tungsten have turned up many times.
One of the reasons the incident received press attention is that the RCM is considered the world’s leading Mint with respect to anti-counterfeit security measures on its coins and bars. This Mint’s silver and gold Maple Leaf coins and bars of the same metals have had their security features upgraded in the past couple of years to include electronically-recognizable materials and digital signatures.
A growing related problem is that of fake U.S. Mint bullion gold coins also often made of tungsten, which has a density similar to that of gold. Many of these counterfeit coins originate from China and then make their way into the U.S. market.
Letter from Congress
At the end of October, two members of congress, Frank Lucas (who is an avid collector and someone with extensive knowledge of numismatic issues) and Alex Mooney, sent a letter to the acting top official at the Mint, David Motl, and the Director of the U.S. Secret Service, Randolf Alles, about “the growing problem of high-quality counterfeits of U.S. precious metal coins entering the country from China and elsewhere.”
In particular, they requested information about the nature and quantity of complaints and investigations about counterfeit U.S. coins made of gold, silver and platinum within the past two years; whether the U.S. Mint has studied the extensive anti-counterfeiting measures implemented by other world mints, especially the RCM and whether the Mint plans to implement similar measures on its own products; what programs are in place to protect the integrity of U.S. coins made of gold, silver, platinum and palladium; and the expected roles of the Secret Service, U.S. Customs and Border Enforcement, and other federal agencies to detect and investigate counterfeit U.S. precious metal coins as well as whether these agencies are coordinating their efforts with the Mint.
Along with their October 27 letter, these members of congress sent a fake 1995 American Gold Eagle coin made of tungsten.
In addition, just days before the letter was sent David J. Ryder, the nominee to become the Director of the U.S. Mint, was asked about this issue during his confirmation hearing with the Senate Banking, Housing, and Urban Affairs Committee. He responded that efforts to deal with counterfeit U.S. Mint products would be his top priority as director.
In the 25 years since Ryder served as Mint director during the administration of George H.W. Bush, he has worked in the private sector for firms that develop measures to prevent the counterfeiting of coins and paper money, including the development by the Royal Mint in the UK of its current 1-pound coin.
Anti-Counterfeiting Task Force
Other key players on the issue include former Coin World editor Beth Deisher, who is currently director of anti-counterfeiting for the Industry Council for Tangible Assets’ Anti-Counterfeiting Task Force.
Ms. Desiher has established a dialogue with members of the Secret Service and other agencies on these issues, which includes helping to educate them about how to identify counterfeits. For example, it turns out that representatives from these agencies did not know that an American Gold Eagle is worth the spot value of an ounce of gold, rather than its $50 face value.
The task force that Ms. Desiher heads has been working with state, federal, and local law enforcements to investigate and prosecute counterfeiters, but it has been hampered by the inexperience of the Secret Service, whose main duty is to protect the president, in this area. In addition, the Secret Service does not open counterfeit investigations unless the face value of the counterfeit material exceeds $100,000. But using face value is misleading since it does not correspond to the spot value of the items, if they were authentic.
In a recent interview with Kitco, Ms. Deisher described the problem of counterfeit coins and bars as massive and that her task force recently helped to identify and stop a recent large shipment of such items at the U.S. border. She also stressed the importance of educating buyers and said the U.S. Mint has been slow to implement measures to deter counterfeiting, especially compared to the RCM and Perth Mint.
The American Numismatic Association and the grading companies, including especially NGC, have also been developing tools to assist buyers and collectors in identifying counterfeits such as this section of the NGC website: https://www.ngccoin.com/resources/counterfeit-detection/
There is no doubt that the problem of counterfeit bullion, as well as the related matter of counterfeit numismatic products, including those in counterfeit grading holders, will be around for a long time and will take a concerted effort by all parties in order to try to bring the issue under control.
It is especially important for the U.S. Mint to address this issue with enhanced security measures and that it coordinate its efforts with other agencies.
Buyers are often reminded that since they typically have neither the expertise, nor the technology, to identify counterfeits, it is highly advisable to purchase from major, established firms like ModernCoinMart.
||Louis is an award-winning numismatic journalist and writer specializing on modern coins. He has been writing a weekly column for CoinWeek since May 2011 called “The Coin Analyst,” which focuses primarily on modern U.S. and world coins and developments at major world mints. In August 2015 he received the Numismatic Literary Guild’s award for Best Website Column for “The Coin Analyst.” He is also a contributor to several magazines, including Coin World, where he writes a bimonthly feature;The Numismatist, the American Numismatic Association’s monthly publication, where he writes a monthly column on modern world coins; and American Hard Assets. He began writing about coins in 2009. He is a founding member of the Modern Coin Forum hosted by ModernCoinMart and has written articles for MCM since 2014. He has collected classic and modern U.S. and world coins since he was about 10 and first joined the ANA in the 1970’s. He was previously a congressional relations specialist and policy analyst at the Congressional Research Service of the Library of Congress and a syndicated columnist and news analyst on international politics and national security for a wide variety of publications. He has been writing professionally since the early 1980s.|