Mystery and misinformation surround counterfeit coins, the mystery intensified by growing public interest in coins and the misinformation bolstered by insupportable claims of anti-coin or anti-gold spokesmen. Counterfeit coins do exist. But they are not prevalent. With U.S. copper, nickel, and silver coinage, a ratio of one counterfeit to one thousand genuine coins would be giving too much weight to the counterfeits. When it comes to U.S. gold coins, an estimate of one in one hundred is probably fairer, but that still represents a tiny minority. Most counterfeit coins are easily detected by the trained eye. The problem is that there aren't enough trained eyes!
It would take a book to detail all the nuances of counterfeit detection and to reproduce the necessary graphics. The essential concepts are best presented visually and most easily absorbed through practical experience. This article will provide an introduction to the basics of counterfeit coin detection, to be followed up through reading, seminars, and practice.
In discussing counterfeit coins, there are three basic definitions to keep in mind. Often the three categories of coins are incorrectly grouped together as counterfeits. First, an altered coin is one on which the mint mark has been changed or removed to increase its value in the numismatic market. Alternatively, two coins can be "sandwiched" together to represent a scarce coin. This is generally done by hollowing out the obverse or reverse of one coin, leaving the rim intact, and inserting that portion of a similar coin that had been ground away. Most attempts at fraud probably involve altered coins. Although it is legal to own them, it is illegal to misrepresent them as authentic if they are offered for sale.
Secondly, there is the restrike. A restrike is made officially by a government mint but is not minted in the year that it is dated. Technically the U.S. government restruck the 1964 half dollars in 1965, but it required an act of Congress to do so. The three most common restrikes are the Austrian 100 Corona, the Austrian 4 Ducat, and the Mexican 50 Peso dated 1947, all of which are currently being struck by their respective government mints. Official government restrikes are perfectly legitimate. (The commonly traded South African Krugerrand is not a restrike, as it is dated with the year in which it is made.)
The third category, the real counterfeit, is a fraudulent imitation of an official mint coin. It is not manufactured at the official government mint and may or may not have the correct weight and purity.
Counterfeit gold coins of the bullion or low-premium variety are very scarce. I have seen only one counterfeit Mexican 50 Peso gold coin, and it was very obviously bad. I have heard of counterfeit Austrian restrikes; I have neither seen or heard of counterfeit Krugerrands. Using a national coin dealer teletype network and many national conventions as a marketplace, I attempted for over a year, without success, to purchase a single example of any other counterfeit bullion coin. If counterfeit low-premium restrikes are as prevalent as some publications would have you believe, why are they so hard to find?
In the bullion-type coins, the premiums simply are too small to make counterfeiting economically justifiable. At one time the premium over intrinsic gold value of the Mexican 50 Peso restrike was in excess of 50 percent; at the present time it is 6 percent. And as soon as the gold weight is lowered, there's a difference, a visual difference—21.6 carat gold just doesn't look like 14 carat gold, at least not to the experienced eye. So, by what factor can the amount of gold be reduced? by 10 percent? Just as it is unprofitable to counterfeit $1 bills, it doesn't make any sense to counterfeit gold coins when the potential profit margin is only 20 percent to 30 percent. There have been counterfeits made from substances other than gold, but these are very crude and consequently of little concern.
Many of the primary tests used to determine the authenticity of a coin are simple ones relying on the evidence of one's senses and a little basic knowledge of coins. Frequently the novice overkills his subject. Using the 60X magnification of the microscope does not necessarily yield twice the accuracy of 30X and may, in fact, give misleading results. Just as the proper procedure, when grading a coin by comparison with an example in a grading book, is to start at the lowest grade and work up the scale, so with counterfeit detection. Look for the obvious first, and work through the procedures step by step. Not only will the results be more reliable, but a great deal of time and energy may be saved.
In one of our firm's counterfeit detection seminars, one of the examples used was a $2½ Liberty gold, correctly identified as counterfeit by a number of the participants after careful examination under the microscope. But no one noticed that the coin was a 1902-S, a nonexistent combination of date and mint mark! The last $1½ Liberty gold struck at San Francisco, or any of the branch mints, was struck in 1879, 23 years earlier. That particular coin had been created from an obverse and reverse die that didn't match, by a counterfeiter who didn't know—or didn't care.
I read recently of a coin firm that drills a hole in a sample of some incoming lots of bullion coins to ascertain their authenticity, showing with certainty that the firm does not know its business. There are enough accurate and nondestructive ways to determine the authenticity of even bullion coins that such destructive analysis is inappropriate. Imagine the response of a collector who forwarded a coin for authentication, only to be advised: "We're certain it's solid gold; we've drilled a hole in it to find out."
Eschewing both unwarranted anxiety and carelessness, let us take a practical and workable approach to coin authentication, going through each step a novice can perform to make a reasonable determination as to the genuineness of a particular coin.
EAR AND EYE TESTS
The simplest and most obvious test is to listen to the "ring" of the coin when dropped on a smooth, hard surface (preferably glass) and to compare it to that of a genuine piece. This should only be used on a coin whose value could not be impaired by damage to its rim or surfaces, that is, not on a proof coin. This test will only uncover the most obvious counterfeits.
If examining someone else's coin, allow the owner to perform the "ring" test in order to save yourself from potential wrath at your "mishandling" of his or her merchandise. If you want to remove the coin from its holder to examine it, request that the owner remove it for you. Be aware that, just as you have no experience with a particular seller, the seller has none with you and may legitimately be reluctant to remove an expensive coin from its protective case. If the dealer recognizes you as a serious buyer, however, he or she will generally have no qualms about complying with your request.
If you are purchasing a coin whose rarity depends on the combination of its date and mint mark, especially small denomination coins such as the 1909-S VDB cent or the 1916-D dime, always remove it (or have the seller remove it) from any protective case it may be in. Since most people who bother to inspect coins at all examine only the date and mint marks for potential tampering, the "sandwich" altering described earlier can easily go unnoticed. Frequently, these coins are mounted in three-layer plastic holders that hide the edge of the coin. A legitimate dealer or collector mounts coins in these holders to protect them; others mount coins in these holders to protect themselves from detection.
There is another reason for removing such a rarity from its holder, which again falls into the "obvious" category. I once attended a major convention at which a very scarce 1916-D dime in uncirculated condition was offered for sale at $500, at the time a reasonable to low price for the coin. It was mounted in a two-inch-square black plastic holder fastened with plastic screws. I did not recognize the seller and asked if I could remove the coin from its holder and inspect it. The seller said no, because I might scratch his coin, so I declined to purchase it.
Later the same day, a person I knew brought the same piece to me with the story of how he had gotten a bargain. I asked him if I could take a closer look, and he readily assented. When I opened the holder, we found a bargain indeed—a two-for-one sale—when two coins, not one, fell out of the case. Two common coins had simply been inserted, one showing the required date and the other the appropriate mint mark. The black plastic had effectively concealed the double thickness. Certainly the fastest and easiest "sandwich" I have ever seen and probably the fastest $500 the long-gone seller had ever made. This is an expensive lesson you need study only once.
Certain characteristics appear repeatedly on counterfeit coins, and only by familiarizing yourself with the qualities of genuine coins can you begin to tell the difference. Some of these characteristics can be perceived through careful visual examination in strong light, first with the naked eye and then with a good quality hand magnifier of 10X to 16X. The glass should have a large enough lens to allow easy viewing of a large portion or all of the coin.
First, note the color, especially when examining gold coins. Does it look natural? Compare it with a similar coin of known authenticity. Counterfeit gold coins will frequently appear too yellow in color when compared with genuine pieces. Since gold coins have different colors because of alloys, however, it is essential to compare two coins of the same type. You should familiarize yourself with the natural differences in the colors or shades of gold coins.
Counterfeit pieces will also have a satin or silken appearance when "flashed" in strong light. Authentic gold coins usually look rich and deep in color, although improper cleaning can change this. The mild acid solutions used to remove tarnish from coins can form a plating solution if used for more than one metal. Thus a solution used repeatedly for silver can give gold coins a pink hue if they are immersed in it too long.
Silver coins that have been altered by adding a mint mark or have been heated for any other reason may take on a dull, greyish finish, so that the coins look as if they had been dipped in wet cement and not been completely rinsed afterward. Silver counterfeits often have the same satin or silken finish as gold ones.
Another visual difference is that, generally, the gold counterfeits have shallow definition; they are poorly struck. In comparison with a genuine piece, the fine points of the counterfeit coin, especially the letters, are not clear and sharp. Again, it is important that you are comparing similar coins. Counterfeit gold coins of poorer quality cast manufacture will have an orange peel effect in the field of the coin.
The counterfeit coin will frequently show tiny imperfections in its manufacture that are best described as bubbles or pimples in the metal. These are most likely to occur in or close to the beading around the circumference of the coin. A second place to look for bubbles is within the main design, especially the low spots or recessed areas, such as the headdress on U.S. gold coins. (While most of the examples refer specifically to U.S. coins, the same principles apply to modern foreign coins.) These pimples are the most obvious and easily detected sign of a counterfeit. The hand-held glass can be used to pinpoint problem areas to be examined more closely under the microscope. After the visual inspection with the naked eye and a hand lens, regardless of its results, the next step is the microscope.
I personally use the Nikon microscope, model SMZ-2(zoom), generally with 30X magnification. The Nikon model SM-5 has the same optical quality, but lacks the ease of handling of the zoom. A good microscope will be able to provide you with at least two power settings with little adjustment of the equipment. I strongly prefer a double-eyepiece microscope for its stereo effect. The most effective range is 20X to 45X, but only on a few occasions have I found it necessary to increase the magnification to 45X in order to examine a tiny area of a coin. For a general inspection, anything stronger than 30X may obscure the detail and slow down the process.
A strong, Tensor-type lamp should be used to illuminate the coins under the microscope. Always move the coin during part of your inspection. Allow the light to reflect from the coin at many different angles by rotating it and slowly flashing it back and forth on the axis parallel to your eye. Very often the light will show much different aspects of the coin's detail at different angles of reflection. If necessary, a small lump of clay can be used to hold a coin at a particular angle for lengthy inspection.
In addition to bubbles, you should be looking for "flow lines" in the metal around the circumference. Flow lines, unlike bubbles, are the mark of a genuine, rather than a counterfeit, coin. They are actually stress marks in the metal, caused in the minting process as the metal of the coin blank is forced out from its center to the rim of the coin, where it is restrained by a collar to produce a perfectly round coin to close tolerances.
Flow lines or stress marks can be easily found on the clad coins in your pocket change. They are radial grooves or recesses in the metal flowing into the rim. They are more conspicuous in silver than in gold coins, and should appear on every genuine coin produced by the U.S. or any other government mint. Their degree of prominence will depend on the metal used, the striking pressure of the mint press, the size of the coin, and the tolerances under which it was manufactured. Probably the best example of flow lines appears on U.S. silver dollars. Study several examples of these coins before attempting to transfer the definition to gold coins, for which flow lines are normally not as conspicuous.
IS THE COIN ALL THERE?
A complete determination of the authenticity of your coin requires, in addition to the visual examination, a series of measurements, beginning with weight. We use the 311 model Ohaus scale, which is calibrated at .01 gram intervals up to just over 300 grams (approximately 10 ounces). A listing of correct weights and specifications for the most commonly traded gold coins appears in the attached chart.
Since all coins have tolerances of manufacture, a small variance in weight is permissible. In actual practice, human nature being what it is and governments what they are, tolerances on the minus side are more common than on the plus side. A standard weight is more difficult to determine for a circulated than for an uncirculated coin. An uncleaned circulated coin can even weigh more than an uncirculated coin of the same type, because of the accumulated surface dirt. This is not a hard-and-fast rule, but the possibility should be considered. Generally, any loss of metal weight due to circulation should not exceed three percent of the initial weight. This variance obviously makes authentication of circulated coins by weight alone a less viable alternative.
Specific gravity testing can be easily performed using the same Ohaus scale, along with a beaker and support that are available at a nominal cost. An accurate test can only be achieved with a perfectly clean coin, however. If a rarity is involved, it may not be advisable to clean the coin for testing. There are several professional methods of cleaning coins that will leave no evidence of the cleaning to any but the most experienced eye. To clean or not to clean is an area of controversy within the coin business and is best left to the judgment of the coin's owner.
Assuming we have a clean coin, the specific gravity test compares the weight of the coin in water with its dry weight to determine its specific gravity. Wear does not affect specific gravity; foreign matter, such as dirt, does. The specific gravity determined for the experimental coin is compared with accepted tolerances for genuine coins, providing further evidence of the specimen's authenticity, or lack thereof.
The last two tests involve the use of a T-bar caliper and a micrometer to measure the diameter and edge thickness of the coin. Since three points determine a plane, a T-bar with three points touching the edge of the coin will accurately measure its diameter. Most counterfeits are cast rather than struck, authentic coins being used as molds. Genuine coins are struck within a restraining collar and have close tolerances of diameter, but the casting method can produce a coin that contracts ever so slightly as the metal cools, causing a somewhat undersized diameter. Since counterfeiters have compensated for this, it is not an infallible test, but rather one more effective weapon in your total arsenal.
The micrometer is used to measure edge thickness. Four measurements should be taken, at the 3, 6, 9 and 12 o'clock positions on the coin. These should be averaged for comparison with standardized figures. Care must be taken in the use of the micrometer to preserve its accuracy. Too much pressure in adjusting it can lead to an incorrect measurement on the low side. The coin should not be held in the micrometer's jaws as in a vise, rather, snugness is the guideline. When not in use, the micrometer should not be closed completely; a gap opening of the jaws will help to maintain its accuracy.
Experience will sharpen your skills with the equipment described and provide a background for interpreting the results. By practicing with common coins, you can develop the necessary feel for the tools and for the coins. Another resource is the American Numismatic Association, which provides a first-class, independent authentication service at modest rates. But detection of counterfeit coins is not the whole story; for the collector and investor alike, it is far more practical to avoid counterfeits than to identify them.
CHOOSING A DEALER
Your best protection against buying counterfeit coins is the dealer with whom you are doing business. You should get to know him or her and develop a relationship of trust. This person is a valuable resource to you and can aid in your continuing education.
There are some commonsense rules to follow in assessing a dealer, yet few people take the time to think about them. How long has he or she been in business? A good policy is to deal only with people who have been in business five years or longer. There are enough coin dealers in this category that this recommendation doesn't severely limit your selection. In any expanding field, there are a lot of Johnny-come-latelys and promoters attracted by the lure of fast profits, but without the necessary knowledge and experience to protect their customers.
Secondly, is the dealer a numismatist, with the knowledge to distinguish counterfeits? A person can very honestly sell you coins that are counterfeit because of inability to tell the difference. Buying from someone who is knowledgable provides protection for you. People who operate as brokers of coins are, with few exceptions, not numismatists. Our firm is one of the exceptions.
Has the dealer taken the time to become educated on the subject of counterfeit detection? Not everyone who has been in business five years or longer has. Does the dealer have the necessary equipment to determine the authenticity of a coin? Is it used regularly, or is it dusty? I use my microscope three times a week on the average, and every day during peak times. Does the dealer know how to use the equipment, and can he explain its use to you? If learning proper coin authentication is a concern of yours, it should be of even greater concern to the dealer.
Another word of common sense—a dealer makes his livelihood from the services he offers to the public. His knowledge and time are important assets. It isn't reasonable to expect him to donate these to you without adequate compensation either in the form of a fee for his time or a commission on the coins you purchase through him.
I recall a man bringing me several U.S. $10 and $20 Liberty gold coins for authentication. I quoted him a charge of $25 for the lot, which he thought was very reasonable and which he agreed to pay. After a naked-eye inspection lasting two minutes, I advised him that they were all counterfeits. The fee, so reasonable a few moments earlier, now seemed too high to him. I explained that it took 10 years of practical experience to be able to spot quickly some counterfeits and that most weren't that easily detected. In addition, my professional reputation stood behind my opinion. A detailed analysis of each coin, if necessary, would have cost him at least $100. He subsequently became a client of our firm, and is working toward "the two minute trick," as he calls it.
Counterfeit coins have been with us ever since there were coins. Although medieval counterfeiters could actually improve on the quality of the original, their modern-day counterparts have been unable to match the finesse of mass production. And if you familiarize yourself with counterfeit detection, if you choose your dealer with care, you needn't fall prey to expensive coin "deals."
Walter Perschke, president of Numisco, Inc., and publisher/editor of the Numisco Letter, has been in the coin business since 1963. He is president and founder of the National Numismatic Network, Ltd., a unique teletype communications system used by coin and precious metals dealers. Mr. Perschke is president and manager of the only closed-end numismatic investment fund, a consultant to a Swiss bank, and a frequent speaker at investment forums and seminars. He contributes to the Guide Book of U.S. Coins and the Handbook of U.S. Coins, and he makes a weekly appearance as a guest on the WCIU-TV, Chicago, program "Ask An Expert."