How Big Is The Rare Coin Counterfeiting Problem?

by Jeff Garrett  posted on Numismatic Guaranty Corporation

The issue of counterfeit coins has been around for a very long time.

For years, the numismatic industry has dealt effectively with the problem of counterfeit rare coins. Just to be clear, the issue of counterfeit coins has been around for a very long time. You can read numismatic journals from the 19th century and realize that collectors were dealing with the problem even then. One interesting case involved the extremely rare 1822 Half Eagle. An example was offered in the 1873 sale of the famous Parmelee Collection. The coin was sold and later returned after it was determined that the date had been altered. Several examples of the rare 1804 Bust Dollar that turned up in the late 1800s were also determined to be counterfeits. As long as collectors have been willing to pay a premium for rare coins, there have been unscrupulous individuals trying to take advantage of the unknowing.

omega counterfeit How Big Is The Rare Coin Counterfeiting Problem?In the late 1970s I was working for a large coin company in the Tampa Bay area. My primary job was to buy rare coins. I would travel to local shows, coin shops and just about anywhere coins could be found. This was a great experience for me and my knowledge of rare coins grew quickly from having the opportunity to handle so many coins. One day my boss asked me to make a buying roadtrip through several southern states. This was very exciting to me and I was on my way. I traveled with a friend stopping at every coin shop we could find in Tennessee, Georgia, South Carolina and Florida.

I probably spent around $20,000 in two weeks. I was very proud of my new purchases and could not wait to show my boss how smart I was. I can still remember the shock and disappointment of finding out that most of the United States gold coins that had been purchased were counterfeit. Nearly all had been paid for in cash and returning them was not an option. It is often said that “hard learned” lessons are the best. In my case this was very true. I became determined to become an expert on counterfeit gold coins.

fake omega 20 How Big Is The Rare Coin Counterfeiting Problem?In the 1970s and 1980s, counterfeit gold coins were very common. It was said that many of the coins originated in Lebanon. How anyone knew this is beyond me, but these coins still show up in coin shops around the country when an estate is brought in for appraisal. But now, most experienced dealers can determine if these coins are genuine or not.

Other than large quantities of counterfeit gold coins that were circulating in the 1970s, the biggest issue for most collectors has been encountering altered dates and mintmarks. These coins can be very deceptive as the workmanship on some of the coins is astounding. Thousands of fake 1932–D and 1932–S Quarters, 1916–D Dimes and 1909–S VDB Cents have been created over the years. Luckily, collectors do not have to rely on their eyesight to safely buy one of these coins. Third-party certification has virtually eliminated the risk of buying these coins. NGC knows all of the tell–tale signs for these counterfeits and has the proper equipment to determine if a coin is genuine.

When people bring collections to my shop with any key date coins, they are told that the coins will need to be certified before I can make an offer. I explain to them that the coin must be certified before it is offered in the resale market, and that I will be able to make a much higher offer once certified by NGC. This usually does the trick and off they go.

The above paragraphs deal with the counterfeit rare coins that have been lingering about the rare coin market for years. Now let us address the newest threat to numismatics: Chinese counterfeits. For years these coins have trickled into the United States marketplace. Some were brought back by tourists visiting the Far East, and others showed up randomly at flea markets. Recently, this trickle has become a flood and created a real problem for the industry. Every week someone calls our offices with an accumulation of Chinese counterfeit coins.

fake morgan How Big Is The Rare Coin Counterfeiting Problem?Silver Dollars seem to be a favorite for the counterfeiters. This is probably because many naïve buyers know that the coins they are buying might not be real, but that at least the coins are made of silver and have some intrinsic value. Big mistake! These coins are often made from some sort of base metal and have virtually no value. I have seen this scenario play out dozens of times in my office alone. It probably occurs around the country many times everyday. People who should know better are lured into thinking they have found a bargain. Luckily, the vast majority of the Chinese counterfeits are somewhat crude and easily spotted by anyone with the most basic numismatic knowledge.

The proliferation of Chinese counterfeits can be attributed to several factors and developments. The Internet has made the distribution of these coins much easier than in the past. Until recently, eBay was a prime source and pipeline for the coins entering the country. Many of the larger counterfeit operations in China actually operated websites with dozens of issues for sale. The coins were shown with the word “COPY” stamped on each coin. When the coins were delivered, however, they lacked this required stamp.

eBay has changed their rules and now do not permit any copies or counterfeits to be listed. This has been a tremendous help, and eBay is to be complimented on making these changes to protect the hobby.

fake 250 gold How Big Is The Rare Coin Counterfeiting Problem?I wish I could report that the changes eBay instituted has eliminated counterfeits in the marketplace. Unfortunately, this is not true. In addition to the above mentioned counterfeits, which are somewhat crude, there have been some well made copies seen in recent years. These are substantially superior than the mass produced Morgan Silver Dollars normally encountered. Many are of scarce or rare dates and the quality of workmanship is extraordinary. The coins become even more dangerous when mixed with genuine coins and sold or offered under less than suspicious circumstances.

The Chinese counterfeiters have begun placing the coins in fake holders. The most commonly seen fakes are Silver Dollars. The counterfeiters seem to prefer PCGS holders. I was recently offered a PCGS MS 63 1893–S Silver Dollar by an Atlanta dealer. After much discussion, an offer was made for the coin. Unfortunately, the deal never materialized, as it was determined by the Atlanta dealer that the coin was a counterfeit. These fake Silver Dollars seem to be the biggest counterfeit problem facing numismatics at the moment. I know a few dealers that have been trapped by these devious fakes.

Let me summarize the most common types of counterfeits a collector or dealer might encounter:

Counterfeit Gold Coins

Usually seen when an old collection from the 1960s or 1970s is sold. Most of these are made of gold, but the metal content is uncertain.

Altered Dates And Added Mintmarks

These are very common on 1909–S VDB Cents and 1916–D Dimes. Any uncertified coin should be suspect. Other frequently seen issues include 1932–D and S Washington Quarters, and 1914–D Cents.

Replicas

In the past, many Colonial and Territorial issues were struck as copies. Common issues include Continental Dollars and Blake and Company Double Eagles. Some have the word COPY stamped on the coins, but others do not. Most are of very poor quality and should not cause trouble for anyone with even modest experience.

Chinese Counterfeits

These have been a rampant problem and caution should be used when buying any uncertified coin. If the circumstances seem unusual (the coin is way too cheap), have the certification verified. NGC has a great tool for this on their website.

Extremely Rare Coins

Sometimes crafty individuals will choose an extreme rarity and attempt to commit fraud by counterfeiting the coin. A few months ago a non-numismatic auction house in Atlanta announced the discovery of a previously unknown 1870-S Three Dollar Gold. The coin was accompanied by original documents from the era. The coin was quickly panned by experts as a fake and was withdrawn from the auction sale. I have seen examples of the very rare 1927–D Double Eagle offered that turned out to be fake as well. Probably the most faked rare coin of all time is the 1943 Copper Cent. I have seen dozens of these over the years!

How do you protect yourself from buying a counterfeit?

The best advice that I give clients and collectors is to never buy a coin that cannot be returned. No matter how temping the bargain, it is probably a trap! Buying only certified coins  is great protection, but knowing that you can return something if there is a problem is your safest move. Most expert rare coin dealers do not have much trouble with counterfeits because of years of experience. Use their knowledge to your advantage.

Recently the Secret Service has become much more active in looking at the coin counterfeiting problem. Last year, they contacted me about ideas on how to attack the situation. They have many experts on counterfeit currency, but limited knowledge with coins. They’ve known of the problem for years, but were not diligent enough in dealing with it. The Secret Service has made several arrests in recent months and their efforts were at least partially responsible for the eBay changes. The government knows they cannot arrest everyone in China or even the shady individuals in the United States selling them. They can, however, make high profile arrests and attempt to punish those involved to the fullest extent of the law. At least in the future, the bad guys know there might be serious consequences for their actions.

In general, the counterfeit coin problem is real and a danger to our hobby. Collectors can and should protect themselves by dealing with reputable dealers. NGC spends a tremendous amount of effort staying on top of the problem as well. Best advice: Buy certified coins from someone you trust!!!

Jeff Garrett Biography

Jeff Garrett began collecting coins in 1969, when a family friend gave him a Lincoln cent board. Since then, coins have been the focus of his life. Growing up in the Tampa Bay area in Clearwater, Florida, Garrett became very active in several local clubs, serving as a junior officer of the Clearwater Coin Club in the 1970s. He was mentored at an early age by many of the area’s dealers, among them Ed French and Jeff Means. Garrett attended his first American Numismatic Association (ANA) convention in 1974 in Miami with Ed French and has not missed one since. He has been a member of the ANA for more than 25 years, with life membership number 3124.

At the age of 17, Garrett was offered a position with Florida Coin Exchange, one of the dominant firms of the day. Two years later, he became a partner. In 1984, Garrett founded Mid-American Rare Coin Galleries, which continues to operate today. He is also co-owner of the Sarasota Rare Coin Gallery. During the 1980s, he was a partner in Mid-American Rare Coin Auctions, which sold many important collections and earned Catalogue of the Year in 1986 from the Numismatic Literary Guild. Several years later, Garrett organized the Bluegrass Coin Club in Lexington, Kentucky. Because local coin clubs were so important in his early life, Garrett wanted to foster the same atmosphere of enthusiastic collectors that he enjoyed as a youth. Today, the club is very healthy, with more than 30 members in attendance each month.

Garrett describes his expertise as being a “dealer’s dealer.” With a network of professionals he has established over 25 years, he helps with financing, research and acquisitions sales. Over the course of his career, he has handled nearly every US rarity. During the American Numismatic Convention in 2003, he was one of the experts called upon to authenticate the long-lost 1913 Liberty Head nickel. In 2004, Garrett handled one of the greatest gold collections ever assembled, the famed Dukes Creek set of Georgia gold, which sold for nearly $4 million.

Another important aspect of his career is his membership in the Professional Numismatists Guild (PNG), to which he has belonged since 1982. Today, Garrett is a former president of the prestigious organization. In 2003, the PNG awarded him the Abe Kosoff Founder’s Award, that organization’s highest honor, for work promoting the hobby and organization. In 2003, the first edition of 100 Greatest US Coins was given the highest awards of both the Numismatic Literary Guild and the PNG. Although he spends most of his time buying and selling coins, Garrett enjoys research and the study of rare coins. He is coauthor of the Official Red Book of Auction Records and of the award-winning Encyclopedia of US Gold Coins 1795–1933, a project done in cooperation with the Smithsonian Institution. Garrett is valuations editor for A Guide Book of United States Coins (the “Red Book”), published annually by Whitman.

About the Author:

NGC was founded in 1987, and for coin grading, its opening heralded the introduction of a new standard of integrity. From the beginning NGC focused on only one objective, a standard of consistent and accurate grading. As NGC has grown to become the leader in third-party grading services, we have maintained a steadfast and uncompromising commitment to this standard. The knowledge, integrity and dedication of NGC's team of grading experts ensures you a level of grading consistency unparalleled among grading services. This record of consistency, built over the years, has helped to foster greater stability throughout the rare coin marketplace.

4 Comments on "How Big Is The Rare Coin Counterfeiting Problem?"

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  1. Rob says:

    Great article Jeff.
    I want to point out up front that Ebay has continually made changes limiting contact between the membership during auctions which has made it impossible to warn an unwary bidder on a suspicious item being auctioned off, let alone trying to make Ebay themselves aware of suspect items on their site. I know first hand as I use to browse around in my favorite categories and warn some bidders on fakes that they were bidding on. Ebay put a stop to this by hidding bidder ID’s under the pretense that “it’s for security and protection of those involved in the auction” I still see currency misrepresented in the title and description yet Ebay fails to respond to these bogus listings when warned. I still have my one and only fake silver dollar made in China and purchased with the help of “EBAY”

    • Michael says:

      Jeff,
      I too used to do what you did—warn bidders about scams. The only difference was that I would warn them about sellers that were untrustworthy. A while back, I had ordered about $600 worth of coins from an eBay seller. After a month had passed with the items being delivered, and numerous emails going unanswered, and after contacting eBay, in hopes of them getting involved to rectify the problem (which they never did), I started contacting bidders on items this particular seller had up for auction. Some bidders ignored my warnings (which I’m sure turned-out to be their loss). However many bidders retracted their bids, which caused so much aggravation for this seller, that he started to put a message on his auction pages that someone was falsely scaring bidders to re-neg on their bids (which is probably why some of the bidders refused to heed my advise). Shortly afterwards (not just because of me, because I know others who did what I did), eBay changed the ID’s for their bidders, making it impossible to contact them any longer. eBay knew what they were doing—they made more money on both every auction that was posted, and on the item as it went up in price.

  2. Steve Caruso says:

    From what I understand, eBay’s coin specialists are currently inundated, and even now with the new policies in place it’s pushed much of the worst stuff to go covert, and now they’re dealing with an increase of squabbles and violations over descriptions of grading.

    Furthermore, as a collector of counterfeits I find it especially frustrating that people who want to sell replicas as replicas can’t, but when I bid on an obvious fake for my collection that rather often there’s another bidder who thinks it’s genuine and brings the price up far beyond it’s actual fair market value, and at no point do I have the ability to contact the buyer and reveal this.

  3. Metfan Lou says:

    I saw a tv news story on the purchase of high end counterfeit wine mostly through auction sales. One firm is trying to recover a 300,000 dollar fraudulent purchase. My point, whether it be art, wine, coins, computers, etc., the fakesters will always be with us as sure as the seasons turn. Your advice is great and unless I am buying coins for bullion value from reputable sources I only buy ceretified coins from the known grading services. Now, the counterfeit holders really do scare me. I have stopped purchasing until I educate myself further. thank you.

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