For as long as gold has been prized a valuable metal, counterfeiters have worked day and night in trying to exploit our adoration for it, to swindle and scam their way to an easy fortune. Medieval alchemists attempted to turn base metals into pure gold, making money from cheap, worthless elements, and even though they never figured out the formula, the counterfeiters did.
If you want to turn your gold into cash, you should be aware of what makes gold what it is and the troubling signs of counterfeit gold.
Finding the signs of fake gold
First, let’s identify the many qualities that embody gold. This acts as a primer so you know the “ingredients” of real gold before learning about fake gold characteristics:
- Resistant to oxidation and doesn’t tarnish or rust.
- High thermal and electrical conductive and also corrosion resistant, which makes gold ideal for use in electronics.
- Is dissolved only by nitro-hydrochloric acid which is a mix of 75% nitric acid and 25% hydrochloric acid and features a yellow-orange color.
- Malleable and presses into very thin sheets, and is often 10 times thinner as a paper sheet. The sheets are then applied for infrared reflectivity (by evaporating the sheets onto glass), as fillings for teeth, etc.
- Ductile and can be drawn into thin wires that fit onto circuits, like transistors, and it can be useful as a brazing alloy, industrial solder, orthodontic appliances, jet engines, etc.
- Soft, and often so soft that to make up for its weakness, it must alloy with other metals such as silver, nickel, copper or platinum.
Most items of real gold, such as coins, bars and jewellery, should feature a stamp that displays the purity of the gold. You might need a magnifying glass to view this designation, but you should be on the lookout for a mark that displays either the fineness of the product or the karat number that it contains. For example, bullion will be stamped 9999 or 999, jewellery would be stamped 22k/916, 18k/750,14k/585 etc, depending on the karats and purity.
You shouldn’t assume that just because your piece has these marks it is the real stuff. Many savvy counterfeiters will add them to fakes to make them seem more genuine.
You should also look for discolouration, which may be hard to notice in a gold piece that is new, but if it is old and has gone through a large amount of wear, then you should be able to see noticeable discolouration. This is especially true with jewellery, in which case you should look near the clasp, which likely has been handled aplenty. If discolouration does appear, then your item may only be gold plated.
The colour of the gold itself may also be a sign of a fake, although you need to remember that some gold coins, including the Gold Sovereign and the Gold Krugerrand, are not 100% pure. They both include copper, which gives them a unique reddish hue.
Look for other signifiers unique to, say, a coin. For example, the Canadian Gold Maple Leaf reveals a “9999” on each side of the maple leaf image on the coin’s reverse in addition to the words “Fine Gold 1 Oz Or Pur” on the bottom.
Scaling, Reeding, Magnets and Acid
Weight is another way to identify the real gold from the phony ones. It’s always handy to have a digital scale on hand, whether you own gold through inheritances or you’re visiting a coin shop or gold reseller. On a general level, if you buy the most popular 24-karat, one-ounce sovereign coins, these beauts should feel dense and heavy and weigh exactly one troy ounce.
As coin fraud expert Sebastian Wieschowski told Muzeum: “If people know the weight of an original coin from your coin catalogue, just put the coin on a regular kitchen weight scale. Even if the scale is not very precise, it will show a big difference to the catalogue weight of the coin.”
When focusing on coins, you should also thoroughly review the relief on the obverse (front) and reverse (back) of the coin. The relief is known as the design on the face and back of the coin. If you have more than one coin, stack them like a tower. The coins made by quality private mints and government mints should stack neatly and not topple.
If they wobble or look out of place and barely fit neatly there’s the likelihood at least one is fake.
Also, be sure check the edges of the coin. Some coins have lettering around them; some are smooth; while others have what is called reeding, or little ridges. The American dime and quarter are great examples of circulated coins with reeding. Counterfeiters usually either have a hard time getting the reeding exact or skip it entirely in the hopes a novice buyer won’t bother to notice. The American gold eagle, Canadian gold maple leaf, and South African Krugerrand all feature reeding.
There are also some ways to test if your gold is real or not:
Magnet Test: Gold is not magnetic, as we learned earlier, so you can use a magnet to find out whether what you have is actually a cheap base metal. While it’s not an all-encompassing test, as it may consist of another non-magnetic metal, it certainly helps to narrow down the field.
Scratch Test: For this test you should use a non-glazed ceramic plate, and the goal is to drag your coin/bar/item across the plate, scratching the surface. If the scratch is black or grey, it’s not real gold. If the scratch is gold, then you got the real deal. Also note that this technique may damage your gold.
Acid Test: For a bit of etymological history, the phrase “acid test” actually comes from gold testing. This type of test includes nitric acid and can be dangerous to you and may damage to your piece, so it is often best left to an expert.
If you want to go the extra mile, the most accurate and harmless method in testing gold is using electronic or XRF thermo testing machines. But of course they are expensive and rare to find, and usually only professional appraisers and gold owners take advantage of this certified method. These machines will tell you the exact composition of your gold piece, which is why they are highly valued by the precious-metals community.
We also recommend one of the most reliable and easiest ways to determine if you have real or fake gold: bringing in your items to a certified precious metal consultant, such as Gold.TO.
This is the best option to authenticate your gold item because you will get your piece appraised and analyzed by qualified experts who use state-of-the-art technology that has long been highly accurate and reliable.
No matter what you do, it’s also helpful to stay on top of the Canadian gold price so you can determine if you’re getting a fair shake for the gold you may want to sell.
Fake gold news you can use
We don’t mean to frighten you, but we felt it prudent to pass along a few horror stories of the fake-gold plague spinning out of control.
In 2017, we heard about an Ottawa jeweler who bought what he thought was a genuine 1 oz, .9999 fine gold wafer from his local branch of the Royal Bank of Canada. He didn’t suspect anything was wrong since the wafer seemed to feature all the right marks and stamps and it was in a sealed Royal Canadian Mint package.
But as soon as his goldsmith started to work with the gold, it was apparent that something was wrong. Placing the small bar in a tableting mill, the gold became too hard to bend or smooth out. Then the goldsmith tried to bend the wafer with his hands, but it snapped into two jagged-edged pieces – something gold doesn’t do.
He then used an acid test which only professionals truly do. Rubbing a streak of the metal onto an abrasive stone, he applied a drop of acid to the metallic residue. The bar failed the 18-karat test despite supposedly being 99.99% pure 24-karat gold.
After the news broke, the Royal Bank of Canada refunded the buyer his purchase price of $1,680 CAD and returned the bar to the Mint for immediate testing. A spokesman with the bank said the RBC is actively working with police to determine how the counterfeit got into bank inventory – which, according to the bank, is a rare occurrence.
Is it though? According to media reports, a forgery crisis has been plaguing today’s gold bar market.
Bars fraudulently imprinted with the logos of major refineries have been making their way into the space, in order to launder smuggled or illegal gold, refining and banking executives tell Reuters. The phony bars are hard to detect, turning them into an ideal fund-runner for narcotics dealers or warlords.
In the last three years, bars worth at least $50 million US stamped with Swiss refinery logos, but not actually made by those facilities, have been identified by all four of Switzerland’s leading gold refiners and found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion.
“The latest fake bars … are highly professionally done,” said Michael Mesaric, the chief executive of refinery Valcambi. He added that around a couple of thousand have been found, but the likelihood is that there are “way, way, way more still in circulation. And it still exists, and it still works.”
What make these fake gold bars hard to detect are the subtleties: The gold is real, and offers very high purity, with only the markings faked. Fake-branded bars are a somewhat new way to flout global guidelines to block conflict minerals and prevent money-laundering. These forgeries pose a problem for international refiners, financiers and regulators as they attempt to purge the world of illicit trade in bullion.
It is not clear who is making the bars found so far, but executives and bankers told Reuters they think most came from in China, the world’s largest gold producer and importer, and have slipped into the market via dealers and trading houses in Hong Kong, Japan and Thailand. Once accepted by a mainstream gold dealer in these places, they can quickly spread into supply chains worldwide.
The Shanghai Gold Exchange, which regulates China’s gold market, said in a statement it was not aware of counterfeit bars being made in or transported through China. “The Shanghai Gold Exchange has established a thorough delivery and storage system. The process for gold (material) to enter the warehouse is strictly managed and in compliance with the regulations,” it said.
Swiss Customs noted 655 forged bars were reported in 2017 and 2018 to local prosecutors in Ticino, a region bordering Italy that contains three of Switzerland’s four large refineries, as Reuters writes.
A final tip for all you gold owners: If you watch any old Western film you’ll inevitably see a gold surveyor bite down hard on a piece of gold to test its purity. This works okay for 22K and 24K gold pieces as they are soft and will bear a mark from your teeth but when the gold hovers in the 18K range and lower, like you find with most jewellery, it will be the gold leaving the mark, or chip really, on your teeth. Avoid this stereotypical method of testing gold as there are many other legitimate tests that don’t put your pearly whites danger.
If you have questions about your gold coins, bars or jewellery, or memorabilia and heirlooms, the Gold.TO specialists can assist you in determining your items’ gold value. Contact us anytime to set up an appointment or to coordinate other ways for us to test your gold.