Gold has some unique properties to it that aren’t shared by other metals or at least other metals don’t share all the same number of properties. Gold is also very rare. When the Earth formed most of the gold sank deep into the mantle before the crust solidified. This means it can only be found in concentrated deposits in a few select places on early.
Gold’s value has always attracted counterfeiters who have tried to manipulate individuals, currency, and markets, in hopes of gaining a quick, easy fortune. In ancient and medieval times specious alchemists attempted to find a way to transmute base metals into pure gold.
For gold investors, and those who are interested in taking possession of physical gold to some degree, you need to ensure that you are getting exactly what you paid for. The last thing you want is to sink a significant amount of capital into buying physical gold, only to find out that what you received was counterfeit!
Counterfeit Gold Has A Long History
Until Gideon Smith’s gold detector was patented in 1853, people were forced to use basic if not crude tests to determine if a coin contained real gold or if it was made from some cheap base metal that was only clad with a small amount of gold. Some would try to spit on a coin and then rub it aggressively on an abrasive surface to see if the base metal would show through.
This and other homespun tests often proved effective in those days, because gold counterfeiting techniques were equally crude. Once Smith’s gold detector came into use, gold counterfeiters had to invest even greater efforts, which ultimately propelled their techniques forward.
In ancient times, gold coins were used as currency. This practice carried through to the middle ages with some nations. These coins were typically stamped and didn’t have a milled edge, which encouraged many “Penny Pinchers” to shave off small pieces of the edges of their coins. These shavings could then be collected and eventually melted down to make a full-size coin. This prompted many countries to develop techniques for milling edges on all their precious metal coins. If the milled texture was altered in any way, the coin was considered to no longer have any value.
These days we no longer use gold as an active form of currency. Even the gold standard has been abandoned! Yet there are still precious metal counterfeiters out there, attempting to make a profit off of physical gold investors.
Indeed, there was a man living in New York who purchased several 10-ounce bars of gold that were valued $18,000 each. For reasons known only to him, he decided to drill into them only to find that the core of the bars was made from tungsten cores and the outer cladding of gold was only $3,600!
Even more disturbing was that the gold bars had verifiable serial numbers stamped onto them as well as official documentation. This meant that the counterfeiters had originally purchased the real gold bars, developed a way to hollow them out and extract a large percentage of the gold and replacing it with nearly worthless tungsten. This gave them bars that did look real, yet only carried a fracture of the value!
Tips For Avoiding Counterfeit Gold
Most of the time gold’s unique physical properties make it easy to spot the counterfeit item. Reputable Bullion dealers also have a series of tight protocols and procedures that are designed to ensure that they are only buying and selling real gold.
Most of these dealers work with LBMA certified refiners that meet or even exceed the minimum standards which allow them to be noted in the Good Delivery list. All bars of precious metal on this list are produced with a strict minimum purity under exacting conditions. This type of bullion bar is universally recognized as the standard for all gold bars. Once verified gold enters their secure system a strict chain of custody is maintained to ensure that the gold purchased by clients has never left the system.
Identifying Counterfeit Gold
If you don’t have access to a gold bullion dealer that is associated with an LBMA certified refinery, or you are looking to buy pieces of gold from a private collector, there are some ways you can test suspicious gold for yourself.
With careful visual inspection, you are likely to find some sort of stamp, engraving or other markings noting the purity of the gold. Pretty much every piece of real gold, gold coins, bullion bars, and even jewelry, will have some sort of marking that that indicates its purity. If it doesn’t you should treat it with a high degree of suspicion. At the same time, you shouldn’t assume that just because the piece in question has marks that it is indeed genuine. Most counterfeiters will add marking to the fakes they to give them more of a genuine appearance.
With an older piece of jewelry, there might be some discoloration that might appear suspicious at first. Discoloration with gold that has been handled a lot is not uncommon and is more likely to appear near the clasp. This is often a sign that the piece of jewelry is gold plated and not pure gold.
Testing For Counterfeit Gold
Chances are you’ve seen a movie or two where someone bites into a suspect piece of gold test its authenticity. This suggests that gold is soft enough for your teeth to mark it. However, this is not the case. What is it really testing is whether or not the gold in question is made from led, which can be affected by human bite pressure, and has a weight that is relatively similar to gold.
There are other less rudimentary ways to test if something is real gold
The magnet Test
One of the key properties is that it is not magnetic. If you pass a magnet over a suspect piece of gold and it attracts it, you are likely dealing with a counterfeit piece or it is merely gold plated.
A Scratch Test
This requires a non-glazed ceramic plate, where you apply pressure and drag the suspect gold across the surface. Black or grey scratches are a sign that it is not real gold. However, this test could actually damage the piece of gold or even break the plate!
The Acid Test
Requires nitric acid which can cause significant harm to your skin and in some cases, counterfeit gold can cause it to release dangerous gases. If a piece is a gold, it will not react with the acid.
While these tests can potentially be administered in the comfort of your own home, they aren’t always advisable and could damage the piece of gold or even harm you. If you are concerned that a piece of gold in your possession might be counterfeit, you should consider seeking out a cold expert to professionally test and verify its purity.