Beware of fake gold being sold on eBay. I received this email from a reader yesterday:
I purchase the vast majority of my gold coins and (in-assay only) bars on eBay. I have had much success. eBay buyer protection has saved my butt on occasion, not just for gold purchases. I authenticate every coin I buy. For every purchase, regardless of source, I use a Fisch for Eagles & Krugerrands and a jeweler's scale and calipers for other coins, plus a detailed visual comparison to known-genuine coins (and bars). Anyway...
About a year ago I purchased a 1/10 oz. gold Philharmonic (10 euro). It was an obvious counterfeit. When I reported this to eBay it stirred up a brief hornet's nest: there were other buyers who got taken...they actually traced discovery back to me and thanked me. I remember someone asked you, a year or so ago, whether forgers would consider counterfeiting small gold coins. Answer: Yup!
But what happened earlier this week has, I believe, the potential to compromise the integrity of the slabbed coins certified by the major numismatic coin grading companies. I, for one, will never again knowingly purchase a slabbed coin. If I can't personally authenticate the actual coin (per the above) I don't want it. I purchased two generic 1/4 Krugerrands from a seller with 100% positive feedback (mostly small, non-gold transactions). The seller also sold at least 7 other 1/4 Krugerrands (I watched). The seller stated the coins were located in California. A few days later I received the tracking information: the shipment originated in Shenzhen, China. Hmmm! On Monday (12/2) I received the coins. They were NGC slabbed:
Wow! NGC certified proof gold coins a great price! To the casual observer, everything would look fine. Except, they are counterfeits! The obverse and reverse sides are supposed to be perfectly aligned. These coins were offset about 20 degrees (I could tell based on prong locations). Ooops! Then I examined both coins under 5X magnification next to a known-genuine 1/4 Krugerrand: there were many engraving quality discrepancies, especially with the border engraving shapes and overall lettering crispness and shapes. Bummer! I also compared the NGC slab to the website photo and another NGC slabbed coin I owned. Results: the slab was either stolen or (more likely) an incredibly accurate forgery, including holograms. I could not discern any defects whatsoever. Very disturbing.
I then 'opened a case' with eBay buyer protection for both coins, describing what I had found, including the above links to the NGC website. That's when things started to get really interesting! The next day I received a message (for each coin) from eBay stating that the seller had agreed to provide a full refund when I returned the coins. Then, within an hour, I received another message (for each coin) from eBay stating that I would immediately receive a full refund with no strings attached, which was done. Then something happened that I have never experienced with eBay before. Everything about the purchases (purchase history and seller account information) completely disappeared (poof!), as if the transaction had never occurred and the seller never existed. Bizarre! So, as of now I have possession of two forged NGC proof 1/4 Krugerrands until someone (?) tells me what to do with them. In the meantime I will play some show-and-tell guessing games with friends.
FOFOA, please warn your readers that buying certified slabbed coins no longer assures authenticity. Apparently the Chinese have started producing high-quality forgeries of the coins and slabs.
Take care. Merry Christmas and a happy and golden New Year.
God bless you and thank you for your efforts,
I asked him a few questions and also if he could take pictures of the actual coins he received. Here are the pictures, front and back, which you can compare to the photos on the NGC website:
The most obvious difference is that the coins seem to have shifted orientation inside the fitting, which shouldn't happen. But more remarkably, it seems that the reverse side of the coins shifted more than the obverse. Imagine that!
And if you look closely at the labels, they are clearly not the same labels as in the pictures on the NGC website. Look at where the printing intersects the background watermark. Notice how the P on the real one just butts up against the scale bowl, and on the fake one it overlaps the bowl. The M on the real one rests on the inside of the bowl, and on the fake it rest on the edge of the rim. Above the KR on the real one, there is a gap between the KR and the scale arm. On the fake there is no gap. And look at where the point of the 2 intersects the circle on the left.
Here is how he answered a few of my questions:
Were they advertised as slabbed? Did he include a picture of them?
"They were not advertised as slabbed. Just a generic (obverse) picture, which I can no longer access. I was surprised and very briefly (very briefly!) pleased that that they were slabbed...I paid $319 for each (including S&H). He had listed 3 at that BIN price; one had sold, so I bought the other two. He advertised later coins (3 at a time) at $329 BIN. I tried to buy more, but for (again) some strange reason I never encountered before on eBay, I was not allowed to buy any more for at least 10 days...the message said only a single purchase of up to 3 coins/buyer allowed per 10 days. Very strange."
Was the 3 coin limit imposed by the seller or by eBay? And was the limit apparent before you bought your first coin, or only when you tried to buy more?
"I don't know who imposed it or how. I did not know about the limit until I tried to make the second purchase (I tried again over several days to see it it was real...yup.)"
Did the seller appear to be an individual or a business?
"The seller is an individual (I even have his name & address in California). I have not tried to contact him. I don't know what would happen if I did. I'll let eBay worry about him."
What advice would you offer for people shopping for gold on eBay?
"My advice for buying coins from anyone, not just on eBay...immediately authenticate your purchases like I described earlier. For eBay, 'open a case' with Buyer Protection immediately for any perceived irregularities. Stay clear of slabbed coins unless you have the necessary expertise to evaluate them, since they cannot be weighed and measured.
eBay is quite diligent about tracking down forgeries, especially with regard to precious metals. I had several discussions with their precious metals fraud team after I discovered the fake 1/10 Philharmonic I told you about. They traced all the eBay purchases of that batch of coins (~200; some were resold several times) back to the original seller, shut down open listings, and contacted buyers. I think everyone got their money back. As I said, buyers traced discovery back to me and I got thank you's for identifying the fakes. What really surprises me is that so many buyers didn't realize the coins were poor quality fakes...they only weighed 2.4 grams. Scary."
I have always advised people against buying gold on eBay, and I have never done so myself. Stories about fakes originating in China and sold on eBay have been around for years. My advice is to buy your gold from a reputable dealer. If possible, I prefer to buy in person from a local dealer who has been in business for a long time, but I have also had good experiences with APMEX.
I also think that coin shows are a great place to buy bullion coins. I can usually negotiate a good deal, often better than what's offered online, and meet lots of local dealers at the same time. It's also an easy way to swap your silver for gold! ;D Here are a couple of websites to help you find coin shows scheduled in your area:
As for slabbed and graded coins, I prefer to avoid them, for precisely the reasons above. I do have a few, but only because that was all my local dealer had at the time, and he sold them to me at the bullion price.