Like any other commodity, the supply and demand for gold rise and fall; and this also means that gold prices oscillate. Still, the price of gold does not go with changes in stock market prices. There are times when gold prices remain the same or even increase while stock prices plunge. Hence, gold can be used as hedge against inflation and it also serves as some sort of financial insurance for when the value of currencies fall.
There are a number of investment vehicles for those who are considering investing in gold, including the following: mutual funds, mining stocks, exchange-traded funds, certificates, bars, bullion and numismatic coins, with coins being very popular with new and experienced collectors and investors.
It is important to be familiar with an option first in order to have an understanding on how an investment may earn in time. Moreover, it’s vital that people do business only with highly reputable dealers and brokers to avoid counterfeiters and other individuals or groups that sell bogus gold items. It will also be beneficial to anyone who deals in gold to know how to spot real ones from fakes or counterfeits.
How to Spot Fake Coins
1. Measurements
A coin’s dimensions can be used to check if it’s real or not. The measurements of specific coins can readily be found online. Take note of such measurements and if the coin that you’re measuring doesn’t possess the standard dimensions, then it’s most likely a fake.
2. Bullion Coins
Bullion coins are generally sold as one-ounce, half-ounce, tenth-ounce or twentieth-ounce coins. Some, like the 2012 Australian Dragon, are also sold as two-ounce coins. The value of a bullion coin rests solely on its gold content. Hence, it’s important to know the exact weight of a bullion coin. A one-ounce bullion coin weighs 1 troy ounce or 31.1 grams.
3. Fake Numismatic Coins
Spotting fake numismatic coins is much harder as such coins are often valued not only for their gold content, but also for their design, rarity, and current condition. Numismatic coin collectors or experts will know how to differentiate a fake from a real coin by evaluating design, color, content and also quality. For those who aren’t as experienced, a prudent move will be to purchase gold coins from an honest broker or dealer, or have it assayed and authenticated by an expert.
4. Methods to Test a Coin
There are different methods to test a coin. One easy way to detect a fake is by using a magnet. Coins made from high quality or pure gold or silver do not stick to magnets, while those that contain high amounts of other types of metals, like iron, are very magnetic. Other methods include the following:
a. Scratch Test – When scratched, gold will produce a yellow streak. However, people should not solely rely on this test as gold-plated coins also leave a yellow streak.
b. Acid Test – Exposing a very small part of a real bullion coin to certain kinds of chemicals, like sulphuric acid, will not produce any reaction.
c. Bite Test – Gold bullion coins often have fineness of 916.7 (US Gold Eagles) to 999.9 (2012 Australian Dragon). A fineness of 999.9 is equal to 24 carats. The purer the gold or the higher its fineness or carats, the softer it is. So, if a person bites a pure bullion coin, then he is going to leave teeth marks on it.
Although such methods can be used to test if a coin is made of pure gold or not, these can still be damaging. Such tests will leave minute marks that can devalue a coin or any gold item. Therefore, have an expert assayer evaluate a coin first in order to avoid using these techniques.
Claire Gruber has been a gold dealer for 10 years and she studies the prices of gold coins for sale to get the best quotes for her clients. She is familiar with United’s rare coins as well since she has been an avid numismatist for more than a decade.
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