By Jesse Robitaille
In light of the counterfeit Royal Canadian Mint wafer recently sold to a customer of a Royal Bank of Canada (RBC) branch in what appeared to be proper packaging, collectors and investors are asking how they can protect themselves.
Although the Mint has since said the one-ounce “gold” wafer – containing no gold whatsoever – wasn’t produced at a Mint facility, the fact a counterfeit gold wafer was sold at an Ottawa RBC branch “rattles the foundation,” said Henry Nienhuis, president of the Royal Canadian Numismatic Association.
Protecting yourself from purchasing a counterfeit item – whether a coin or a piece of bullion – has two critical aspects.
“There are a couple of things that are almost equal, but one of them – maybe the most important thing – is to buy from a reputable source,” said Nienhuis, who added it’s easier for collectors to buy from reputable sources because dealers, on the other hand, also do business with walk-in customers. “It makes it a little harder for a dealer.”
As a collector, however, Nienhuis said it’s crucial to know who you are buying from, whether you meet them in person or do your business online.
“If you don’t know the person that you’re buying it from, then that should be a red flag to you. A dealer or source should also be willing, if there’s a problem, to live up to their guarantee and take things back,” he said, adding this applies to coin collectors and bullion collectors alike.
The second critical aspect of preventing counterfeit fraud is knowledge.
“You need to know what you’re looking for, and you need to know what you’re buying. If somebody just steps out, and for example, just wants to buy a house. They’re going to run into a number of issues,” said Nienhuis, who added collectors should be researching legitimate examples to know what it looks like, how much it weighs and even details about the packaging.
“If there’s a company or a person that can counterfeit gold wafers or gold bars or Silver Maple Leaves, then there’s no reason they can’t counterfeit the packaging as well.”
Nienhuis also referenced last year’s discovery of counterfeit bullion bars and coins that were sold to several dealer members of the Canadian Association of Numismatic Dealers. Some of the fake bars were held inside legitimate-looking packaging that appeared to be made by Switzerland’s PAMP (Produits Artistiques Métaux Précieux); however, the packaging was also counterfeit.
“It all sort of lends in to give you a picture that you need to know what you’re buying, and you need to buy it from a reputable place,” he said. “That comes from both sides, dealers and collectors.”
TRUST YOUR DOUBT
Nienhuis said it’s also wise to trust your doubts, if any, when making a purchase.
“If you’re in doubt – if it doesn’t quite weigh right, or if the colour is off or the surface condition is off – then just pass. There’s no reason to take the risk. There’s another one you can buy. Don’t let that little green goblin blind you from making an informed purchase.”
There are several methods at the disposal of collectors and dealers that are not time consuming but help prevent unknowingly purchasing a counterfeit item.
“The other thing a collector or dealer can do is to perform the standard diagnostics,” said Nienhuis, who added these tests will determine weight, size or metal content, among other things. “It doesn’t take a rocket scientist to know a one-ounce bar is supposed to weigh one ounce.”
To get the job done, all it takes is a simple digital scale, which are generally affordable (in the area of $40), or investing in a mechanical scale, which are more expensive.
“Mechanical scales have been around since the dawn of time. Ancient money lenders used to have scales that they would weigh coins on, but there are modern implementations of that, some of them quite expensive,” he said, referring to one line of products known as “The Fisch,” which can check the weight, diameter, thickness and shape of specific types of bullion coins.
“The same thing can be accomplished with a digital scale and a calliper, which are not expensive and are available everywhere.”
The Fisch also includes a “ringer,” which is another tool Nienhuis refers to for testing coins.
“If it’s a coin out of package, you can also rely on the ring test in some cases,” he said, adding “all of these can be gotten around.”
There are also other methods that are “a little more invasive, and a little more expensive,” Nienhuis said.
“There are diagnostic devices that pass a current through the coin, and based on inherent resistance in the coin, you’ll get a reading that indicates that it’s counterfeit or real or has a certain metal content,” he said.
“That helps him and it helps you as well. It’s like anything in life: if you have people that sort of dirty the water by not testing things, then they pass it on and it can expand and become an even greater problem if you don’t have people protecting themselves.”
USE YOUR JUDGEMENT, OR A FRIEND’S
Despite the best efforts of the numismatic community, “nothing is foolproof,” Nienhuis said.
“You have to use your own judgement; know what you’re buying and use your judgement to know that it’s safe.”
And as with most things in life, if the deal feels “too good to be true,” it usually is.
“You shouldn’t let the idea of greed blind you to the facts of the matter,” said Nienhuis, who also suggested using a second opinion.
“In many instances you can have a friend with you or go to an experienced dealer and rely on them to give you an opinion on things.”
This is especially true of bullion collectors, who often store precious metals in their packaging as an investment, hoping they will accrue value after being purchased.
“It could very well be that counterfeit material ends up in somebody’s stash for decades and doesn’t come out. If you’re going to put a bunch of bullion away for investment purposes, you really want to make sure you get it from a reputable source.”
Nienhuis said the issue doesn’t stop at small bullion bars or coins; there could be counterfeit 100-gram bars sitting in a bank’s vault and affecting the overall economy.
“You can have major problems coming out because of that.”