For example, about 2 months ago, a guy came into the store with a graded, certified 1916-D dime. It was graded as MS 63. In English, it means that this dime - the most valuable of modern-era dimes - was graded to be a Mint State (MS) 63 (out of a scale from 1 to 70). Anything in the 60's range is Mint State, and this means the coin is uncirculated - it never made it into someone's pocket to be spent. This is a VERY rare coin - somewhere in the vicinity of $15,000-$17,000!
|A $15,000 Dime!|
Where'd you get the coin? My grandfather died and left it for me (red flag - with the number of grandpa's that have died and left stuff to their grandkids who come into our store, there should be no one alive in California over the age of 60!)
How much are you looking to get for the coin? I know it's worth 15 grand or so, but I'm heading to Vegas tomorrow, and want fast cash. I'll take $7000 for it. (WOOP! WOOP! WOOP! Red flag, sirens, fireworks. The wholesale buy price for this coin would be ten to twelve thousand. A seller might take a haircut of a few hundred dollars - maybe a thousand bucks. But for his asking price to be a minimum of $3000 below the low end - especially when he knows the retail value - signals trouble.)
My partner looked more closely at the coin, and COUNTERFEIT fairly bit him in the ass.
The coin was clearly a circulated coin - somewhere in the 30 to 40 grade range. And, as indicated on the picture above, it was graded FB. This stands for "full bands". On the reverse of the Mercury dime is a tall bundle of wheat that is banded in 3 places. "Full Bands" means you can see the separation between the individual bands that are binding the wheat stalks.
When a coin is highly circulated, these bands get rubbed down, because they are one of the high points on the reverse of the coin. Each different coin type has its own Achilles Heel. This is the weakness of the Mercury dime, and when it's in Full Band condition, the price skyrockets.
The bands on this coin were smooth as a baby's butt.
So, he had a coin which was clearly a circulated coin, in a certified holder (from one of the two grading companies that we trust), saying it was an uncirculated coin in pristine condition. That tells you just one thing:
The certification and slab were counterfeits.
If you come to that determination, you can also assume that the dime itself could have been altered. Say, a 1916 dime from the Philadelphia mint (a very common dime that comes out with no mint mark) where a bogus mint mark was added to the coin.
Needless to say, we passed on the coin.
How do you protect yourself? Personally, I'd stay away from upper-level numismatics, unless you yourself are able to evaluate and authenticate the coin in question. With regards to the dime in question, if my partner hadn't known what to look for, we could have taken a HUGE hit.
One of the big grading companies (PCGS, the other is NGC) is coming out with a new case (called a 'slab' in the industry) that is more tamper-resistant and includes a hologram for security purposes. I'm sure the other companies will be coming out with something similar, but I'm not holding my breath that it won't take counterfeiters little time to start producing knock-offs of these as well.
Coins like the one above are kind of in this "middle earth" ground. They're more expensive than bullion, but they're not earth-shaker coins where the sale makes the newspapers. Lately, we've been seeing dimes, nickels, silver dollars and gold pieces selling for millions of dollars.
The mega-big-bucks guys are still out there, but the people that go for the coins in the $5,000 to $50,000 range have dwindled. Significantly. I don't know that there is sufficient demand to keep prices up.
One of the private bullion mints, Sunshine Mint, has come out with rounds and bars with a new security feature. You pass a special decoder card over the coin, and you can read, "valid" on it.
Fisch tester. We purchased a complete set - for north of $500 - about 2 years ago. Well worth the price. It has already caught 4 gold coins that were counterfeits. At $1300 or so a coin (higher when we first bought it), it paid for itself with the first catch.
It authenticates the weight, diameter and thickness of the coin. A counterfeiter can fake two of those, but not all three without using real gold or silver. For instance, you can have a coin that weighs exactly 1 ounce, and is the perfect diameter. But, unless it's gold or silver, it will need to be significantly thicker due to the lower density of counterfeiter metals such as lead, pewter or nickel.
We've got a couple of gold customers who only pay after they see us put their coins through the tester. Smart.
If you don't want to put out that kind of money, junk silver is another great way to fight this. Ninety percent silver coins are individually too small in value and aren't worth the trouble to counterfeit. Couple that with some of the lowest premiums over spot silver prices, and it makes them a tough combination to beat.
Accept The Challenge
If you're going to buy numismatic coins, PLEASE get educated first. Trust no one other than yourself. Trust someone else and you can very easily end up like this guy who came into our store... after paying DOUBLE what he should have.
At least those coins were real.
Think of numismatic coins as works of art. The market is driven by folks who want rare things. Some folks - maybe you - like the thrill and prestige of owning something very rare. To each their own.
God Bless Them, because I sell to them each and every day. But for my money, I like investments based upon intrinsic value. Bullion and numismatics can both cost you, or make you, a bundle. Just know what you're getting into before you buy.
This post ("Entering The PM Pool") has links to a half dozen articles I've written to get you on sound footing before you buy. Read 'em.
Copyright 2014 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates. www.BisonRMA.com