Fool's Gold: Protecting Yourself Against Counterfeit Bars

The practice of counterfeiting has been around as long as currency itself. With the wide availability of gold merchants online, as well as more sophisticated technology, scammers are finding it easier than ever to dupe investors out of their hard-earned money. Many investors have been burned, even those with extensive experience buying and selling pure gold coins, ingots, and bars. This knowledge has caused a bit of panic amongst would-be gold investors and collectors, but the good news is that by following a few important tips and becoming savvy and careful, people can protect themselves against fake gold even through transactions online.

It probably comes as no surprise that the majority of fake gold is sold online, especially through auction sites like eBay. These sites, combined with the number of novice gold collectors attracted by the prospect of a good deal (and ignorant of the safeguards that distinguish real gold from counterfeit), can become "gold mines" for fraud. Bars larger than 1 kilogram are the types most commonly targeted by scam artists, because they're easier to fake. Gold has a high density, making it heavier than most metals. Smaller bars are more difficult to duplicate the correct weight, which is used as a reliable test for detecting fake gold. Often in fakes, gold plating covers a different type of metal - titanium can even fool the scales, since it has a similar weight to gold. This is the reason smaller ingots and coins are more rarely faked, since a high-quality scale calibrated to the hundredths of a gram will be able to spot the slightest irregularity in weight.

There are several reliable tests gold investors use to determine if the bar they have is real or not. Weighing the gold (and often successfully picking out the frauds in smaller pieces) is one of the easiest methods. The softness of the bar is another factor. Gold is a soft metal - we've all seen those scenes in movies where a merchant bites down on a gold coin to determine if it's real or not. This can actually be a fairly reliable indicator: A coin or bar that easily indents is made of real gold. However, it's not the best idea to deface the value of any suspected pure gold coins by chomping all over them - test them in other ways instead. Buyers should also inspect the color and stamp on the bar. Real gold will not vary in color across its surface, but fakes have been known to have differences in shading and color. The stamp indicating the issuer's name, serial number, etc. should have a clear, crisp font with an indented and clearly hand-stamped serial number. Finally, professionals will do a test with nitric acid on the gold. Real gold will not react to the acid, but other metals will.

Credit Suisse gold is one of the most trusted brands, but counterfeiters will even try to pass bars off as being from Credit Suisse. A real bar should have "Essayeur Fondeur CHI" stamped on it; some fakes have been found that have "CEI" stamped instead.

To protect yourself from falling into the trap of buying fake gold, only buy from reputable dealers. Always check a dealer's feedback rating before placing a bid, if you're buying online. Some buyers find it wise to avoid online transactions completely; however, many people can and have found great gold deals online. Because of the increased risk of fraud, don't ever buy any of the larger bars online. Only buy from a trusted, reputable dealer. And educate yourself as much as possible before putting any money down.

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