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Don't Fall for Fool's Gold: How to Spot Fake Money

GOBankingRates logo GOBankingRates 4/1/2017 John Schmoll
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Money makes the world go around. Unfortunately, some people choose to create money rather than earn it.

As modern printing technologies grow more advanced, counterfeit money can be hard to spot. For gold or collectible coins, you might have to rely on an expert to avoid ending up with fool's gold.

Here are some tips to identify counterfeit and fake money — and how to steer clear of buying or accepting it. Learning these rules will help you avoid scams and protect your money.

Buy Gold and Silver Coins Only From a Reputable Dealer

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Planning to invest in gold or silver coins? Coin scams come in many varieties. For example, some counterfeiters punch a coin out of a lesser metal, such as copper or zinc, and apply a fine layer of gold or silver to the top. To the untrained eye, the result look like an authentic gold coin. Another scam involves putting fake coins into sealed coin holders, as if they have been graded and certified by a professional organization.

The best way to avoid these types of scams is to deal only with reputable dealers. Although the coin dealer advertisements you see on TV might be compelling, it is best to find a dealer from a professional industry organization. The American Numismatic Association or the Professional Numismatists Guild are both excellent sources of reputable dealers.

Verify that everything is on the up-and-up by using a precise scale and measuring equipment. Coins have very specific dimensions and weights. If possible, measure and weigh your coins. If a counterfeiter is using a lesser base metal, the size of a fake gold coin might be slightly enlarged to get the correct weight.

Related: 5 Precious Metal Investments Better Than Gold

Check for Common Flaws With Collectibles

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Common flaws are often specific to particular coin types and are well known in the field. For example, here is a list of commonly spotted mistakes with the Morgan dollar, a popular silver-dollar collectible minted between 1878 and 1904 (and again in 1921):

  • Poorly struck numbers in the date due to the use of different fonts
  • Poorly struck letters on the reverse, especially the "rib" found in "E Pluribus Unum"
  • Poorly aligned mint marks. Coin ratings agencies have been advised to be on the lookout for mint marks — such as the "O" representing the New Orleans Mint — that are crooked or struck at an angle

Other coin types generally have their own common flaws as well. A coin guidebook — or reputable dealer — can help you identify which coins to avoid.

Research the History of Your Investment

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Some fakes are easy to spot because they simply shouldn't exist. For example, some counterfeiters have placed the "D" mint mark of the Denver Mint on fake Morgan dollars. However, the Denver Mint wasn't opened until 1906, two years after the end of the original print run of the Morgan dollar. Thus, if you have a Morgan dollar with a "D" mint mark — unless it is also dated 1921 — you have a fake.

In addition to the Denver Mint error, many counterfeit Morgan dollars bear the Carson City Mint "CC" mark in error. A common example is the 1895-CC, a year in which Carson City did not strike any dollars. Other erroneous date/mint mark mashups include:

  • 1887-CC
  • 1888-CC
  • 1902-CC
  • 1878-O (for the New Orleans Mint)

Although this type of information is easy to find, counterfeiters know that the average person doesn't carry such knowledge around. In the excitement to buy an attractive coin at a good price, buyers can sometimes overlook signs of fakes that should be obvious.

Beware of ‘Too Good to Be True’ Deals

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The adage "it's too good to be true" is applicable when it comes to currency and coinage transactions. Except for truly rare collectors' items, most coins are bought and sold as bullion, which is priced based on the value of the metal. Since the price of gold or silver is easily tracked in the public market, most dealers price bullion coins in a very tight range around this price. If you find a dealer offering a price well below market, you should be suspicious.

Of course, not all good prices are necessarily scams. If you're dealing with a fair seller, you should be allowed to measure and weigh your purchase and get a second opinion from a dealer you trust. As with any purchase, check the return policy if you're buying a suspect coin, and get that return or buyback policy in writing.

Be Wary of Online Sellers

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The easiest way for a counterfeiter to sneak a fake past a buyer is to post it online. You can't hold and examine money or coinage while on a computer, meaning it's next to impossible to detect until it's delivered. By that time, a counterfeiter could have already deleted his account and disappeared.

In the coin world, a number of counterfeit sellers come from China. According to some reports, up to 90 percent of fake coins offered on eBay, for example, are from China. If you are looking at a coin listed by a seller in China at a surprisingly low price, it should be another red flag.Certain online sellers might be legitimate. For example, the U.S. Mint publishes a list of gold dealers you can generally consider to be reliable. Although the U.S. Mint does not specifically endorse sellers, it does verify that they are represented by the Better Business Bureau. Even with this vetting, you should read consumer reviews to confirm you aren't working with a counterfeiter.

Gold — and money — have long held an attraction for human beings. As long as there is a desire for these commodities, there will be scam artists out to capitalize on it. Take note of these tips and don't allow yourself to fall prey to the lure of counterfeit and fake money.

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