Use a Magnet

Many experts recommend using a magnet to determine the authenticity of the coin. For instance, nearly all of China’s counterfeit based coins are produced with an iron-based planchet. If the coin sticks to the magnet, then it is counterfeit. Only one coin in United States history has been counterfeit. The 1943 steel penny is the only authentic coin that will stick to a magnet. All other gold coins that stick to a magnet will be counterfeit in the United States and China. Canadian coins are the only exception to this rule.

Use a Gram Scale

In the United States, a coin that is off its pre-specified weight by more than 1% is a candidate for counterfeit. The United States has a very low tolerance for errors in weight and diameter. In China, the counterfeiters often use scrap metal to make the coins or cast blanks. The coins made with these blanks are typically underweight.

Use a Caliper to Measure the Dimensions

A caliper may be used to measure the diameter of the coin. Any coin that has a diameter smaller than the country’s specifications will be suspected as counterfeit. Simply slide the jaws of the caliper across the edges of the coin to make the measurement.

Drop the Coin on a Hard Surface

The sound the coin makes when the coin makes when it is dropped or comes into contact with another coin is distinctive. Counterfeit coins are often softer than authentic coins. A plastic-like sound may occur when the coin is thrown onto the floor or when the coin is struck against another coin.

Use a High Powered Magnifier

A high powered magnifier may be used to review the details of the coin. Any suspicious writing or misspellings may indicate that the coin is counterfeit. Bubbles on the surface may mean the coin is counterfeit.

Experts must know the United States coin specifications before determining if the coin is counterfeit. The Red Book will have the correct specifications listed for comparison purposes. All of the tolerances are miniscule. Fine instruments such as 10 times or higher microscope are used to determine the authenticity of the coin.

To determine if a coin is counterfeit, look at the date to determine if there is any damage around the date. Each number should adhere to the design set forth in the country’s specifications. Also, examine the Mint Mark to determine if it is in the correct shape and position. A small depression around the Mint Mark is usually a good indication of a genuine coin. If the Mint Mark is removed completely, this may be a sign of counterfeit also.

Use a Reputable Gold Coin Dealer

If in doubt, solicit a reputable coin dealer to verify the coin’s authenticity. Experts often advise investors to buy gold coins during a recession as a safe investment vehicle as the value tends to increase when other investments decrease in value. Our clients often buy gold coins for investment or for collections. This can be a lucrative hobby or investment opportunity if you purchase from a reputable gold coin dealer or complete the proper research before your purchase.

If you had listened to our advice over the course of the past several years, you would have made a great deal of money. We have consistently advised clients to accumulate $20 Gold Pieces and we are still strongly urging investors that now is still a great time to invest in gold. Our research analysts believe the index still looks very strong technically and could increase a significant amount by the end of 2010. We believe this is a great opportunity for buy and hold investors, or even those looking for short-term trades.

The US Rare Coin market has been in the midst of a very strong bull rally. With Gold trading over $1000/oz , Gold coins, in the meantime, have shown an even better price appreciation. Some coins have moved up 80-100%! I’m here to tell you that this rally has just begun. Take a look at the chart below of the mint state gold coin index. You’ll see that these coins still have quite a way to go. So, yes, is my answer to “Should I Buy Gold?“.

We also recommend purchasing coins graded Mint State 63 or higher due to their natural scarcity and general strong liquidity. An additional advantage to buying $20 gold pieces is that the underlying gold value comprises a large percentage of the overall price, giving the investor a double-play profit opportunity — one on the scarcity premium attached to the coin, and the other on gold value. There are principally two design types for the $20 gold pieces — the Liberty (minted 1845-1907) and the St. Gaudens (minted 1907-1933).