Gyroscopic Investing

Are coins now easy to counterfeit?

I'll just throw in my opinion here. The mark up does not bother me too much. It seems like there is much more built in friction in this market that is part of the reason it is a considered a safe (and very old) form of money.

Xan wrote: ↑Mon Feb 24, 2020 11:39 am Are coins now easy to counterfeit?

Not easy, but once the makers of The Balance rescinded that guarantee on eagles, there were stories here and there.
I didn't hear anything about platinum at the time, just that some testers like The Balance had possibly failed to detect some fakes.
I'm not the one to ask, but I would think it's still difficult.

Bars, of course, are easy to fake. It has been done with tungsten.

dualstow wrote: ↑Mon Feb 24, 2020 2:39 pm

Xan wrote: ↑Mon Feb 24, 2020 11:39 am Are coins now easy to counterfeit?

Not easy, but once the makers of The Balance rescinded that guarantee on eagles, there were stories here and there.
I didn't hear anything about platinum at the time, just that some testers like The Balance had possibly failed to detect some fakes.
I'm not the one to ask, but I would think it's still difficult.

Bars, of course, are easy to fake. It has been done with tungsten.

The solution is going to be some sort of sonic test. The speed of sound in gold is quite different from that speed in any of the metals that are even close to its density.

Libertarian666 wrote: ↑Mon Feb 24, 2020 2:49 pm

dualstow wrote: ↑Mon Feb 24, 2020 2:39 pm

Xan wrote: ↑Mon Feb 24, 2020 11:39 am Are coins now easy to counterfeit?

Not easy, but once the makers of The Balance rescinded that guarantee on eagles, there were stories here and there.
I didn't hear anything about platinum at the time, just that some testers like The Balance had possibly failed to detect some fakes.
I'm not the one to ask, but I would think it's still difficult.

Bars, of course, are easy to fake. It has been done with tungsten.

The solution is going to be some sort of sonic test. The speed of sound in gold is quite different from that speed in any of the metals that are even close to its density.

Isn't Mark saying here that the solution was available six years ago?

Vinny

Mark Leavy wrote: ↑Fri Jun 06, 2014 8:42 pm

goodasgold wrote: This new type of fraud has me concerned. I was thinking of buying a few coins, but now I will wait until a secure method is developed to weed out the fakes.

Maybe I wasn't clear in my earlier post.
Audio Spectrum is 100% accurate.

If it even remotely looks like an Eagle, then if the audio spectrum has the three spikes in the right place, it IS an Eagle. Realistically, you don't even need the iPhone app - your ear is pretty damn good. Drop your known good eagle a couple of inches onto the counter, do the same with the "Device Under Test". Impossible to fake.

If the app that I mentioned earlier is too expensive, then pick another one. It's a very simple function and any "audio equalizer" type of app should work just fine.

You can test this with your pocket change. Drop some quarters and dimes and pennies. Every year that they changed the metal content produces a different audio signature. It's clear and obvious.

Yep, I remember that, plus a more poetic post he had on the sounds of gold coins.

Libertarian666 wrote: ↑Thu Feb 02, 2017 12:58 pm
Markup is not the issue. Spread, including all costs, is the issue.

The spread on a 10 oz. bar at Kitco is about 1% at present. Shipping, including registered insurance, is going to cost about $50 (each way), which is about 1/2% extra, so let's call it 2% round-trip altogether. You can get it a bit cheaper by buying 20 of them, but let's say it is still 2% round trip.

If you keep it for 10 years, that makes 0.2% yearly, which amounts to about $500/year vs. the $125 for the s&p fund. Is that $375/year too much to pay for insurance against financial catastrophe? Hmm...

Is it a correct assumption that for most of you who own your physical gold in your possession that it is in the form of coins and NOT bullion bars?

I think I've seen a lot of discussion here regarding gold coins but relatively little regarding gold bullion?

yankees60 wrote: ↑Sun Oct 17, 2021 11:06 am Is it a correct assumption that for most of you who own your physical gold in your possession that it is in the form of coins and NOT bullion bars?

I think I've seen a lot of discussion here regarding gold coins but relatively little regarding gold bullion?

Coins can still be bullion. Of course, not all coins are. If you’re not a coin dealer and you’re buying from the mint, that’s not bullion. But bullion coins are … bullion. Does that make sense?

And anything in fractional ounces is going to cost more. Look at the price of two ½ oz coins vs a 1 oz. A 1 oz coin is the sweet spot. you’ve seen that in the pp books.

But also, gold is frickin expensive. I know wealthy people (and Palantir) are buying bars, but that’s too rich for my blood. I would think that, besides the counterfeiting issues discussed above, more people buy coins because they’re more affordable. They’re almost like fractional bars.

dualstow wrote: ↑Sun Oct 17, 2021 12:08 pm

yankees60 wrote: ↑Sun Oct 17, 2021 11:06 am
Is it a correct assumption that for most of you who own your physical gold in your possession that it is in the form of coins and NOT bullion bars?

I think I've seen a lot of discussion here regarding gold coins but relatively little regarding gold bullion?

Coins can still be bullion. Of course, not all coins are. If you’re not a coin dealer and you’re buying from the mint, that’s not bullion. But bullion coins are … bullion. Does that make sense?

And anything in fractional ounces is going to cost more. Look at the price of two ½ oz coins vs a 1 oz. A 1 oz coin is the sweet spot. you’ve seen that in the pp books.

But also, gold is frickin expensive. I know wealthy people (and Palantir) are buying bars, but that’s too rich for my blood. I would think that, besides the counterfeiting issues discussed above, more people buy coins because they’re more affordable. They’re almost like fractional bars.

Thanks for response.

Understand what you are saying.

In all my buying I try to buy a bulk buyer as much as possible to get the best pricing.

When (date indeterminate) I finally implement Permanent Portfolio I will be making one large purchase to get started. Seems clear that the lowest markup is on bars. But it also seems that coins are more practical and less likely to be counterfeited? Or, less likely to be questioned?

My concern would not be buying something that is counterfeit (I have clearly got the message to only buy from reputable dealers) but with someone questioning whether my bar was real when I went to sell. Seems like there would be less questioning about coins? Or, coins are easier and less expensive to check for authenticity?

I think someone who actually owns bars can answer more completely. For example, I don’t really know what’s stamped on bars.
Bars are easier to fill with tungsten. Dealers have been fooled. I believe coins *have* been faked so well that some dealers were fooled, but it’s harder. You have to get the stamp right, the weight, and the dimensions. Common sense says that’s going to be harder to do with a little one ounce coin.

Do you know why many coins have that rough edge? I forgot the proper term, but think of the knurled edge on a radio dial that is easier to grab than a smooth dial. Originally, it was to prevent the coin being shaved. Well, it’s easier to shave gold off of a bar, an authentic bar, than off of an authentic coin.

As for selling your bars to a dealer, don’t worry, Vin. By the time you buy gold you’re going to be like 90 and someone else can deal with the selling.

dualstow wrote: ↑Sun Oct 17, 2021 1:18 pm
I think someone who actually owns bars can answer more completely. For example, I don’t really know what’s stamped on bars.
Bars are easier to fill with tungsten. Dealers have been fooled. I believe coins *have* been faked so well that some dealers were fooled, but it’s harder. You have to get the stamp right, the weight, and the dimensions. Common sense says that’s going to be harder to do with a little one ounce coin.

Do you know why many coins have that rough edge? I forgot the proper term, but think of the knurled edge on a radio dial that is easier to grab than a smooth dial. Originally, it was to prevent the coin being shaved. Well, it’s easier to shave gold off of a bar, an authentic bar, than off of an authentic coin.

As for selling your bars to a dealer, don’t worry, Vin. By the time you buy gold you’re going to be like 90 and someone else can deal with the selling.

Thanks for allowing me know more than I knew prior to reading what you wrote.

Also, thanks for the humor...humor, which as usual, generally has a fair amount of truth in it.

Thank you for being a good sport about the humor.
If I start a separate thread asking what your portfolio is now, before dipping your toe into the pp, would you answer? I don’t mean a poll of everyone- just you.

dualstow wrote: ↑Sun Oct 17, 2021 3:51 pm
Thank you for being a good sport about the humor.
If I start a separate thread asking what your portfolio is now, before dipping your toe into the pp, would you answer? I don’t mean a poll of everyone- just you.

I would definitely answer.

dualstow wrote: ↑Thu Feb 02, 2017 12:09 pm When you're thinking of buying physical gold, is the markup a large factor for you? Is it an outright deterrent?

I usually tell myself, well, that's the price of buying in. If gold triples in value, it won't matter.

But, once in a while I think about how the expense ratio of Vanguard's S&P 500 fund and Total Stock Market Fund is 0.05%
Let say gold's markup is about 4%. Feel free to dispute that or to tell me about some great offers you got. Does not include shipping, insurance, safe box fees. Just dealer markup.

If you put US$250,000 into 1 oz gold coins, you'd be paying $10,000 up front in markup.
The ER for 1 year of holding 250K in the S&P fund? $125. ( 0.0005 x 250,000)

With a physical gold purchase, you're all done with you buy, vs paying that ER to Vanguard every year. How long do you have to gold the gold before the nominal cost of both is the same? Only 80 years.

And of course treasuries are free.
Wow.

Trading on reputable gold/PM forums typically has both buyer/seller content at 2% above spot for the most common/popular gold coins. Add in $10 for insured carriage and round-trip trading along with personal securing (stored at home/wherever) can be cost efficient. Comparable to $5 trading fees ($10 round trip buy/sell), and the loss of interest (time value) against a 2% price premium. Assuming $1800/ounce, $36 premium and 2% interest rate = 72 cents/year time value/1 ounce coin, which relative to $1800 = 0.04%/year.

Don't however do that via the likes of EBay, only use reputable boards with respected individuals who have a established reputation and one that they wish to maintain. Start with single coins, build your own reputation and once you've traded for a while you'll get into a circle of trusted regulars where you'll more likely be able to sell (buy) larger quantities (rolls/sheet/tubes of 20 x 1 ounce coins).

Most will hold both 'paper' (Futures/Options/ETF's/whatever) as well as physical, so when you're looking to sell others might be light on physical and happy to buy a bulk quantity of physical/reduce paper. Similarly when you're looking to buy others might be content to reduce physical/expand paper (given that its quicker/easier to add/reduce paper gold).

That was a five-year-old question, but if anyone is just starting out: I would avoid trading on any boards - use dealers - and definitely avoid futures and options. Those aren’t pp assets.