One of the more familiar coins from our early colonial and statehood period and one whose name is linked to tales of pirates and plunder is the Spanish 8 reales, better known as a “piece of eight”.

When Spanish explorers discovered silver in the new world, they set about establishing mints to produce coinage virtually at the mines entrance. Early production was very crude whereas the silver, after being alloyed to its’ proper fineness, was rolled the same as one would roll cookie dough. The mint master would then cut off pieces referred to as cobs, adjust the weight by trimming the blank and when the weight was correct, stamp the blank with dies. The resultant coin is very crude in appearance, and very susceptible to being altered after the fact. Since coins of that era were supposed to have their full value in a precious metal, removing some silver from these coins would be hard to detect and would result in the coin being undervalued. This also makes them easy to counterfeit, so anyone wishing to collect coins of this type should exercise caution when making a purchase.

Beginning in the 1730’s coins at the Spanish colonial mints were produced in the more typical way, that is utilizing a dies to strike premade blanks that were of a consistent size and fineness. The design on this new coin was of 2 orbs representing globe like images showing the old world and the new world under a crown and over a representation of the Strait of Gibraltar and flanked on each side by pillars (the Pillars of Hercules), hence giving it the nickname “pillar dollars”. Included in the legend around the edge on the two sides would be “PHILIP-V-D-G-HISPN-ET-IND-REX.” Literal translation is “Philip 5th (who was king at that time) by the grace of God, King of Spain and the Indies“. Also included would be the assayers and mint masters initials, the denomination (8R for 8 reales) and initials for the mint that struck the coin, since several mints existed in what is now Central and South America. An example of this mint mark is a small letter “o” over the top of a large “M” which stands for Mexico City. These coins incorporated an “anti clipping” feature of crude milling on the edge of the coin which would show if someone tried to clip some silver from the coin.

The coins were redesigned in the 1770’s by removing the pillar design and replacing it with the profile portrait of the ruling kings of Spain, successively Carlos (Charles) III, Carlos (Charles) IV and Ferdinand VII. Striking of these coins effectively ended in the 1820’s.

These coins were widely accepted in trade throughout the Colonies as well as the early period after the creation of the United States (they actually had legal tender status until the mid 1850’s). They also were accepted throughout the world because of their weight and consistency of purity. Many found their way to the Orient where merchants in those countries freely accepted them in trade. It is not uncommon to find examples of a piece of 8 with Chinese characters stamped on them showing the mark of the person verifying their value. These stamps are referred to as “chop marks”.

Pillar style pieces of 8 are more valuable and sell in the range of $150 and up, whereas the portrait style start at around $50, with chop marked specimens bringing slightly less.

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While reading some online articles related to coins and bullion, I ran across a summary of a presentation made by Patrick Heller, the recipient of The American Numismatic Association 2012 Dealer of the Year Award. The topic he spoke on was “dealers (and practices, my addition) you may want to avoid“. He touched on some things I’ve spoken about in the past, along with some other examples I feel are worth sharing.

One of the main examples he offered, and one I am constantly warning people about are dealers who run full page advertisements in newspapers, magazines, direct mailers plus radio and TV ads and infomercials offering coins and bullion at ridiculous prices or even “free to the first (fill in the blank) callers”. (This can also apply to buyers who offer “limited time” offers that go on for years or “ up to” prices, that sellers never seem to receive). Those ads are expensive and to only way they can be afforded is by selling a product that is highly overpriced (or by purchasing coins and bullion at prices that are ridiculously low). And the product is never, ever free, there is always a catch such as “postage, shipping and handling charges”.

Once you’ve responded to one of those ads and purchased the product, you may find yourself on the receiving end of a telemarketers calls offering some “great deals” (the dealers emphasis). These “dealers” engage in high pressure calls, or on the extreme opposite they can be made by someone who wants you to think he is making this offer just for your benefit and your profit potential is unlimited. The truth is the items offered are overpriced to the extent they pay the commission to the seller – he’s the one to benefit, not you. I had a customer who was victimized in this fashion. He would receive calls on a regular basis offering rare coins. The coins were rare, which was an exception to the norm, but the problem was they were highly overpriced. He needed to sell the coins to raise money for a business venture and was disappointed that the price I offered was about half of what he paid the company he purchased the coins from several years ago. I explained my price was the going wholesale rate and that I could replace those same coins for about 10% over my buying price. I encouraged him to contact the company he purchased the coins from to see what they would offer. They never responded to his request. Any legitimate dealer is in the business of selling AND buying coins, so one that will not buy back rare coins, and these were rare, just overpriced, is suspect.

Mr. Heller’s presentation also covered issues about mail order that raise flags where dealers accept credit cards same as cash or checks. Because credit card companies charge a fee that can exceed 3% and since margins on gold and silver bullion are so small, if that dealer can afford to absorb the credit card fee, his product is probably overpriced to start with. Also, dealers that go out of their way to avoid using the postal service, although not necessarily a problem, this may indicate the dealer could be structuring the transaction so as not to involve the U.S. postal authorities that would investigate him if his operation is in fact a scam.

And any dealer who offers to structure a transaction to avoid any federal or state laws is one to be avoided. The state of New Jersey is getting more diligent on going after bullion transactions that are conducted through the mail for the purpose of collecting sales tax. I was also made aware of a situation where a person used a credit card for a bullion purchase in Delaware. The N.J. division of Taxation was alerted and went after the purchaser for the sales tax. The only way we can beat the sales tax is to petition our legislators to exempt coin and bullion transactions that are investments, the same as investing in stocks and bonds, from sales tax. Maybe after this election is behind us, we can start the work needed to accomplish that goal.

Has everyone had an opportunity to examine the new $100 bill the Federal Reserve just released? It contains many high-tech features meant to thwart counterfeiters, since the $100 bill is one of the counterfeiters favorites. The new $100 note took over a decade to develop and production problems set back its’ release by over 2 ½ years. But now the printing presses are running smoothly with over 3.5 billion notes having been printed. (Think about that number. Who says the government is broke?)

Counterfeiting our paper money has been a problem almost from the beginning. It was such a problem during the Revolutionary War, that some of the paper money printed at that time had the statement on the back reading “to Counterfeit is Death” and they meant it. No qualms about capital punishment here.

During the period from the early to mid 1800’s it didn’t take much to obtain a charter to open a bank, and since most banks were of a local nature it was easy to make a note from another region on a bank that didn’t even exist, or else to modify a note from an existing bank with a design not used by that bank. This problem was finally addressed in the early 1860’s through the creation of currency backed by the United States government that would be used throughout the states, doing away with local issues.

The Civil War brought about counterfeiting as a means of economic warfare, where as counterfeit Confederate Currency was printed in order to create financial stress on their government.

The designs created by the government from the inception of national circulating notes were of such detail as to have deterred counterfeiting, but it didn’t work. The engraving used on the designs were of great detail and created miniature works of art on small size paper. But the counterfeiters were artists also.

Some examples from that era that I have encountered; (1) a $5 note from the 1860’s that to this day I have difficulty understanding how it could have been created. The giveaway is that the serial number on the note is outside the range of numbers actually used. (2) A $1 Silver Certificate dated 1899 with portraits of Abe Lincoln and Ulysses Grant. When I looked at the note, I knew Lincoln was not a particularly handsome man, but he looked pretty bad on this note. The story behind this bill is that a German immigrant who was a die engraver in his country couldn’t find work here, so he engraved his own dies to print money for his own use. (3) I just purchased a pair of 1914 series $100 bills. Upon further research I found they had been highly counterfeited by the Russian Government during the 1920’s. They are so good, that the difference between the real and counterfeit comes down to the placement of the thumb of the female figure on the reverse of the note, and the difference is minute. Mine were real.

In 1928 our currency was redesigned and reduced in size to that which is in use today, and the designs remained fairly consistent until recently. There has been a problem with counterfeiting all along, but things really ratcheted up with the advent of computers and the copy machine. This necessitated major changes in printing which included the utilization of watermarked paper, the watermark bearing the same portrait of the individuals who are pictured on the note. But even that wasn’t always successful as I’ve had a $100 note that pictured Ben Franklin but with a watermark of Abe Lincoln. A $5 note was bleached and the design of a $100 note printed on it. The paper was correct and passed the test using the pen, making examination of the watermark a necessity.

Counterfeiting has evolved from printing money for personal use to governments, notably North Korea printing huge amounts. Fortunately our Secret Service organization who is tasked with catching counterfeiters has done a very good job. Let’s hope that the new $100 bill will prove to be too technically advanced to be counterfeited in the foreseeable future.

This, and my preceding articles about counterfeits are not meant to make my readers paranoid, but rather to educate and cause you too be aware these exist. The examples I’ve given are in the minority and not wide spread so don’t worry, you probably will never encounter one in your day to day activities.

Counterfeits part 3.

This article will deal with the counterfeits coming out of China and the impact they have on our hobby.

In the past, Chinese counterfeits were crudely done, usually copies of early silver dollars from the early 1800’s. They wouldn’t fool anyone with even a basic understanding of coinage, but the intended victims were people who had never encountered coins from that era. The usual tip off is when someone comes into my store with a large quantity of these coins which display the typical flat appearance and lack of detail. Further examination with reveal they are only made in base metal, not the silver that the real coins were made of.

About 5 years ago we noticed the counterfeiters were expanding into making copies of silver dollars from the years 1878 to 1935. These would typically show up at flea markets where the sellers would offer them at prices under the going rate. We would have customers come to us with these coins expecting to make a profit whereas we had to tell them the coins were counterfeits, and hence worthless. While these coins showed better detail then the ones I mentioned above, they weighed considerable less than the real coins and in some cases had date and mintmark combinations that had never been minted. I won’t pass judgment on the sellers of these coins, but my suspicion is they knew what they had and were trying to make a quick buck.

Moving along, the counterfeiters have now expanded into other types of coins from common type coins to rare and expensive ones. I have even seen a collection of dollars mounted in a folder containing all dates and mints from 1878 up to 1895 where not only were the common and rare examples counterfeit, but the folder was also a copy! Everything was fake.
As I mentioned, there are fake coins on all types and denominations coming out of China at an alarming rate. The ultimate example of the size of the problem is the following. One of the major grading companies, PCGS who grade, authenticate and encapsulate coins, actually had their capsule copied so that not only was the coin within the capsule a counterfeit, but the capsule that it was in was also fake.

To combat this problem, the organization of which I am a member, The Industry Council of Tangible Assets (ICTA) has successfully had legislation introduced known as The Hobby Protection Act, which would target both importers and sellers of these Chinese counterfeits. Hopefully, once Washington gets back to business this act will pass.

Fortunately all of the above examples are well known to those of us in the industry. And the guidelines for insuring what coins you purchase are genuine are fairly straight forward: know and trust whom you purchase coins from; for rare and valuable items get a third party guarantee of authenticity; and most important – if something seems too good to be true (cheap), it probably isn’t. Remember too, just because a coin has been in someone’s collection for years, that doesn’t guarantee authenticity.

Last week on the Don Williams Shop, while we were discussing Chinese counterfeits, I mentioned that since China is a major purchaser of our Treasury Notes, maybe we should send them some counterfeits of those notes to even the score.

Paper money counterfeits next week.

Counterfeits part 3.

This article will deal with the counterfeits coming out of China and the impact they have on our hobby.

In the past, Chinese counterfeits were crudely done, usually copies of early silver dollars from the early 1800’s. They wouldn’t fool anyone with even a basic understanding of coinage, but the intended victims were people who had never encountered coins from that era. The usual tip off is when someone comes into my store with a large quantity of these coins which display the typical flat appearance and lack of detail. Further examination with reveal they are only made in base metal, not the silver that the real coins were made of.

About 5 years ago we noticed the counterfeiters were expanding into making copies of silver dollars from the years 1878 to 1935. These would typically show up at flea markets where the sellers would offer them at prices under the going rate. We would have customers come to us with these coins expecting to make a profit whereas we had to tell them the coins were counterfeits, and hence worthless. While these coins showed better detail then the ones I mentioned above, they weighed considerable less than the real coins and in some cases had date and mintmark combinations that had never been minted. I won’t pass judgment on the sellers of these coins, but my suspicion is they knew what they had and were trying to make a quick buck.

Moving along, the counterfeiters have now expanded into other types of coins from common type coins to rare and expensive ones. I have even seen a collection of dollars mounted in a folder containing all dates and mints from 1878 up to 1895 where not only were the common and rare examples counterfeit, but the folder was also a copy! Everything was fake.
As I mentioned, there are fake coins on all types and denominations coming out of China at an alarming rate. The ultimate example of the size of the problem is the following. One of the major grading companies, PCGS who grade, authenticate and encapsulate coins, actually had their capsule copied so that not only was the coin within the capsule a counterfeit, but the capsule that it was in was also fake.

To combat this problem, the organization of which I am a member, The Industry Council of Tangible Assets (ICTA) has successfully had legislation introduced known as The Hobby Protection Act, which would target both importers and sellers of these Chinese counterfeits. Hopefully, once Washington gets back to business this act will pass.

Fortunately all of the above examples are well known to those of us in the industry. And the guidelines for insuring what coins you purchase are genuine are fairly straight forward: know and trust whom you purchase coins from; for rare and valuable items get a third party guarantee of authenticity; and most important – if something seems too good to be true (cheap), it probably isn’t. Remember too, just because a coin has been in someone’s collection for years, that doesn’t guarantee authenticity.

Last week on the Don Williams Shop, while we were discussing Chinese counterfeits, I mentioned that since China is a major purchaser of our Treasury Notes, maybe we should send them some counterfeits of those notes to even the score.

Paper money counterfeits next week.

Counterfeits Part 2.

Last weeks’ article dealt primarily with counterfeits that used less gold or silver in their production with the idea that they would be spent, which would result in the counterfeiter benefiting by using lower value metal. This approach was usually utilized by small time crooks who lacked the sophistication and resources for large scale operation, although exceptions exist. I have actually come across a dime that was counterfeited for use, not a lot of profit there.

A more dangerous counterfeit coin is one that is made not to benefit from the difference in metal value, but one that is made to reap the numismatic premium, that is the value a coin collector is willing to pay to add a rare item to his or her collection.

One way to make a counterfeit coin is to alter the mintmark on the coin. With the exception of the Philadelphia Mint (that is until recently), all other mints that struck coins would add their mintmark to the coin. “S” for San Francisco, “D” for Denver, “CC” for Carson City, etc. For many reasons, each year saw the various mints producing varying amounts of coins, with some mints producing very few in relation to the others. Enterprising counterfeiters would then try to replicate a scarce coin by adding or removing a mintmark. An example is the Lincoln Cent, first struck in 1909 in both the San Francisco and Philadelphia Mints. The first coins struck in those mints contained the designers’ initials V.D.B. for Victor D. Brenner on the reverse. While the Philadelphia minted coin is quite plentiful, selling for $10 and up, the San Francisco minted coin starts at several hundreds of dollars and goes up rapidly as the condition improves. So, what counterfeiters do is merely add an “S” mintmark to the Philadelphia minted cent in order to reap profits in the hundreds of dollars. This is just one example or adding a mintmark, there are hundreds.

The other way counterfeiters benefit is by removing a mintmark from a coin. An example of this is the 1928 Peace Dollar. The Philadelphia Mint produced few of those coins whereas the San Francisco Mint struck many in relation. The “S” mintmark, located on the reverse of the coin was small, and as such easy to remove, again creating a coin worth hundreds of dollars more than the San Francisco variety. Again, this is just one example of many that exist.

Fortunately these types of counterfeits are fairly easy to detect with a good 10 power magnifying glass by someone who knows what to look for. Also most books on counterfeits show examples and diagnostics of these counterfeits, plus what to look for in the real coin. Some old collections I examine will have some counterfeit coins in them because the collector was not aware of the fact that counterfeits existed.

More on counterfeits next week and the more dangerous examples that exist.

When I examine coins which I intend to purchase, especially in the case of gold or scarce coins, the first thing I do is to determine whether or not they are genuine, not counterfeit. Usually, the response I hear when I tell customers this, especially if I feel the coin is counterfeit, is “it must be real, it’s been in my fathers’ (grandfathers’) collection for years”. Unfortunately, coins have been counterfeited almost from the time coins were first used. And coins can be old counterfeits as well as modern.

Coins are counterfeited for several reasons. One reason, from the time when a coin had its value in gold or silver, reducing the amount of that metal in a coin would give a profit to the counterfeiter when he would spend the coin for its face value. An example would be in the case of a $20 gold coin. This coin was made with 90% gold for hardness and contained .96 ounces of pure gold, which at the time it was minted equaled $20 in gold value. If someone were to counterfeit a $20 gold piece using 18 Karat gold (75% gold), they would use almost 20% less gold, reaping a profit of around $4 per coin.

The same approach has been utilized by counterfeiters with silver coins, that is using less pure silver and benefiting when spending the coin for face value. I have even seen coins that were stamped in copper ,then silver plated to fool people.

Most early counterfeit coins are crudely made by being cast in molds instead of being struck under pressure using dies. This leaves the detail on the counterfeit “mushy” and lacking sharp detail. However that is not to say there are not good quality die struck coins from earlier times, there are. Fortunately most are well known and have characteristics that allow them to be quickly identified as such. And there are numerous books available that picture and describe know counterfeits.

Modern counterfeits use the proper quality of gold and silver when making coins because the profit lies in the numismatic premium paid for the coin, not the metallic content. An example, again using a $20 gold piece, if the metal value of the coin, based on the current gold price of $1300 per ounce is $1248 and a common $20 gold piece currently valued at around $1350, using the proper amount of gold would still yield a profit of over $100. That example shows how a common coin is counterfeited for profit, but more value to the counterfeiter is derived when they copy coins of much higher numismatic value, such as $3 gold pieces which sell for in excess of $600 each but have just over $200 worth of gold. The higher the value of the coin, the greater the opportunity to counterfeit.

With the advances in technology of recent years, the sophistication of the counterfeiters has improved to the point where they have produced very good copies of rare coins. But all counterfeits have unique features and as such once one has been discovered, the information is shared throughout the industry.

More on counterfeits next week.

Those of you who have listened to me on the Don Williams radio program or who have spoken with me know of my feelings toward those companies that run full page ads in newspapers touting unreasonable and unrealistic prices. Those ads are expensive and are paid for by those who patronize the businesses.

While I generally target those companies with “buy” ads, a recent article I read also discloses the dishonesty in the full page ads that offer “rare and never seen coins” to unsuspecting readers. The advertisements referred to were placed by a company with a history of false and misleading advertising. When The Better Business Bureau was questioned by the reporter writing the article, they responded that this company had a rating of “F” with their organization.

The most recent full page ad pictured armed guards protecting what appeared to be pallets of boxes intended for shipping and a picture of a new looking 1913 Buffalo Nickel. The advertisement stated that for $29.95 the customer would receive a vault bag containing rare and never seen coins. The reporter who purchased the bag as part of his investigation found only common Buffalo Nickels, with most having no dates showing because they were completely worn off due to being heavily circulated. When taken to several coin dealers in the area, the reporter was told the value of the coins contained in the “vault bag” was at best only a couple of dollars. Note: although there are some better date and valuable Buffalo Nickels, the majority are extremely common and have minimal value. Those without dates only command a 20% premium.

When the company was confronted by the reporter, they stated that they offered a money back guarantee, but that was only if the purchaser returned the vault bag unopened. Since you couldn’t see the contents without opening the bag, the guarantee is useless. As a result of the article, the company agreed to change the wording of “never seen” to “never seen in circulation”. That means they still intend to continue advertising the sale of coins that have no value to unsuspecting consumers.

All this goes back to my assertion that full page ads by companies that offer what appears to be too good to be true deals. Free, Rare, Highest Prices, UP To, Limited Time Only; all these headlines should make the reader skeptical that something is wrong, and in most cases it is the advertiser trying to cheat the public.

My last 2 articles described the most common markings found on items made of precious metals, but a word of caution. Not all marks are real and hence the item marked will not be made of precious metal. While the occurrence of false markings is not common, it does occur.

As I write this article, gold and silver prices have again jumped due to the Federal Reserves’ decision to continue pumping money into the economy, which I feel will result in high inflation in the future. But that is just my opinion.

A concern I hear from gold investors is that they are worried that once again the government will attempt to confiscate physical gold from the public. The happened in 1933 when President Franklin Roosevelt ordered all citizens turn in their gold coins to the banks (which the banks in turn were supposed to return them to the government). Roosevelt also stopped the future minting of gold coins and ordered all coins already struck to be melted. Readers of this column know that didn’t turn out as expected.

Fortunately for collectors of United States coins, not all citizens complied with that order. And some bankers, instead of sending the coins turned in to their banks to the government, kept selected pieces for themselves. I have purchased some fine gold collections from heirs of bankers from that era. Also, much United States gold coinage found its way to foreign countries where it remained until President Nixon rescinded the law and allowed U.S. citizens to own gold once again.

So the question is “could it happen again”. I don’t think so. First, I feel our society was more passive at that time and more acceptance that the government knew what was best for its’ citizens. That mood does not prevail today as most people are distrustful of the government and the decisions they make. If an order to turn in gold were to be issued, I think most people would chose to ignore it and wait to so what happens down the road. If an order to turn in gold can be rescinded once, it could be rescinded again.

Gold in normal times has been viewed by some individuals as a hedge against inflation. As inflation erodes the purchasing power of the dollar, the value of gold rises to offset that erosion. So if inflation is on our financial horizon because of the amount of dollars the Federal Reserve is printing, having a few gold coins in your nest egg may not be a bad idea. Again, only my opinion.

This weeks’ article continues with explanations about marks that will be found on items made with precious meals.

Silver

Sterling: This mark can be found on silverware, serving dishes, candle sticks, watch cases, etc. The word sterling signifies that the item is made of 92.5% silver and 7.5% something else, usually copper. The forgoing items, by law, must have the sterling mark if in fact they are made of sterling silver. Item not having the sterling mark, even though they may have the word “silver” in the company name that made the item, are in fact not silver, but merely silver plated. Some exceptions exist with items produced in England and some other European countries whereas they will have what is known as a “hall mark” that can take the form of a lion or some other characters that will not only tell the content but also who made the item.

Coin Silver: This mark can be found on any of the above, but is most commonly found on watch cases. It means the item is made with the same purity silver as our silver coins; that is, 90% silver. All of our silver coins (dimes, quarters, half dollars and dollars) minted until and including the year 1964 were made of 90% silver. Occasionally some of the above items can be found with the mark “900”.

“.999 Silver”: This mark is usually found on bars and means the item is 99.9% pure silver.

“.950”: This is a mark I have recently encountered on jewelry and means the item is 95.0% silver.

“.925”: This is the mark typically found on jewelry and as with the word “sterling” means it is made with 92.5% silver.

“800”: This mark is occasionally found on silverware, etc. and means the item is made of 80% silver, a low content. This is usually found on items of European origin.

Platinum

“.999 Platinum” The mark on platinum bars meaning 99.9% pure.

“Platinum; Plat; Pl.” All marks that can be found on platinum jewelry and unless paired with some other qualifier means it is solid platinum.

“.95 Platinum” As with the silver marks means the item is 95% platinum.

“90% (platinum; plat; pl); 10% (iridium; ir)” This piece of jewelry is made with 90% platinum and 10% iridium, another precious metal.

I hope this article and the one last week help to identify items made with precious metals. As in all cases there are exceptions, but these marks are the ones you would most likely encounter.

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