Facing the Chinese Counterfeit threat
Justacommeman
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as sniped from the CRO Road Report and our very own Dave Wnuck. I found it compelling. MJ
While our readers may have come here expecting to see exciting news about our flights from New England, or possibly something about a lost bag, instead you are going to get some heavy-duty numismatic content as I describe the two-day ANA-sponsored seminar that I (DW) attended, along with a dozen other men and women, prior to the show.
Titled “Facing the Chinese Counterfeit Threat”, the course was taught (not surprisingly) by a podiatrist from Alabama named Dr. Greg Dubay.
Actually that’s true, but Dr. Dubay is also an Iraq war veteran who has devoted the past several years to learning about and educating others about the counterfeit US coins currently being produced by Chinese factories. And this is pretty serious stuff, evidenced by the fact that the last audience for this presentation was a little outfit called The United States Secret Service in Washington, D.C. As an aside, Dr. Dubay assured us that the Secret Service is serious about enforcing the laws in this area, but they lack resources.
Nevertheless, there are several ongoing prosecutions of counterfeit coin importers and the dealers and mules that are selling them, and more on the way.
So what did we learn:
As some of you may know, it is perfectly legal to counterfeit coins in China, as long as they are dated prior to 1949(!). That includes coins of all nations (Chinese too!).
There are factories of various sizes that operate out in the open, with employees, buildings, and all the necessary government licenses. The largest of which has many employees, uses surplus presses from the Philadelphia mint that were shipped to China in the 1920’s, and churns out something like 100,000 counterfeits per month. And most (but not all) of these coins are US counterfeits.
I found the course absolutely fascinating, especially the entire day devoted to hands-on examination of the various qualities of counterfeit coins and coinage dies. We saw plenty of coins, including dangerous counterfeits that have even slipped by all the grading services. The services do an excellent job of weeding out these counterfeits, but no one is perfect. Counterfeit slabs were also discussed.
At the end there was an optional “final exam” consisting of 15 Morgan dollars spread out on a table. 14 of them were the finest of the counterfeits coming from China these days, and one was a genuine coin.
At the start of the course, Dr. Dubay rattled off the names of several prominent numismatists who failed this test. Being a competitive sort, and having years of experience in the counterfeit detection arena, I made up my mind then and there that I was going to pass. So with the coins lined up in front of me, I studied for a long, long time and ultimately narrowed it down to two before finally making my selection. Which, I am delighted to report, was correct.
I am less delighted to report that it was pretty difficult, the quality of the fakes was outstanding, and, according to Dr. Dubay, some of the most deceptive examples of coins and dies have arrived from China only in the past 2 weeks. It is safe to say that if not for the information I picked up here, I do not think I could have passed.
Which makes taking a course like this mandatory for any serious dealer IMO, and an excellent idea for a collector too.
While our readers may have come here expecting to see exciting news about our flights from New England, or possibly something about a lost bag, instead you are going to get some heavy-duty numismatic content as I describe the two-day ANA-sponsored seminar that I (DW) attended, along with a dozen other men and women, prior to the show.
Titled “Facing the Chinese Counterfeit Threat”, the course was taught (not surprisingly) by a podiatrist from Alabama named Dr. Greg Dubay.
Actually that’s true, but Dr. Dubay is also an Iraq war veteran who has devoted the past several years to learning about and educating others about the counterfeit US coins currently being produced by Chinese factories. And this is pretty serious stuff, evidenced by the fact that the last audience for this presentation was a little outfit called The United States Secret Service in Washington, D.C. As an aside, Dr. Dubay assured us that the Secret Service is serious about enforcing the laws in this area, but they lack resources.
Nevertheless, there are several ongoing prosecutions of counterfeit coin importers and the dealers and mules that are selling them, and more on the way.
So what did we learn:
As some of you may know, it is perfectly legal to counterfeit coins in China, as long as they are dated prior to 1949(!). That includes coins of all nations (Chinese too!).
There are factories of various sizes that operate out in the open, with employees, buildings, and all the necessary government licenses. The largest of which has many employees, uses surplus presses from the Philadelphia mint that were shipped to China in the 1920’s, and churns out something like 100,000 counterfeits per month. And most (but not all) of these coins are US counterfeits.
I found the course absolutely fascinating, especially the entire day devoted to hands-on examination of the various qualities of counterfeit coins and coinage dies. We saw plenty of coins, including dangerous counterfeits that have even slipped by all the grading services. The services do an excellent job of weeding out these counterfeits, but no one is perfect. Counterfeit slabs were also discussed.
At the end there was an optional “final exam” consisting of 15 Morgan dollars spread out on a table. 14 of them were the finest of the counterfeits coming from China these days, and one was a genuine coin.
At the start of the course, Dr. Dubay rattled off the names of several prominent numismatists who failed this test. Being a competitive sort, and having years of experience in the counterfeit detection arena, I made up my mind then and there that I was going to pass. So with the coins lined up in front of me, I studied for a long, long time and ultimately narrowed it down to two before finally making my selection. Which, I am delighted to report, was correct.
I am less delighted to report that it was pretty difficult, the quality of the fakes was outstanding, and, according to Dr. Dubay, some of the most deceptive examples of coins and dies have arrived from China only in the past 2 weeks. It is safe to say that if not for the information I picked up here, I do not think I could have passed.
Which makes taking a course like this mandatory for any serious dealer IMO, and an excellent idea for a collector too.
Walker Proof Digital Album
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
0
Comments
Ron
sad...very sad context...
<< <i>That bothers me, whats in the next 5 or 10 years? >>
I'm thinking the chinese will outsource those jobs to the US by then.
Herb
EAC 6024
<< <i>At the start of the course, Dr. Dubay rattled off the names of several prominent numismatists who failed this test. Being a competitive sort, and having years of experience in the counterfeit detection arena, I made up my mind then and there that I was going to pass. So with the coins lined up in front of me, I studied for a long, long time and ultimately narrowed it down to two before finally making my selection. Which, I am delighted to report, was correct. >>
Curious but scary question. How many of the 15 would you of eliminated had you not known 14 were counterfeits?
I caught his seminar at the Philadelphia Expo in 2009. Here's a writeup with photographs:
Dr. Gregory Dubay's counterfeit-coin presentation at the 2009 Philly Expo
<< <i>American greed is a large part of Chinas success. Take a look in the mirror, we are all at fault. >>
I agree. The unions got too greedy forcing American companies to move off shore so they can still be able to compete in the world market.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>American greed is a large part of Chinas success. Take a look in the mirror, we are all at fault. >>
a good outside perspective
"To know thy enemy, know thyself"
.
<< <i>as sniped from the CRO Road Report and our very own Dave Wnuck. I found it compelling. MJ >>
ty for sharing justacommeman
.
<< <i>
<< <i>At the start of the course, Dr. Dubay rattled off the names of several prominent numismatists who failed this test. Being a competitive sort, and having years of experience in the counterfeit detection arena, I made up my mind then and there that I was going to pass. So with the coins lined up in front of me, I studied for a long, long time and ultimately narrowed it down to two before finally making my selection. Which, I am delighted to report, was correct. >>
Curious but scary question. How many of the 15 would you of eliminated had you not known 14 were counterfeits? >>
Yeah, a better test would have been 20 coins, and between two and ten real ones. Knowing that there was only one real coin made the test 10x easier. Even then probably fewer than 50% of bourse dealers would pass the easier version. Maybe 25% would pass a more difficult version of the exam.
Even better test ... anonymously (through several submitters) send 100 real plus counterfeit to PCGS, NGC, ANACS ... then publish the results. The results of such a test will heighten the awareness of everyone (and likely really upset a lot of folks as well). Of course, our host will score a perfect 100%!
Collectors and dealers view raw coins differently than slabbed. I think what is far more dangerous than "good" counterfeits being sold raw or in counterfeit holders, is the potential for counterfeit coins to slip past the TPGs.
If several "prominent" numismatists "failed" the test and one admits to spending a "long, long time" evaluating 15 coins ... what chance do other experts have who don't have the luxury of a "long, long time" but rather only 10 seconds or less per coin in the grading room.
Scary stuff.
See http://www.doubledimes.com for a free online reference for US twenty-cent pieces
<< <i>Scary stuff.
Even better test ... anonymously (through several submitters) send 100 real plus counterfeit to PCGS, NGC, ANACS ... then publish the results. The results of such a test will heighten the awareness of everyone (and likely really upset a lot of folks as well). Of course, our host will score a perfect 100%!
Collectors and dealers view raw coins differently than slabbed. I think what is far more dangerous than "good" counterfeits being sold raw or in counterfeit holders, is the potential for counterfeit coins to slip past the TPGs.
If several "prominent" numismatists "failed" the test and one admits to spending a "long, long time" evaluating 15 coins ... what chance do other experts have who don't have the luxury of a "long, long time" but rather only 10 seconds or less per coin in the grading room.
Scary stuff. >>
Many members on this forum that now it cannot fit in my signature. Please ask for entire list.
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
Interesting comment with which I do not agree.
I don't think the US Secret Service would either.
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
That's a simplistic and naive approach. Just because an "expert" can't detect it is a counterfeit at the time doesn't make it "genuine."
See http://www.doubledimes.com for a free online reference for US twenty-cent pieces
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
I totally disagree.
If that is true, this hobby is doomed.
<< <i>
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
I totally disagree.
If that is true, this hobby is doomed. >>
Agree. It makes no sense to think that a fake coin that is well made becomes a genuine coin.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>
<< <i>
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
I totally disagree.
If that is true, this hobby is doomed. >>
Agree. It makes no sense to think that a fake coin that is well made becomes a genuine coin. >>
But as the statement says "it truly fooled the experts" and it's fooled you , nobody but the manufacturer knows and perhaps the original reseller to the open market , nobody knows.. is it a fake or is it genuine ? Bearing in mind you've bought it as genuine and the experts say its genuine , theres no way of knowing otherwise.
Sure it's easy to say it's still a fake , and it is , i wonder how many fakes are considered genuine in peoples collections today.
<< <i>I don't want to hyjack this thread but are the Chinese counterfeiting paper money to or just coinage? I have never collected paper money but it may be a safer area. >>
Collect Chinese paper money. They don't counterfiet stuff that could end up with them getting their hands chopped off.
<< <i>I don't want to hyjack this thread but are the Chinese counterfeiting paper money to or just coinage? I have never collected paper money but it may be a safer area. >>
The PRK(North Korea) has been counterfeiting U.S. currency for decades. Don't think the Chinese are doing this yet.
"Seu cabra da peste,
"Sou Mangueira......."
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
Nonsense. Just ask around in the art world. Plenty of people will be fooled, but not REAL experts who exercise due diligence when evaluating an object.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
<< <i>
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
Nonsense. Just ask around in the art world. Plenty of people will be fooled, but not REAL experts who exercise due diligence when evaluating an object. >>
Seriously though, once you are unable to detect that an item is counterfeit it is the equivalent of genuine by the only standard available. That may change as the sophistication of the detection mechanism improves, but at that moment before that there is no difference.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>
<< <i>
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
Nonsense. Just ask around in the art world. Plenty of people will be fooled, but not REAL experts who exercise due diligence when evaluating an object. >>
Seriously though, once you are unable to detect that an item is counterfeit it is the equivalent of genuine by the only standard available. That may change as the sophistication of the detection mechanism improves, but at that moment before that there is no difference. >>
Perhaps a topic for a philosophical essay on the aesthetics of counterfeits, but we aren't even close to having to worry about this. If they get die characteristics right, then there will be a problem. Even this can be solved by using pedigree information to make more informed purchases in some cases. The art world has had to deal with the forged art problem for centuries (even the Romans were making knock-offs of Greek statuary). Certain types of physical properties can be forged (but rarely everything), pedigrees can be forged (but this is rare). Existing fakes continue to circulate because people---dealers and collectors---get lazy (or perhaps don't really want to know the truth). What the Chinese counterfeiting problem elicits from me is even more skepticism when I am hunting for coins, particularly since slabs themselves are being counterfeited.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
That was like 3-2-1 countdown............right on cue. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
you're right about that.
items that pass undetected sure have a different journey that their detected counterparts
seen a few go from fake, genuine, fake genuine. just depends on who owns it ><
i'd bet a large stack of case there are hundreds of thousands of counterfeits that get sold as authentic,
then detected, then some time passes and then resold as authentic, then detected and on and on
kinda ironically sad/humorous simultaneously
although our desire is for them not to exist, so long as man does, so they will
.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
This is similar to the logic that a crime is only committed if a prosecutor can prove it in court.
I've read that some luxury goods makers that used to aggressively combat cheap Chinese counterfeit goods have long since basically given up after having spent years appealing to the Chinese govt. to curb the export of counterfeit goods but it falls upon deaf ears. It's now estimated that over 75% of all the worlds counterfeit products originate from China. (our "most favored trading partner")
<< <i>I don't want to hyjack this thread but are the Chinese counterfeiting paper money to or just coinage? I have never collected paper money but it may be a safer area. >>
North Koreans and a few other countries are rumored to be faking U.S. $100 bills by the billion. Paper money has an advantage in that every piece has a unique serial number, which helps with tracking high value pieces.
As to perfect fakes being real coins, I disagree. Fakes and detecting fakes are an ongoing never ending battle. At times fakers get slightly ahead of some experts, at times experts have a good handle on things and fakes have a hard time finding homes. Just because a fake is "perfect" for today's detection methods, that may not hold. New tech may be able to detect today's perfect fake, and in say ten years, all those formerly perfect fakes get washed out of the market and all those holding them have melt value slugs. If it comes to that, key dates and rare type coins will plummet in value, because they will tend to be the coins faked in high quantity. If that kind of darkness falls upon the hobby, it will be a time to collect mostly for bullion value, because everything else might be suspect.
As an aside, in a separate thread, someone posted a warning about fake classic commems. There were a couple of raw commems in the local coin club auction. I have no idea if they were some of the fakes mentioned, but I wasn't about to take a chance. No one in my club has enough expertise to authenticate a high quality fake commem.
I specialize in Errors, Minting, Counterfeit Detection & Grading.
Computer-aided grading, counterfeit detection, recognition and imaging.
Someone here at the Denver show told me of the existence of this thread.
While it is good to be aware, there is no need to panic. There are new detection methods being evaluated now that will help greatly, and only a tiny percentage of the fakes now being inported from China are anywhere close to being their "top end product". It is expensive for them to produce those high quality fakes, so they do it sparingly. Nearly every one of them get weeded out anyway by the grading services.
And someone mentioned that they should collect currency instead, as that might be a safe haven. Maybe, but I know for a fact that the Chinese are now making top quality fakes in (current) US currency in all denominations (not just $100's).
So -- the battle between counterfeiters and authenticators continues and the arms race escalates, but do not dispair. By the way, the same thing is going on in car parts, smart phones, watches, machinery, consumer goods, software, etc. That's the way it is, and always has been. Be smart, get education, deal with reputable firms like the top grading services and respeced coin dealers, and relax.
Hey -- Claychaser just told me here at the show that the Mayan calendar does not end in 2012, but actually ends 1,500 years from now (per an article in USA Today). You can't get any better news than that!
-DW
Coin Rarities Online
<< <i>There is no doubt in my mind that the technology, skill and expertise exists to create "genuine" fakes. This is reality. You can play ostrich and stick your head in the sand or you can come to grips with the reality of our hobby. It is interesting that the immediate response to my statement is that it cannot be so. The content of this thread proves that it is so. >>
I'll agree with this statement in that the Micro O Morgans resided in TPG slabs for years before being identified as well done contemporary counterfeits due solely to the efforts of dedicated experts that had an in-depth knowledge of die characteristics. Of course, the conclusion was based upon a presumption that the US Mint, in all their years of production, never reused dies from previous years (actually over a 6 year span) but the folks that adamantly believe that the Mercuary 1936/29 FS-110 might disagree.
You can fool some of the experts all the time.
You can fool all the experts some of the time.
But you can't fool the experts for a very LONG time simply because this hobby can get so complex that only the most diligent and dedicated individuals will eventually figure out whats what.
While the statement(s) "Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin." seems a little ridiculous, it's actually true in that, if only the manufacturer knows it's a counterfeit, then it might as well be genuine.
Having said that, I'm not in the least bit scared primarily "because" I rely upon the experts who, like the Morgan Micro O's, guarantee their grades and attrobutions so if I go under because of an abundance of "doubt" within the collecting community, everybody else will be in the same sinking ship.
While the Chinese counterfeits can be very well done, they are still identifiable as counterfeits by the experts. The experts, really, are the backbone of the hobby and if we, as collectors, cannot feel a certain level of confidence in what is related to us (bad as well as good) then we should really seek some other form of casual etertainment. (Hobby Trains is pretty good!)
A quick scan through the 2011 RedBook, which MANY non-Professional Coin collectors rely upon, did not show any sections "dedicated" to the Chinese Counterfeits including accurate diagnostics.
If it isn't already in the 2012 and 2013 editions, perhaps that production team should consider something for the 2014 edition? The timing could not be any better.
The name is LEE!
After a few factories disappear from the planet, they'll get the hint.
<< <i>An even better test: 19 fakes and 1 real one and tell people there are 2 real ones. >>
A scarier thought is that each month over 100,000 are being accepted by people somewhere as genuine.
Kind of when I see the "bags of 100" dollars at a coin show being traded for +/- melt. Nobody checks them and I would bet it would be easy to dump in 50% fakes and make a decent amount.
I was in a large company that deals in coins not to long ago and they had a large accumulation (it was several thousand) of silver dollars came in which they paid a % melt at the time (he said he paid around $16 each and wanted $23).
I looked at a couple and noticed that some definitely looked wrong and pointed it out to the store owner.
Of course his 40 years in the business trumps my 23 years of age and knowledge and he quickly told me Im worng and that I dont know much.
A quick ping test changed the whole story for him.
<< <i>To allay your fears; There is at least one grading company working aggressively to detect counterfeits with 100% accuracy. >>
I can think of several grading companies that are doing this.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
U.S. Type Set
<< <i>Any coin that can truly fool the experts is no longer fake. It becomes a genuine coin. >>
Close, but not quite correct.
This statement rings true, however:
"Any coin that can forever fool the experts is no longer fake. It becomes for all intents and purposes a genuine coin."
(Edited for spelling)
However, let me play devil's advocate for a sec:
Did this expert get to handle these pieces? Did he have a scale? His reference books and notes? An internet connection and laptop?
Did he even have a loupe or a magnet?
Did this expert have enough time, or even good lighting?
Those are the simple tools for a simple diagnostic.
Remember the full resources of what our hosts and the other real TPGs have at their disposal. All of these things plus specific gravity, digital imaging referenced 24-7 online, computer mapping and X-ray fluorescence spectrometers, etc.
So we need to beware of what is in the container on the ship bound from China right now, and what is coming next month and next year.
But it's not quite time to panic.
You can make 100,000 1921 Morgans that can fool the local pawn shop and the mom & pop/B&M shop owners. But those are melt-fodder anyway. Punch a hole in them and test them for 90%. Honestly, 90% is 90%. That's why it's 90%. Will China bother to make 90% silver fake Morgans if the potential profit margin is a few cents? As long as it's 90% silver, do you really care or need to be worried?
Conversely, it's exponentially harder to make really good fake better pieces. The market is smaller, the experts sharper, the scrutiny better. When there is big money to be made, there is big money to be lost.
--Severian the Lame
I was going to ask these questions!
as for the last remark: they'll never make 90% anything using 90% blanks. no profit. So, the melt value ones still get made in an off metal.
<< <i>I and many others sounded this alarm a long time ago on this forum: metalurgically correct blanks, CAD dies, authentic presses. It's a matter of time--if economics support it.
However, let me play devil's advocate for a sec:
Did this expert get to handle these pieces? Did he have a scale? His reference books and notes? An internet connection and laptop?
Did he even have a loupe or a magnet?
Did this expert have enough time, or even good lighting?
Those are the simple tools for a simple diagnostic.
Remember the full resources of what our hosts and the other real TPGs have at their disposal. All of these things plus specific gravity, digital imaging referenced 24-7 online, computer mapping and X-ray fluorescence spectrometers, etc.
So we need to beware of what is in the container on the ship bound from China right now, and what is coming next month and next year.
But it's not quite time to panic.
You can make 100,000 1921 Morgans that can fool the local pawn shop and the mom & pop/B&M shop owners. But those are melt-fodder anyway. Punch a hole in them and test them for 90%. Honestly, 90% is 90%. That's why it's 90%. Will China bother to make 90% silver fake Morgans if the potential profit margin is a few cents? As long as it's 90% silver, do you really care or need to be worried?
Conversely, it's exponentially harder to make really good fake better pieces. The market is smaller, the experts sharper, the scrutiny better. When there is big money to be made, there is big money to be lost. >>