Dear Patrick

[beauanderos]

to Patrick Heller... a letter I'm considering sending:

Dear Patrick,

I have been reading your submissions to Numismaster with great interest. I would like to thank you for your continuing contributions to the field of coin collecting.

As well, several of your pieces highlight the benefits of safeguarding one's financial well-being -- assailed as we are by ever-accelerating dollar depreciation, courtesy of quantitative easing -- by taking positive steps to ensure one's continued purchasing power by investing in physical silver and gold. Tangible items that are under our own safekeeping, that cannot fall prey to counterparty risk.

Speaking of risk, there is currently none greater than for one to be well-intentioned; wise enough to decide to allocate a portion of one's portfolio to amassing precious metals via a dollar-cost-averaging plan, but foolhardy in not taking the proper steps to do so without incurring further injury. What do I speak of?

Every investor who makes the decision to invest in silver or gold, first faces adopting a position contrary to the armada of talking heads and other pundits who badmouth gold as a barbarous relic, and silver as the preferred currency of tin-foil hat wearing conspiracy mongers. Those who believe in real, sound money get treated no better than Rodney Dangerfield. As is frequently surmised, in all likelihood less than one percent of the populace has any significant holdings of either silver or gold.

In addition to overcoming the mental hurdles that are placed as obstacles to those who oppose fiat, we must ensure that we are paying a fair price for the items we select to serve our purpose. We need to avoid the overpriced wares peddled by opportunistic vendors, those MS70 slabbed "First Issue" pieces, and resist the "bait-and-switch tactics of online charlatans who promise loss leaders, then do everything short of water-boarding to brainwash you into purchasing egregiously higher priced items that help their bottom line, not yours.

And, now? Worst of all? We are facing a threat of tsunami-like proportions, emanating from the Far East. No, I'm not speaking of radioactive flotsam drifting towards our West Coast, I'm talking about the overt Chinese tactic of poisoning our existing precious metals pool with toxic additives. China has long been known for it's production of faux products, and now, for at least a decade, they have turned their attention to producing counterfeit gold and silver coins.

It is not the intent of this letter to point fingers at the sources that implement the sales of these goods, but alibaba.com seems to be a primary one which vendors utilize. One can browse, and in just moments learn that a counterfeited version of nearly every one ounce bullion coin is available. All forms of United States 90% junk silver seem to fall prey as well, and Canadian 80% has been victimized in tandem.

There is likely little that can be accomplished by calling these nefarious misdeeds to the attention of authorities. Witness the spineless inaction of the CFTC after four years of investigation into the virtual one bank suppression of precious metals prices, ongoing now for the greater part of twenty years as documented by expert silver analyst Ted Butler.

I am addressing this letter to you, Mr. Heller, as it appears to me that your position within the coin industry is one that would provide you with a pulpit from which to spread the gospel of this sermon. You would be "preaching to the choir" if you could possibly take advantage of your connections to create inroads to attempt to thwart the flood of fakes that are irreparably tainting our pools of silver and gold.

Specifically, I am inquiring as to what steps do coin dealers take to avert the unintentional purchase of fake coins from the public? And to ensure that bullion, purchased from various sources for resale, is indeed authentic? Do the large online dealers machine sort junk silver coins with industry designed comparitors?

PCGS has an online resource of photograded coins for comparitive purposes of determining your own grades prior to submission of coins for slabbing. With your influence, how hard would it be to persuade them to compile an online resource, available to all, in which images of counterfeit coins could be examined by potential buyers, and a guidelist of determinants to avoid counterfeits be reviewed? As well, they would be in a position to know how prevalent the problem is becoming, and how all encompassing the problem is for the denominations being produced. It is my understanding that entire counterfeited collections of most common junk silver coins can now be purchased from sources like the one I mentioned earlier.

Something needs to be done, and thus this appeal. Please consider using your advocacy to spearhead this movement, as our forces require a General. I am one, but we are many, and en masse, we stand ready to reinforce any strategies you see fit to employ.

We MUST do something to protect the consumer against fake Chinese counterfeits. Any assistance you can lend would be much appreciated.

Regards,
Ray Long

P.S. As a member of two different online coin forums, Realcent.org and BullionStacker.com, I know that I am not alone in sharing these sentiments, but the ideas expressed in this letter should not be attributed to anyone but myself.

[blackrabbit]

Great writing. Send it!

[neilgin1]

well spake.....you got a good pen Ray.

(i'm dreaming up a targeting list for whats called a "full spectrum" attack on these chinese fabricators, but here you are, living in the real world.....aint ya glad i'm not President?...lol)

[Morsecode]

[Diggin4copper]

Well said Ray! Please send it, and keep everyone updated to any response. And let us know what we can do to do our part.

[RichardPenny43]

Nice work!
Send it.

[cjlive2000]

Ray , Thank You for being proactive with this, we all here owe you A Big Thank You !

[barrytrot]

Interesting read but you may want to be more specific instead of just throwing up a dozen problems.

Concentrate on one or two problems and it may be more likely to get a response.

[beauanderos]

just sent it to him email via his website LibertyCoinService.com

Barry, you're right of course, but I'm sure Mr. Heller is well aware of the depth of the problem. He has written regarding counterfeits before.

I invite others to pen their own thoughts and contribute to our defensive strategy. I think if would prove fruitless to send this type of letter to our elected representatives, but maybe Ron Paul would make for a good recipient as well?

[tedandcam]

Ray,
I hope you linked this thread to the email. The letter was well written. It conveys the feelings and sentiments of all/most all of us here on RC. Many will be sharing their support on this thread. It would be great to have Patrick "lurk" through this thread and others to see what this community is about. Once again my hat is off to you

[mbailey1234]

First thought is at what point would the secret service get interested in this? If the Chinese kooks were printing billions in $100 bills I would think they would try and do something about it. Many of the counterfeits are legal tender though like the ASE's and the 90% coins so I would think they would be doing whatever they can to keep them from coming into the country.

My second thought is TPTB may not care if someone is flooding the coin/bullion markets with fakes and they may even appreciate it if it helps them achieve their agenda.

[beauanderos]

First thought is at what point would the secret service get interested in this? If the Chinese kooks were printing billions in $100 bills I would think they would try and do something about it. Many of the counterfeits are legal tender though like the ASE's and the 90% coins so I would think they would be doing whatever they can to keep them from coming into the country.

My second thought is TPTB may not care if someone is flooding the coin/bullion markets with fakes and they may even appreciate it if it helps them achieve their agenda.

right on both counts.

[Engineer]

First thought is at what point would the secret service get interested in this? If the Chinese kooks were printing billions in $100 bills I would think they would try and do something about it. Many of the counterfeits are legal tender though like the ASE's and the 90% coins so I would think they would be doing whatever they can to keep them from coming into the country.

My second thought is TPTB may not care if someone is flooding the coin/bullion markets with fakes and they may even appreciate it if it helps them achieve their agenda.

I don't think the SS would take an interest unless they were publicly embarrassed. At that point, they'd throw a few little guys under the bus to appease the masses.

[68Camaro]

The problem with making broad critique of fakes public knowledge is that (apart from common info like weight, dimensions, and alloy composition) it educates the counterfeiters and over a relatively short time results in increasingly better fakes up to the point where only sophisticated and expensive equipment can sort things out. Been there in another hobby.

[Morsecode]

As I said before, the only one of these fakes they'd even remotely be interested in are the current issue ASE & AGE, since those would be in direct competition with the Feds.

All that other silver is coveted by kooks. Doomsday preppers, Tea Party types, strict Constitutionalists, End the Fed supporters, and Ron Paul cranks. Basically, anyone standing in the way of the NWO. Yeah sure...a Franklin half is still legal tender. It's just not likely tender, so no harm, no foul.

If I were to adjust my tinfoil hat ever so slightly I might even start receiving transmissions suggesting the TPTB are not only assisting in the importation of this crap, but they probably helped out with the master dies.

[beauanderos]

The problem with making broad critique of fakes public knowledge is that (apart from common info like weight, dimensions, and alloy composition) it educates the counterfeiters and over a relatively short time results in increasingly better fakes up to the point where only sophisticated and expensive equipment can sort things out. Been there in another hobby.

Rich, looks like you're right

Patrick Heller's response:

Dear Ray,
Thank you for your thoughtful email. There is a significant problem in Michigan over the past few weeks of a woman going to various coin dealers, pawn shops, jewelers, and the like, trying to sell a specific brand name of counterfeit 1 oz silver rectangles. They are packaged in such a way as to make it difficult for the potential buyers to thoroughly examine them for authenticity. This woman has sold 100-piece lots to at least 10 places in Michigan that we know of so far.

One difficulty that we face is that the police are reluctant to arrest her. Several police agencies have interviewed her, but not have made an arrest. As best I understand it, a police officer needs to be confident of three elements in order to make an arrest. First, they need to be confident in their own mind or are comfortable with expert information that the pieces are counterfeit. Second, they need to have some belief that the would-be seller was aware that the pieces were counterfeit. Third, once the police are content with the first two issues, they need to contend that the would-be seller was attempting to pass off the pieces as genuine. If you just go into a place with these items and only say "What will you pay me for these?" that would not be any representation that the pieces are genuine. And it appears that this woman is savvy enough that she is extremely careful in what she says to a potential buyer.

We are working to try to get this one woman arrested, having devoted several hours to consulting with police departments around the state. The best I can hope for is that at some point, one police department and prosecuting attorney will have the backbone to arrest and prosecute her. My company happens to be the largest coin shop in Michigan. In this capacity, we serve as something of a clearinghouse for other dealers in the state. But it just isn't possible to reach all 300+ dealers right away to warn them.

China's laws against coin counterfeiting only prohibit counterfeits of Chinese coins that are so good that people might be fooled. The counterfeiters do make copies of Chinese coins, but make at least one significant change in the design so that knowledgeable people would know they are not genuine. Counterfeit coins of issues from other countries do not violate Chinese laws.

There are multiple prongs to the problem of numismatic and precious metals counterfeits. First you have the manufacturers who do not face legal difficulties in their home country. Second you have marketing services offered by eBay and alibaba, who receive payments for helping in the distribution of these products. Third, you have some unethical people who recognize the opportunity to buy cheap counterfeits and try to pass them off to unsuspecting sellers. Looking at that as a whole picture, it is difficult to figure out which would be the optimum direction to start cutting this chain. At the moment, I hope that some of the company's whose named-products have been copied without a license agreement or payment will exert pressure on eBay to curtail the marketing of them. That won't cure the problem, but should reduce it, at least for a while.

The problem of counterfeits also applies to jewelry. Perhaps 50% of all 14 karat white gold jewelry offered for sale to us is counterfeit. If a group is exclusively white gold jewelry or has many white gold pieces, almost always it is all counterfeit. We suspect that there are teams that take these lots of counterfeits around to jewelry buyers until they find someone incompetent to buy it as real gold.

More jewelry buyers and coin dealers are purchasing x-ray spectrometers to help protect against purchasing fakes. Unfortunately, these have significant testing limitations which could still lead dealers to purchase some fakes that fool these machines. But a lot of dealers don't have the $20,000 or more it takes to purchase such a machine.

As for publicizing the counterfeits to educate the public what to watch out for, this is not the perfect answer. The grading services do not want to report all the characteristics of fake coins or fake holders as that would simply educate the manufacturers how to make even better looking fakes.

There is even the problem I discussed several months ago about a company selling counterfeit green plastic boxes that look just like the ones used by the US Mint to package 500 pieces of Mint State Silver Eagle Dollars. If the problem gets bad enough, the storage facilities will stop accepting sealed boxes because they want to ensure they are only storing boxes with 500 Silver Eagles in them and not a substitute material that fakes out those who examine the sealed box.

The best I can do is to report these problems. Unfortunately, I expect that whatever steps might be taken to thwart the passing of these fakes will at best just provide a temporary reprieve. Centuries ago, the penalty for producing underweight, under-purity, or counterfeit coins was to have one or more hands amputated or even execution. I hope it doesn't take that extreme of action to solve the problem.

If you have further ideas, I'd certainly appreciate if you could share them.

Patrick A. Heller
General Manager
Liberty Coin Service
400 Frandor Ave.
Lansing, MI 48912
path@libertycoinservice.com
http://www.libertycoinservice.com
517-351-4720 (Local)
800-933-4720 (National)
517-351-3466 (Fax)

Honored by the American Numismatic Association as the 2012 National Coin Dealer of the Year

Editor of Liberty’s Outlook
Gold market commentator for http://www.numismaster.com
Precious metals commentator for http://www.coinweek.com
Precious metals commentator for http://www.coininfo.com
Bimonthly columnist on Collectibles for The Greater Lansing Business Monthly
Host of twice weekly radio program “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” on Wednesday and Friday mornings 8:45 AM Eastern time at 1320 WILS-AM. Streaming live and archived at http://www.1320wils.com.
Executive Producer of the forthcoming movie Alongside Night (see http://www.imdb.com/title/tt1667061/fullcredits#cast or view trailer at http://www.youtube.com/watch?

[OneBiteAtATime]

Nice, Ray! You got such a quick response, you'd think your signature read, "Regards, Adam Youngs."

[barrytrot]

Quick response and VERY genuine.

Unfortunately his response boils down to, "yeah, I agree that it sucks out there."

[RichardPenny43]

Educate yourself, and TS for anyone else.

[beauanderos]

Patrick adds:

Dear Ray,Overnight, I thought of one more "reason" why it might be hard to get government cooperation going after counterfeiters of cons and bullion bars. The US government has a vested interest in discouraging the demand for physical precious metals. If people can be scared away from buying them out of concerns that they might receive fakes, that would actually assist the US government in its goal. So, why would the Secret Service want to put effort into reducing this problem? Scary thought, I know, but there just might be some truth to it.


Ain't that the truth, folks!

[68Camaro]

He seems so well-balanced, it's scarily interesting to see him essentially on the same page as most of us!

[beauanderos]

I invited him to lurk our threads... who knows, maybe he'll join us. "Eh, Patrick?"

[Morsecode]

Patrick adds:

Dear Ray,Overnight, I thought of one more "reason" why it might be hard to get government cooperation going after counterfeiters of cons and bullion bars. The US government has a vested interest in discouraging the demand for physical precious metals. If people can be scared away from buying them out of concerns that they might receive fakes, that would actually assist the US government in its goal. So, why would the Secret Service want to put effort into reducing this problem? Scary thought, I know, but there just might be some truth to it.


Ain't that the truth, folks!

I'm smelling it.

[mtldealer]

Would boycotting Chinese coins help? Maybe if as consumers we stop buying Chinese coins it will put pressure on the Chinese government to do something about more than just counterfeit "Chinese" coins?

[Engineer]

He seems so well-balanced, it's scarily interesting to see him essentially on the same page as most of us!

I agree.
Saying that the Governmint™ has an interest in encouraging counterfeits sounds like the stuff of tin foil hats...but it seems more feasible every day.