Coins DIG

Among all the collectible items you might want to diversify your investment portfolio with, rare coins offer the most potential for profit, as there are more wealthy coin collectors than there are say, collectors of stamps, baseball cards, comic books or just about anything else.

Sadly, counterfeiters have figured this out too. A simple search on eBay and a few online auction sites show that it’s common for rare coins to attract bids of $1,000 or more — and that means huge profits for those who can pass off counterfeits bought for a few dollars as the real thing.

Neal Shymko, a coin collector in Edmonton, logged on to eBay in February and spotted a package of 15 Canadian 50¢ pieces being offered by a Quebec-based seller. Twelve of the 15 coins were of so little value their combined worth would be about $50, Mr. Shymko says, but three coins, from 1888, 1890 and 1894, were noteworthy, and he won the package with a $4,000 bid, then paid with a money order.

The coins arrived soon enough. After a quick glance showed they were indeed old 50¢ coins, Mr. Shymko logged on to eBay and gave the seller positive feedback — a favourable review of the transaction, a move he later regretted, since eBay does not allow changes.

Mr. Shymko says he grew suspicious about the three high-end coins when he took them out and noticed they felt unusually light. Such coins should weigh 12 grams, but when he put them on his postal scale, each of the three weighed only 8.5 grams.

“Just to make sure my scale wasn’t out I checked other coins I have from the same time period and they all weighed in at the 12-gram mark,” Mr. Shymko says.

Before putting them in a safety deposit box with the rest of his collection, he examined the three coins and discovered they’d been struck improperly, with the same obverse, or front, for all three, and a historically incorrect obverse for the 1894 coin. As a final clue, Mr. Shymko noticed the seller had reused a box with a label from China, where producing replicas of rare coins is a huge industry.

Mr. Shymko contacted the seller, who first claimed an inability to understand English, then fell silent when Mr. Shymko used an online translator to correspond in French.

“All correspondence from them has now ceased,” Mr. Shymko says.

Mr. Shymko complained to eBay, which sent him a few form-letter replies and said its staff was investigating but could not offer further details because of privacy issues.

“Ebay has been totally useless in this matter,” he says.

Andrea Stairs, an eBay Canada spokesperson, described the incident as “not typical to eBay,” noting that according to the information she has, the seller, who spoke no English, used a translation program and listed the item in good faith.

The incident “was the result of a couple of really unusual events,” says Ms. Stairs. “We have a zero tolerance for counterfeits and we’re doing our best to make sure that those things don’t hit the marketplace,” she says, adding that eBay works with the RCMP, the provincial police forces and members of the numismatic community to develop guidelines and policies that help protect buyers from purchasing illegal merchandise.

Ms. Stairs says if Mr. Shymko had paid with PayPal, he would have been protected up to the full amount of the purchase price — something Mr. Shymko says he’s heard several times since then, but which doesn’t make him feel any better.

A recent search on eBay found 352 replicas of rare Canadian coins for sale, all but four from sellers in China. Another 9,950 replica U.S. coins were listed; of these, 9,134 were from China. There is nothing illegal about buying or selling a replica, as long as the coin is stamped as such. A collector who wants the 1936 “dot” Canadian 1¢, for example, might want a replica since only three genuine ones exist, going for prices of $200,000 and up. A replica of the coin on eBay, however, is just $4.65, with free shipping. A replica of the extremely rare 1921 Canadian 50¢ piece, which goes for $35,000 to $85,000, depending on its condition, was on offer for US$4.

On eBay, the photographs of the coin copies show the word “replica” stamped into the coin. But if it arrives without a stamp, the buyer has a counterfeit coin.

To avoid being victimized by a counterfeit coin, it’s best to stick to coins that have been independently examined, graded and encapsulated in tamper-proof holders. In Canada, that means only buying coins graded by International Coin Certification Service (ICCS) of Toronto or Canadian Coin Certification Service (CCCS) based in Saint-Basile-Le-Grand, Que. (canadiancoincertification.com).

Louis Chevrier, CCCS president and chief grader, has been a coin collector for 35 years, a dealer for 16 years and a coin auctioneer for the past five years. He says he can usually spot a fake coin right away.

“It raises a red flag with me. I get a gut feeling there is something wrong,” he says, adding that some Chinese replicas are often crudely made but novice collectors could still be fooled.

Mike Marshall, a coin collector in Trenton, Ont., says he has tried without success to make police enforce Section 406 of the Criminal Code, which deals with counterfeit coins, and to persuade politicians to contact eBay and urge them to disallow the sale of “replica” coins.

“One phone call from an agency of power in Canada to eBay would end the influx,” Mr. Marshall says.

Source: vancouversun.com