Do You Know What You Are Buying?

By Patrick A. Heller from

Coin collectors and gold and silver bullion investors need to stay alert to be sure they get what they pay for, or what they think they are paying for.
• The number of counterfeit coins has soared in recent years with imports coming in from China to add to pieces from the usual sources.
• Not only do collectors have to worry about counterfeit coins, they have to worry about counterfeit slabs. The Professional Coin Grading Service, Numismatic Guaranty Corporation, ANACs and the Independent Coin Grading Company now provide the ability for the public to view online the photograph of the genuine coin for the specific certification number, but not everyone knows that this protection is available.
• There are privately issued pieces that use terminology that not everyone might understand. Last week, a dealer brought to my company some coins that we had not seen before. They are a Cook Islands 2011 $5 and $25 that state on their reverse that they are, “A Tribute To The United States.” These coins were brought to a West Michigan jeweler, who contacted a local coin dealer who then contacted us to find out what these coins are worth.
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The issue of these coins is legal as far as I can tell and within legal marketing practice, but in figuring out precious metal content, how would you interpret this: It is stated on the coins that they are made of “.24 Pure Gold.” See
Do you know what that means?
The phrase “.24 Pure Gold” probably has no legal meaning at all (I am not an attorney, so I am speaking as a layman). On the $5 coin it reads “1/10 Oz .24 Pure Gold” while the $25 coin states “1/2 Oz .24 Pure Gold.” If the .24 refers to the karat purity of the coin (which neither the coins nor the marketing materials claim), that might lead some people into thinking that these coins are 24 karat pure gold. If so, the 1/10th-ounce coin would have a gold content well above the $99 price at which these coins are offered. Therefore, some people might miss the decimal point before the 24 and not realize that the coins and marketing materials don’t even use the word karat anywhere and conclude that what is offered is made of 1/10th ounce of 24 karat pure gold.
The obverse depicts the head of the Statue of Liberty similar to the design of the U.S. Mint’s 1986 $5 Statue of Liberty gold commemorative, which has a gold content of 0.2419 ounce. The reverse also features the Liberty Bell in the center, somewhat similar to Franklin half dollars. The two features that show that it isn’t a U.S. coin is the small text on the reverse that reads “Cook Islands” and the small head of Queen Elizabeth II superimposed on the Liberty Bell (Cook Islands is part of the British Commonwealth, so portrays the reigning British monarch).
By the way, the seller does state on its website that these “coins” are “non-circulating.”
If the coin is made of 0.24 karat gold, that would mean that the $5 piece has a gold content roughly of 0.1 ounce x .01 purity = 0.001 ounce of gold. At current gold value, the $5 coin would contain about $1.60 of gold content. But, as I pointed out, the description of gold content is fuzzy. Actual gold content may be lower or higher.
If you are buying a gold coin, you should know what the gold content is.
The $5 coin is 16 millimeters in diameter while the $25 coin measures 25 millimeters.
Cook Islands is one of the lowest-cost nations when it comes to licensing the production rights of coins bearing the Cook Islands imprimatur yet being issued for private marketing purposes. In late 2003 I was contacted by an agent for the mint that actually strikes as least some of the Cook Islands issues to see if I had any interest in production of a 1-ounce silver coin bearing the design of the forthcoming 2004 Michigan state quarter. In all, I was approached by agents for seven nations around the world (including Liberia, Isle of Man, and others I cannot now recall) to pay them a royalty fee for striking coins that would be official issues of the respective countries. Among them the Cook Islands quoted the lowest royalty fee. I did not take up any of these offers.
There are many coins from many places that appeal to collectors or souvenir hunters. If you are an investor, you should look for known quantities of bullion for the lowest prices.
If offered an unfamiliar item, as a collector or bullion investor, you need to read the fine print to be sure you know what you are buying.