In coins, and many other areas of life, the old saying, "If it's too good to be true, it probably is," is a rule to follow. Almost every deal we see or hear of that fits this rule has a major pitfall behind it. Of course, everyone has heard of a collection or special coin that was bought for next to nothing and sold for big bucks, so greed can entice even the most cautious.
The first and most dangerous pitfall is counterfeits. Many forgeries are being made today. In fact, in China it is legal for them to make fake U.S. coins, and there are companies making them by the thousands. Many of these counterfeits are sold in online auctions, but others are sold by unscrupulous vendors looking for a quick buck. Even people claiming to be collectors are selling them. One customer actually paid $1,700 for six coins that were all forgeries. If the coins were real their value would have been about $16,000. They thought they were going to make thousands, but instead all they had was an expensive handful of worthless metal.
Another dangerous scenario is when a dealer lacks the knowledge to detect a counterfeit. In this case the collector buys a coin trusting the dealer's knowledge, only to find out later that the dealer had no idea. It is important to buy from an experienced dealer with a guarantee that everything sold is authentic. Authorized PCGS and NGC dealers help you avoid this pitfall. Coins certified by PCGS (Professional Coin Grading Service) and NGC (Numismatic Guaranty Corporation) are guaranteed authentic by the grading services themselves. In a world where some counterfeits are so deceptive that every once in a while they even make it by the experts, and grading services, a dealer's guarantee is important. Make sure your dealer stands behind his product.
Fantasy pieces are similar to counterfeits but not as deceptive to a knowledgeable person. One example we recently saw was an 1842 Seated dollar with the Carson City mint mark. Since the Carson City mint did not open until 1870 this piece could not possibly have been real. This was not a counterfeit, but rather a fantasy piece. You have to have some working knowledge to avoid this pitfall, yet some are still caught by it.
Buying coins from a knowledgeable dealer can save you from many pitfalls. Trying to save a few dollars could end up costing you more than you could foresee in the end. Taking a chance on a deal that just seems too good to be true, well, we have seen where that can lead.
• Allen Rowe is the owner of Northern Nevada Coin in Carson City.