With the price of gold at less than $1100 per ounce, many hobbyists are buying old coins rather than bullion, taking advantage of price and adding raw coins to their collections. However, unlike other numismatic items, raw gold comes with more potential problems because of the soft metal, history of counterfeits, improper care and, lest we forget, unscrupulous sellers.
Some problems lessen value but still may earn a grade at the top holdering companies. Many problems will not be worth slabbing. And a few problems are outright frauds.
The most common flaw is the test cut. Such cuts were made to discern whether the coin in question is gold or merely gold plated, as was the notorious 1883 racketeer nickel, which scammers tried to pass off as $5 gold, because the US Mint neglected to put a denomination on the coin other than the Roman numeral V. See below.
It goes without saying that you will not be fooled by this.
You can, however, be fooled by test cuts because they occur near the rim where eager bidders tend not to look when competing for a coin online. (Dealers at shows or in hometowns would typically identify the flaw on the flip.)
Below are examples of test cuts. This seller honestly seems to have missed the cut on the bottom right (expanded in the photo below). This cut may not be severe enough to prevent slabbing. But a world-class grader would reject it, so why take the risk?
This test cut below also is difficult to discern at first glance because it is scraped rather than cut on the rim. Again, this will be a close call at any reputable grading company.
Here is a more obvious test cut on a coin with several problems, including polishing (another frequent flaw found in raw gold coins):
In evaluating raw gold, do not confuse the test cut (made with a knife or sharp tool) from a rim nick, which often happens when coins tumble against each other in a bag. Here’s an example of a rim nick:
Old gold coins often are used in jewelry. Some are made by owners, usually ruining the coin, as in this example showing remnants of a removed mount at 12 o’clock on the obverse:
Some coins soldered or fastened to jewelry, damaging the gold when the jewelry is removed, as in this example:
Common flaws, even in modern gold, are copper spots (which will not prevent slabbing) as in this 2008 First Spouse Martin Van Buren coin:
Because gold is a soft metal, any gentle attempt at cleaning leaves marks:
Small denomination gold coins are prone to being bent because the metal is so thin and malleable. The bend here is on the left side:
And of course, because of value, gold coins are often counterfeit. That’s a separate column in itself, but you must always be aware that any raw old coin has a significant chance of being a fake. The best defense is to buy slabbed coins by PCGS, NGC, ANACS and ICG.
There are many books about detecting counterfeit gold. Here is my favorite, United States Gold Counterfeit Detection Guide, by Bill Fivaz:
Here is a fake offered on Proxibid that I detected a few years ago:
Here is a close-up comparison of the misplaced mint mark:
Of all fake gold, the most common is California fractional coins. You can read about that in depth here.
If you see a bear on the reverse, it is almost always a fake, like this example:
Finally, don’t buy fool’s gold. I’m not talking pyrite but vials of gold-flake, which are so microscopically thin as to have no value.
Have you purchased a raw gold coin only to find a flaw in it? What are your thoughts? Share them in the common section below!
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RAW – Grrr!
I notice this article uses the word “raw” several times, referring to ungraded, unslabbed coins.
The use of this word in this context really annoys me, as it carries the strong implication that “raw” coins are somehow inferior to certificated (cooked?) ones.
Numismatists, whether collectors or dealers should remember that all coins were “raw” when created, and stop using “raw” as a pejorative.
I guess that the word has been used by grading companies as part of a marketing campaign to brainwash everyone into believing the only good or safe coin is a slabbed one.
I know the alternative “unslabbed” or “uncertificated” is longer, but bothe these words come without the negative implications inherent in “raw”.
Sorry, Lawrence: I didn’t get the memo on “numismatic correctness.”
Nice article Michael!
@Lawrence Chard – As far as the use of the term “raw” I never heard it used as a pejorative. Coins in OGP are also “raw”.”Raw” coins may not be inferior but the buyer takes more risk when acquiring these coins, its the entire reason we have TPGs. The point of the article was to help identify some of those risks. IE regardless of the quality of the meat, you have a higher probability of getting sick by eating raw meat, than if you eat cooked meat. Whether you agree with that analogy or not the market perception of “raw” coin is they are riskier.
and that perception will not change by using different terms like “unslabbed” or “uncertificated” IMHO those terms have a pejorative as it would indicate that the coin slabbing is the natural state of a coin and these are not certified…rather than just being “raw” or “in a natural state.”
Thanks, Sith, for your comment: “‘Raw’ coins may not be inferior but the buyer takes more risk when acquiring these coins, its the entire reason we have TPGs.”
You’re right.
These days the risk online is so much greater, Sith, because we can’t always trust the photos. Also, I think there are some consignors out there with problem coins that use online portals like Proxibid and eBay to get rid of their flawed coins.
good article, very informative. im still waiting though for gold to go down some more!
Thanks, Joe. I think gold will hover around $1000. But you may be right if China’s depression continues as that country buys lots of gold.
For me personally, when I purchase online, I would rather purchase a PCGS or NGC graded coin, especially in the case of older/classic coins since there is a possibility that it may have been damaged, cleaned, altered, or counterfeited. But, having said that, even though a coin may have been slabbed by a TPG, it doesn’t entirely rule out the possibility that any of the above could still be true. There was a poster on another forum who mentioned that Omega Man $20 Saints were seen in PCGS slabs. Third party graders are human and coin grading is subjective.