Beware of fake gold

Fortuna Gold Rectangular Ingot-2.5g

PAMP Gold Ingot

The Numismatic Crime Information Center is reporting that two suspects have been arrested for selling fake Suisse PAMP gold bars. The NCIC report is as follows:

Traveling Suspects Arrested

Two suspects have been arrested for selling fake Suisse Pamp carded gold bars (2.5gm, 5gm,10gm and 1 ounce) at a coin shop in Greenwood, Indiana. Search of the suspects vehicle revealed multiple identification cards, business and pamphlets from different coin shops and an additional 250 fake gold bars and coins. Based upon receipts located in the vehicle the suspects had been selling the fake gold to shops in Illinois, Kentucky, Tennessee and Indiana since September, 2014.
 
The suspects were driving a silver Ford Focus with Missouri license plates. The suspects are being held for Theft by Deception.

Aaron TaylorWestern Union, IL

Aaron Taylor
Western Union, IL


 
Second suspect was identified as Nelson Hernandez (No photo available) alias Benjamin Wade.
 
Anyone having been in contact with either of these subjects should contact:
 
Doug Davis, 817-723-7231, Doug@numismaticcrimes.org

If you have information, please contact Doug Davis. Let’s keep the hobby for both collectors and investors safe!

Credits

Numismatics Meet Multi-Level Marketing

Over the last few months I have been receiving invites to join Numis Network. Numis Network is a multi-level marketing (MLM) program whose primary purpose seems to have people recruit a network of other interested people and have them join the network. There is a fee to join and a commission that is paid up the organization chart as new members join.

Multi-level marketing goes under many names: network marketing, direct selling, referral marketing, and pyramid selling. Regardless of the name, it is a marketing scheme where the structure creates a marketing and sales force through the use of compensating promoters for selling products but creating additional distributors. The multiple levels creates a type of pyramid where those closer to the top of the pyramid makes the most money. Numis Network exhibits all of the characteristics of an MLM scheme. It emphasizes the network, growing the network, and receiving commission from the network.

It is important to note that a MLM scheme is not the same as a Ponzi scheme (which is what Bernie Madoff did) since there is supposed to be real marketing behind the network. In the case of Numis Network, they try to keep this scheme on this side of legal by touting their compensation is derived from the sales of certified coins. Numis Network uses a binary plan to grow the network using two subtrees, a power leg, which has new members, and the profit leg, which has your direct recruits. The key is supposed to be that your profit leg provides your best chance to make money. However, I found the following in Wikipedia:

In truth this benefit is slight because the new members who are recruited by your ancestors are shared among all the available leaf nodes. For example, your immediate ancestor in the tree only puts half of his new recruits in your downline, on average. Likewise, his ancestor only puts one fourth of his recruits in your downline. Following this argument to the root of the tree, the total approaches just one person recruiting for your downline (1/2 + 1/4 + 1/8 + 1/16 + 1/32 + … + 1/2n, where n is your tree depth). This is often insignificant in comparison to the number of people required in your downline to make yourself profitable.

If you calculate the amount of compensation per person diminishes as the number of downline people increases. In order to make money, you would need to recruit quite a few people and have them buy and/or sell coins in order for you to make a profit.

The only people making money in a MLM scheme are those at the top of the overall pyramid—the root node. Not only are they making money on the your initial purchases, but they are collecting on the commissions from the new recruits, which they earn a share of every one of them since they are at the root of the scheme. Remember, they are also the ones selling the coins. Once you buy the coins to resell, they have made their profit and it is up to you to sell the coins at a higher profit in order to earn a large enough commission.

Most of the people who have sent an email note asking me to join will probably never see a profit. I hope they can earn back their original investment.

While it is legal to create a pyramid scheme whose compensation is based on a real sales commission, the truth of the matter is that the further you are away from the top of the pyramid, the less money you will make. And think about it, how many coins would you have to sell to make a profit and how many coins could be sold? How many coins will you have to sell in order to break even after spending $500 (for the Fast Track Collector’s Kit) or the $75 (Basic option) plus the $9.95 per month for the Numis Network ecommerce website? Think about how the premiums on bullion coins have lowered as the US Mint has raised the supply then ask yourself if there are enough interested customers out there to even sustain the effort.

Since Numis Network is located in Tampa, Florida you may want to familiarize yourself with the well written advice from Florida Attorney General Bill McCollum. If there are any questions, you may want to contact Attorney General McCollum’s office for assistance.

While Numis Network may technically be legal I question its ethics. It is something I would never be involved with. If someone were to ask me for advice I would suggest that you not involve yourself with this program.

When is a Variation Not a Variety

If you search the online auction sites, you will find less than honest sellers trying to sell variations in the positioning of edge lettering of the new George Washington Dollars errors or varieties. Letters that are pointed up, or the top of the letters towards the obverse, are considered “normal” by these sellers. Letters that are pointed downward, or the top of the letters closer to the reverse of the coin, have been called errors or varieties. They are neither.

An accepted definition of a variety “is any variation in the normal design of a given coin, usually caused by errors in the preparation or maintenance of the coin dies.” They are also errors caused in the striking process. But these definitions do not account for the differences in the orientation. The problem is that after the planchets are struck into coins by the high speed coining machines, they are mechanically collected and fed into a machine that will press the lettering into the edge of the coins.

The machine that adds the edge lettering uses a three part collar to impress the incuse lettering does this without regard to position. not only could the edge lettering face any direction, but the lettering can appear at any position along the edge. The US Mint confirms this by saying that because of “the minting process used on the circulating coins, the edge-incused inscription positions will vary with each coin.

Since the Mint is saying that the process can vary, these variations are normal for the design. Since these are normal variations, they are not numismatic varieties or errors. Thus, the coins with variations of orientation edge lettering are not worth the premiums being sought online. They are worth their face value of $1.

There have been errors found with the edge lettering. The most infamous has been called the “Godless Dollars” for coins missing their edge lettering and the motto “In God We Trust.” Most of these coins were minted in Philadelphia and discovered in Florida. Others have found doubling of edge letters and what looks like breaks in the three-part collars where letters have moved out of place. These are legitimate errors and worth a premium above face value. Orientation variations of the edge lettering are not errors.

If you want to consider these varieties, please save your money and visit your local bank. You can purchase these coins for face value without shipping and handling fees. If you purchase a 25-coin roll, you can spend the coins you do not want since they are legal tender.

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