All Cook Islands '.24 Pure Gold' Coins are FAKE

Summary:

If you bought one, I would recommend returning it. If you bought it on eBay, ask the seller for a refund even if they do not accept refunds or say it is too late (unless they stated that it had less than 1/10 ounce of gold, it was 'significantly not as described' since the image incorrectly claims to be 1/10 ounce of gold). If they do not refund your money, dispute it with eBay. If that fails, contact your credit card company and report a "billing error" (the term used when you get something that was not what it was supposed to be); they should reverse the charge.

More Details:

I hate to be the bearer of bad news, but Cook Islands (a real country), in conjunction with "National Collector's Mint" (apparently a sham operation), have created a new brand of collectible coin that purports to be a 1/10 ounce gold coin. They refer to is as ".24 pure gold" -- to make it seem like it is 24 karat gold (which would be pure), but in reality it is 24% gold (not 99.9% or more like most gold coins). They are copper coins with a bit of gold mixed in. So that "1/10 ounce" gold coin actually contains only .024oz of gold, or 1/41 ounce, much less than the .100oz it purports to be. It is clear that these coins were designed to fool people into believing that they contain 1/10 ounce pure gold, but they do not. These are not even gold coins (they likely contain more copper than gold).

What Are 1/10oz, 1/4oz, 1/2oz and 1oz Gold Coins?

In 1980, South Africa introduced fractional gold coins, which state "1/10 OZ FINE GOLD". Similarly, they weigh .109 troy ounces, and since the gold is .9167 fine, they contain a full .100 (1/10) troy ounce of gold.

China followed in 1982 with the popular panda series, and many other countries have produced fractional gold coins (as well as fractional coins in other precious metals, such as silver, platinum, and even palladium). All of them, if melted, would contain exactly 1/10 ounce of 100% pure gold. These Cook Islands coins, however, lie: they do not contain exactly 1/10 ounce of gold; they contain much less.

How Much Gold Does a Real 1/10oz Gold Coin Contain?

Many gold coins are .999 or .9999 fine. These coins weigh slightly more than the stated weight, so that they contain at least the full amount of gold stated.

Other gold coins (such as Krugerrands and U.S. Eagles) are made from .9167 fine gold (22 karat), where 91.67% of the metal is gold, with the rest consisting of other metals (such as copper and silver). Like with the Krugerrand example above, these contain enough extra weight to ensure that you are getting the amount of pure gold listed.

• The obvious: All 1/10 gold coins marked "1/10 OZ" (or "1/10 OUNCE") have an actual gold content of at least .1000oz of gold, except these bogus Cook Islands '.24 gold' coins.
• Most fractional gold coins show the purity *if* the gold is pure (e.g. .999 or .9999)
• None of the fractional gold coins show the purity *if* the gold is alloyed (e.g. 22k .9167 gold)
• Purities are shown as millesimal fineness, e.g. "999", ".999", or "999.9". Millesimal fineness is precious metal parts per thousand, which requires at least 3 digits, so ".24" is not in the correct format ("240" or ".240" or "240.0" or ".2400" would be acceptable).

How Much Gold Do These Coins Contain?

If I saw one of these for sale at or below spot/melt (the price of gold per ounce times .024, or $24 if gold was $1,000/ounce), I would consider buying some. Unlike other 1/10 ounce gold coins issued by countries, I would pay no premium beyond that. It is important to remember that these are base metal coins with some gold in them, so melting them would likely be more expensive than melting pure gold coins.

Note that I would never consider bidding on these on eBay, as the increased bidding just makes it more likely that the victims (the people thinking these are worth more than 4 times what they are really worth) enter their high bids.

Are These Intentionally Deceptive?

All real fractional gold coins state the actual gold weight (AGW), not the gross weight. Someone intentionally chose to use the gross weight, not the actual gold content. It sounds like they tried to stay within the law by marking it as ".24 pure gold" (a nonsensical term; the United States doesn't allow jewelers to mark anything under 41.67% gold as gold, so calling it "pure gold" is nonsense). The term "pure gold" refers to the hypothetical amount of gold in something that would exist if all impurities could be removed (which is nearly impossible to do).

If a country accidentally marked coins made from 24% gold as "pure gold" or ".24 pure gold", or accidentally marked coins as "1/10 oz" of gold if they did not have actual gold content of at least 1/10 oz, the country's coins cannot be trusted at all. If a group of people don't understand those basic concepts, how can you believe that the 24% of the coin that is supposed to be gold is really gold, and they didn't get duped?

So the next question is "Why did they choose to make these out of 24% gold rather than a simpler 25%?" The obvious answer is to defraud people, by making them think they are 24k gold. Why else pick 24% (5.76k or 6/26ths) rather than 25% (6k or 1/4 gold)? This is likely the first ever coin minted in 24% gold. It is not normal

Next, we ask "Why did they choose to mark it as '.24' rather than '240' or '.240'? The proper formats for marking the millesimal fineness of gold are '240' (preferred; indictating 240 parts gold per 1,000) or '.240' (a common alternative format, e.g. 240/1000). By removing the trailing '0', it no longer indicates millesimal fineness (which, by definition, involves thousanths). This is a made-up "centessimal fineness". The obvious answer for why the removed the trailing zero is that people would see ".240 pure gold" or "240 pure gold" and have no clue what the product was. But newbies see ".24 pure gold", and they think "24 karat pure gold".

Finally, what possible reason could a country or company have, other than profit motive, to go to such great pains to make a coin that is so similar to a real 1/10 gold coin but with only 24% of the gold needed for it to be a real coin?

Are People Fooled by These?

The value of fractional gold coins consists of 3 components: [1] the gold value, and [2] the collector value, and [3] the dealer markup. With gold at $1,000/oz, a 1/10oz gold coin will typically sell for around $115-$125. There are some exceptions for proof coins and other coins with a high collector value. But there is little, if any, known collector value to these Cook Islands coins.

As I write this, ncmint.com is selling 1/10oz gold Eagle coin for $189 (with spot at $1,332.40), or a markup of about 42% over the gold content. They are selling 1/10oz ".24 pure gold" Cook Islands coins for $99, with a markup of 310% over the gold content. They limit you to ordering a maximum of 5 (it's unclear if that is to fool people into thinking it is a loss leader, or if it is to help ensure that people don't order enough to make it worthwhile to sue them).

But the real proof that people are fooled by these is eBay: many unscrupulous sellers are selling these. Looking at the past 10 actual auction sales (not including one oddball price), 1 went for fair value ($26.00), 3 went for a few dollars below the price at ncmint.com ($.50 to $3.50 less, so obviously people who assume the ncmint.com price is 'fair'), 6 went for 7%-14% above the value of an actual 1/10 ounce of gold. 9 out of 10 of the coins sold went for over 3 times the value of the gold!

Sample COA

CERTIFICATE OF AUTHENTICITY
===========================
     This certifies and guarantees that each 2017 Statue of Liberty $5 Coin is a
genuine, non-circulating Legal Tender issue of the Cook Islands. Each features
the Statue of Liberty, her torch held high with the American flag waving behind
her on the obverse. The reverse portrays the famous Liberty Bell standing as
tribute to the United States of America along with the official Cook Islands
imprimatur and $5 denomination. Each privately minted piece is struck in
.24 pure gold and conforms to these:
                           SPECIFICATIONS
                           --------------
Diameter .....................16mm  Total Weight ...................... .100 ozt
Strike...Individually struck proof  Gold purity ....................... .24 Fine

Registration #         Certified By:                        Certified By:
Fill in the Order      Angela Marie (Bay) Buchanan          Barry M. Goldwater, Jr.
Registration # from    37th Treasurer of the United States  14-year Member House of Representatives
your Invoice and Order Co-Director, NCM Board of Advisors   Co-Director, NCM Board of Advisors
Registration Form.

Notably, the COA purports to be created by National Collectors Mint, not Cook Islands.

People buy bullion coins primarily for the gold content. If the owner of a gold coin was told, "Would you rather find out that your coin is made of copper but truly made by the country you think it was made in, or find out that your coin is really gold but made by an unknown company or government?", nearly everyone would choose the latter. So a COA for a bullion coin that states the weight as anything less than the actual precious metal content is intentionally deceptive.

How Can I Honestly Sell These?

If you want to sell these, here are some pointers:

• You should not write ".24" -- it would need to be ".240". If you want to quote the ".24" in places, that's OK -- just so long as it isn't in the title (unless it also has .240).
• Also be sure not to write "24k", as (depending on the context) it would very likely be fraudulent.
• Do not use the word "pure", as these are not pure gold. "Purity" is OK to use (e.g. ".240 purity"), "pure" is not ("pure" refers to 100% gold, or the amount of gold you would come up with if you melted them). Like with ".24", it is OK to carefully quote what is written on the coin/COA, just so long as it isn't in the title, and you are clear that the word "pure" is being quoted from the coin.
• Do not set a selling price or "Buy It Now" price that is suggestive that it contains 1/10oz gold.

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