As the global economic crisis intensified, investors moved funds into precious metals and rare coins. This made for fertile ground for counterfeiters of coins and new technology has made it easier to fool professionals.
Coin fanciers from all over the world descend on Berlin's Money Fair
This past weekend, Berlin hosted the World Money Fair, one of the preeminent gatherings for coin collecting and minting.
Present on the show floor were manufacturers of coin minting machines, rare coin dealers, coin collectors and the national mints of a host of countries including the Singapore Mint, the Swiss Mint, the Polish Mint and the UK's Royal Mint.
There's one topic on everyone's mind: counterfeiting.
Hundreds of thousands of rare coins were on display at the World Money Faír
While counterfeiting has always been an issue in the numismatic world, the last few years have seen an upsurge in the amount of fake coins flooding the market.
In fact, earlier this month, the European Commission reported that the number of counterfeit euro coins removed from circulation last year rose by eight percent to 186,000, worth 300,000 euros. By contrast, the European Central Bank reports that counterfeit euro notes were worth 850 billion euros in 2010.
"The fight against counterfeit money - whether coins or notes - is extremely important for both our economy and our currency," Algirdas Semeta, the European commissioner responsible for anti-fraud activities said in a statement.
"We will continue to dedicate all necessary resources to finding these fakes, in an effort to stamp out the problem across the EU," he said.
Royal Mint deals with counterfeiters
Most counterfeited coin in the United Kingdom
One of the most counterfeited coins in the United Kingdom is the one pound coin.
Mark Shaw, head of technology for the Royal Mint, said that out of a population of about 1.4 billion one pound coins, about 2.8 percent were fake, or one out of every 36 coins. That amounts to about 40 million pounds ($65 million, 47 milion euros) of funny money floating around.
"It's relatively a simple coin," said Shaw. "It's a single metal coin, it's also a relatively straightforward design and it's quite high value for a coin."
But the Royal Mint isn't taking this lying down.
With each new iteration of the coin, Shaw said the Royal Mint was adding new security technologies. While he wouldn't divulge what those security attributes are, he did observe that it is harder to add security measures to a coin than to a banknote.
There are a couple of reasons for the rise in counterfeiting - the first is due to the global economic crisis. In times of uncertainty, people and investors move their funds into precious metals and coins that can hold their value better.
Another reason is that technology has gotten so much better that counterfeiters - especially those in China, allege coin collectors and dealers - can now produce coins and limited run high-end proofs that are as good or even better than the originals.
Technology is the answer
Coin analyzer can level the playing field in counterfeiting
While it is getting harder and harder to tell a real coin from a fake coin, CoinSecure, a California technology company, has a new coin analyzing and identification machine that has only been on the market for less than a year.
"The coin analyzer CP16 has the ability to uniquely identify any coin based on the way it deflects laser light in a unique way like a fingerprint and therefore at the time a coin is created by a mint, they can serialize it, fingerprint it basically," explained Richard Haddock, the company's CEO.
"And then at any time in the future it can be validated against its own fingerprint and be absolutely proved that that is the coin the mint issued."
However, as this technology is in its infancy, only a few thousand coins have been scanned and stored so far.
Haddock would like government and private mints around the world to buy his product and scan every coin produced. As this is a monumental task, he would settle for mints scanning the limited runs of high end proof coins for starters.
This device, the CP16, can also be used by reputable coin dealers to scan rare coins into the data base for future identification.
But for now, the only company using the device is the Professional Coin Grading Service in Newport Beach, California.
Author: Andy Valvur, Berlin
Editor: Cyrus Farivar