You may have seen the advertisements in popular magazines or late-night info commercials pushing "gold" 50 State Quarters®. They may have had an option to purchase the "premium" Platinum State Quarters. They touted them as rare and only available for a limited time. They encouraged you to tuck away a set or two for investment. A set of four or five quarters usually sold for around fifteen dollars plus shipping and handling.
Many people bought these 99.99 percent gold-plated or platinum-plated quarters believing that someday they would be able to pay for their child's college education or maybe enhance their retirement options. Their hopes ran high until they tried to cash in their coin investment for huge sums of money.
Those hopes were followed by disappointment when they quickly learned that they were just ordinary quarters plated with a minuscule amount of gold or platinum. Although they are plated with pure gold, the plating is usually less than 0.003 of an inch thick.
Serious coin collectors consider these gold-plated coins as "damaged coins" and refused to purchase them. If you are lucky, a coin dealer may offer you between thirty cents and fifty cents for the coins. Most coin dealers will tell you that they are worth face value and they do not want to buy them.
Why Do They Make Bad Investments?
Although the gold and platinum are real, the plating is less than the thickness of a human hair. The time and effort to recover the precious metal far exceeds the one or two cents worth of metal that the coin contains. Even though the coins are genuine United States Mint coins, they have been altered by a third-party plating operation.
Anybody with the right equipment can take quarters, dimes, nickels, pennies or any other coin and plate them with precious metal. Therefore, they will never be rare since anybody can create them. Other options also include colorized coins with the coin's design enhanced by paint. Once again, these are common coins with an altered appearance that can be created by anybody with the right equipment.
Are They Illegal to Own?
Section 331 of Title 18 of the United States code titled "Mutilation, diminution, and falsification of coins" covers the legality of plating and colorizing coins. This law provides criminal penalties for "Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales, or lightens any of the coins coined at the mints of the United States." The statute continues to focus on the intent of the individual must be fraudulent. In other words, if you transform or change the appearance of a United States coin and disclosed to the buyer when you sell it as a modified or altered coin, you are not trying to deceive or defraud anybody. However, if these marketers tried to sell these as "solid gold" coins when in fact they are only plated, that would be a violation of the law because they are trying to defraud you.
Even though plating coins is not illegal, the United States Mint does not actively endorse plating, colorizing, engraving, or performing any other modifications to coins. The mint has in the past sold coins mounted on spoons, Christmas ornaments or jewelry. The key difference here is that the coins are unaltered and are not being sold with the intent of defrauding the public.
Other Over-Hyped Coin Rip-Offs
In addition to coins plated with precious metals, marketers have also created special sets of coins marketed to the public. They create fancy holders and extravagant boxes to distribute their rip-off coins. They tag them with names such as "Obsolete Coins of America" which contain cheap well-worn coins that are worth only a few dollars and sell the set for thirty dollars or more.
Other scams include "ballistic rolls" of presidential one-dollar coins. Instead of receiving a regular roll of twenty-five coins, the ballistic roll contains fifty coins and is stamped with a fictitious "Vault ID." These usually sell for over $100 per roll of fifty coins. Remember, these are the same coins you can buy at the bank for the face value of one United States dollar.
As you can see, anybody can take ordinary coins, modify them, package in special boxes, hype them through television, print, or Internet advertisements, and sell them at exorbitant prices. As long as they are truthful in their descriptions, they are not violating United States law. However, these have always proved to be a rip-off and not an investment.
Is There Any Way to Get My Money Back?
The short answer is usually "no." However, if the company marketing these coins used false and misleading advertising, you may be able to initiate a lawsuit against the company. Unfortunately, you'll have to recover a sizable sum of money to cover your legal fees. Usually, the amount of money that people have invested in these coins is minimal and comes nowhere near the amount that would be required to cover the cost of legal fees.