In the early 2000th, numismatic market experts started to spot false coins of unprecedentedly high quality. Unlike cast or electroplated fakes, those coins were minted by stamps very identical to the authentic ones because their metal composition, sizes, weight and rimmed edge treatment – everything was virtually similar to original coins. Initial batches of such “rarities” still had some tiny flaws which gave a chance to a qualified expert to attribute them to the “souvenir” category of low repute. However, every year their manufacturer, evidently not without advice on the part of some connoisseurs, was improving its products trying to reach complete identity with historic originals. And finally this target was achieved. According to various estimates, today high-quality fakes account for 20 to 50 percent of the numismatic goods circulating on the market. The mainspring spouting this flood of “values” is well-known – it’s China.
The numismatics market (as well as the antiques market as a whole) has been densely colored at all times in grey and black hues. Really, the temptation is great – the difference in price between two pieces of gold having similar weight but one of them bearing some historic profile may reach quite a sizable amount, which provoked historical precedents of not too scrupulous and rather powerful players popping up in this field. For instance, the swindle of the Soviet government which in the late 1920s minted about two million gold ten-rouble coins (in Russian called chervonets) bearing the profile of Emperor Nicholas II for the “needs of foreign trade” is common knowledge. And no experts can distinguish an original tzarist chervonets made in 1911 from a Soviet “remake” of 1927.
Of course, today there are many organizations worldwide rendering services to diagnose and certify antiquarian (including numismatic) material. But realty proves that these certificates do not give reliable guarantees of authenticity. Fakes manage to mix in even at the most prestigious auctions and during elite transactions advised by highly competent experts – it would be enough to recollect the purchase made by Viktor Vekselberg who bought a collection of items manufactured by Faberge from the Forbs family just to discover some fakes it contained. As for numerous online auctions, nowadays they provide a direct and obvious channel for distributing magnificent “rarities” made in China.
The paradox is that despite the fast-growing flow of Chinese production, the numismatic market has not collapsed. Moreover, the start of manufacturing hard-to-detect fakes in China coincided with the peak of a new world hobby – “treasure hunting.” Companies turning out ground metal detectors (whose hardware components are of course made in China) are prospering meanwhile treasure hunters have found and put a great number of original historical coins on the market. Both these factors, obliged to new technologies, have considerably increased - possibly twice as much - the amount of goods offered, but not at all collapsed prices as the market was preliminary and competently “inflated” by means of a wide range of media resources dedicated to “treasure hunting and collecting” followed by systematic saturation with “rarities” so sought after by neophytes but undetectable by “ordinary” expert examination. And if earlier the cream from financial flows in the numismatic market was skimmed off by auctioneers and dealers now this honorable role is eventually played by the manufacturers of metal detectors and perfectly made fakes.
Such an expatiation about the numismatic market was required to draw an analogy explaining the interest taken by the Chinese colleagues and distinctly displayed during the last three years at international summits on synthetic diamonds towards organizing production of gem-quality diamond monocrystals in the People’s Republic of China.
Currently, China is the world’s leader in manufacturing synthetic diamond powders producing about two billion carats a year by way of the HPHT method. As it is known, the HPHT technique permits to receive gem-quality monocrystals including colorless stones. The CVD technique is more promising in this way but there is no information about its application in the People’s Republic of China, as well as about manufacturing synthetic diamonds for jewelry purposes in this country in general. But the absence of information in this case can hardly be an occasion for complacency, more likely on the contrary.
Can China develop mass production (say, based on CVD) of colorless synthetic diamond monocrystals suitable for cutting them into polished diamonds of 0.1-0.4 carats? Undoubtedly, it can. Will such production pay back? This depends on organizing a trade channel. If there will be yet another arduous attempt to create some “synthetic” brand its failure may be taken for granted. However, if parcels of colorless and well cut small-size synthetic diamonds will be mixed up with parcels of natural diamonds and then inserted into jewelry pieces and all this will occur within the limits of the vertically integrated national rough and polished diamond industry of the People’s Republic of China, then one may hope for success.
Seems improbable? Then how about the effort to provide a flow of almost undetectable fakes to the amount of tens of percents in the numismatic market? Everyone knows that the “rarities” are made in China, but nobody can say who exactly is making them or where. There is no information to this effect. May it really be a certain mafia in some garage in the suburbs of Beijing? Or someone of a higher caliber, especially taking into account the quality which is not inferior to the items produced by the best mints of the world? Keep it in mind that the USSR was able to “re-incarnate” Nicholas II in the form of a gold chervonets in 1927. Incidentally, “Coins and Banknotes of Russia,” a rather thoroughgoing monograph (published in Moscow in 2009), affirms that the stamps used to mint the Nicholas ten-rouble coins which the Bolsheviks so deftly handled in the late 1920s, “survived to these days and are still used to mint coins, the only mystery being who is running them.”
If the Chinese numismatic “rarities” had a fair “copy” mark, such coins would cost cheaper than silver and gold of which they are made. Any owner of a “copy” is not a collector but just a droll fellow. However, if viewed as “original” numismatic material such a piece may cost as much as 200% of the metal it is made of. It’s juicy business. Certainly, a collection coin worth $30,000 will pass serious examination almost guaranteeing its authenticity, but such coins are never forged. And here is a fine copy for a green hand: a 19-century coin, not too rare, for the appetizing price of $300, its stamping faultless, its metal, size and weight - all flawless. A regular expert with a loupe will not see any compromising evidence. Of course, you may order metal analysis and compare the bouquet of impurities to the composition of metal in a museum item whose authenticity is guaranteed. That will cost you around $3,000.
No one needs a fine colorless synthetic diamond of 10 carats. Its cost is huge while the possibility to sell as natural - illusive. Such a piece will be examined by all possible methods and you may have no doubts about the results. But maybe you would like to have a look at a nice bracelet with 10 inserts of 0.1 carat each of which (probably) 3-4 pieces are colorless synthetics. A standard test for heat conductivity, electric conductivity and light refraction proves that all inserts are real diamonds. Is it necessary to continue?
What will occur to the rough and polished diamond market if China will implement the above scenario? Most likely, diamond prices will not collapse and moreover the market will continue to expand due to the increasing number of consumers buying diamonds in China itself and India. There will be greater differentiation, which is already turning evident, between “really authentic diamonds” – big stones with good characteristics whose price will justify any complex examination of any level - and “quasi diamonds” for which simple tests will suffice. But the main change will consist in that a considerable part of financial flows will be controlled by a new player – the large-scale and not overly advertised manufacturer of colorless small-size synthetics.
Such developments are first of all adverse for mining companies whose production range includes a considerable part of similar stones. Probably, this is why the rumors about De Beers’ re-listing and the desire of the Oppenheimer family to leave the diamond business coincide in time with China’s outburst of interest towards organizing production of synthetic diamond monocrystals.
The diamond market is similar to the numismatic market in that the original goods here are not so much the physical objects traded as the information about them. Without a properly structured information field the use value of an appropriate piece of minted metal or crystal carbon is equal to zero – it simply does not exist. The main thing is to make the mechanism of purchasing and selling this information operational, whereas the origin of respective objects is by and large insignificant. Therefore, such markets demonstrate surprising “elasticity” in the environment where any real commodity market would burst with a pop due to oversaturation and excess of infringing merchandise.
The word combination “to the detriment of circulation” is used by numismatists to designate false coins made at a time when their prototypes were full-fledged means of payment. The prospect of non-advertised “combination” of synthetics and natural diamonds is based on quite a market axiom that any detriment is always someone's profit.
Rough&Polished
