Anybody who has been collecting gold coins for a while now is familiar with the dreaded “red spot.” The topic is quite popular because many believe red spots on “pure gold coins” to mean that the coin is counterfeit. In most cases this is not the cause at all. Let us explain why.
Red spots are not a new phenomenon, they occur on coins from the early 1900’s to even today’s modern coins. Because the red spots are ultimately caused by tarnishing/oxidation, and pure gold does not tarnish, a popular myth amongst coin forums is that the coin must be fake or fraudulent. That is usually not the case.
Most gold coins are not 100% pure gold. Modern coins such as 22-karat American Gold Eagles and Krugerrands as well as older coins such as French Francs and English Sovereigns contain a percentage of metal alloy that is not gold. This is usually in the form of silver, copper and other harder metals that lend themselves to durability. During the alloy process of these metals (where it is a combination of gold, silver, copper and other metals) the molten metal cools and crystallizes at different rates. There is a slight tendency for the metals with a higher melting point to being to crystalize first which can lead to small localized pockets of metal with a higher or lower concentration of elements. It is around these small pockets that red spots can sometimes appear.
Pure 24-karat gold coins such as American Gold Buffalos and Canadian Gold Maple Leafs on the other hand are very soft. Simple handling can easily cause scuff marks and dents. Because these coins are .999 fine they technically should not rust or tarnish. However, the majority of red spots come from surface contamination. When these pure (soft) gold coins are minted they are struck in facilities that handle other coins and metals. Any type of metallic dust that lands on these coins can cause red spots. Especially if the coin is struck and then enclosed in plastic so the contaminant cannot escape. This is why you see red spots more on Chinese Gold Pandas and Gold Buffaloes because both of those coins are struck and then enclosed in air tight plastic.