This is absolutely fascinating on a number of levels.

U.S. warns about Canadian spy coins
In a U.S. government warning high on the creepiness scale, the Defense Department cautioned its American contractors over what it described as a new espionage threat: Canadian coins with tiny radio frequency transmitters hidden inside.

The government said the mysterious coins were found planted on U.S. contractors with classified security clearances on at least three separate occasions between October 2005 and January 2006 as the contractors traveled through Canada.

Intelligence and technology experts said such transmitters, if they exist, could be used to surreptitiously track the movements of people carrying the spy coins.

The U.S. report doesn't suggest who might be tracking American defense contractors or why. It also doesn't describe how the Pentagon discovered the ruse, how the transmitters might function or even which Canadian currency contained them.

Further details were secret, according to the U.S. Defense Security Service, which issued the warning to the Pentagon's classified contractors. The government insists the incidents happened, and the risk was genuine.

"What's in the report is true," said Martha Deutscher, a spokeswoman for the security service. "This is indeed a sanitized version, which leaves a lot of questions."

Top suspects, according to outside experts: China, Russia or even France -- all said to actively run espionage operations inside Canada with enough sophistication to produce such technology.

The Canadian Security Intelligence Service said it knew nothing about the coins.

The story goes on to quote experts who say this is a poor place to hide a transmitter because the person being tracked might spend the coin. That's shortsighted, this is a brilliant place to put a transmitter.

The whole object to to avoid detection. If it IS detected, the person being tracked is likely to dispose of the evidence by spending it.

For example: Russia wants to track a defense contractor... They simply break into his hotel room and snip a small hole in the pocket of his coat and push the coin thru to the lining.. If it is found it will be assumed it fell from his pocket and the contractor will likely dispose of it. (by spending it) In the mean time that coin may be there for years -long after the battery dies- and never be detected.

If a traditional transmitter where found, it would instantly be recognized.