A few years ago I bought a small tin of saffron from a market stall, thinking I had gotten a bargain. When I opened it at home the threads looked too uniform, almost like they had been cut from the same red paper. A friend who cooks a lot told me to drop one thread in warm water. The water turned bright orange in seconds. That was how I learned that saffron is the most faked spice in the pantry, and the reason is simple. It costs more per gram than silver. Since then I have done the test on every batch I buy.
The first step is to look at the threads in good light. Real saffron is a dried stigma from the crocus flower. Each thread flares at one end like a small trumpet. If you see a uniform shape, all the same size and color, you are probably holding dyed corn silk or cut grass. A real stigma is never uniform. It has a dark red body that fades to a lighter orange near the trumpet end. The fake threads look the same from tip to tip.
The second step is the water test. You need a clear glass of warm water, not boiling. Drop one thread in and watch what happens. A fake thread will release its dye right away, turning the water a bright red or orange within seconds. Real saffron is slower. It releases its color gradually, first a pale yellow, then a deeper gold over several minutes. After about ten minutes the water should be a clear golden yellow, not cloudy or bright red. If the water turns red, you have a dye.
The third step involves your sense of smell. Real saffron has a hay-like, slightly sweet scent with a hint of honey. Fake saffron often smells like nothing, or it has a sharp chemical odor from the dye. Rub a thread between your fingers. Real saffron will leave a faint yellow stain on your skin. Fake saffron may leave no stain or a bright red one.
The research interest in saffron centers on two compounds, crocin and safranal. Crocin gives saffron its color and is a strong antioxidant. Safranal gives it the smell and seems to affect mood. That is why saffron shows up in supplements, usually at a much smaller dose than a recipe uses. In cooking you might use a pinch of threads, maybe ten to twenty. In a supplement capsule the dose is often a tiny fraction of that, ground into powder. The effects are not the same.
If you want to use saffron for its possible benefits, the best way is to steep the threads in a little warm water or milk for ten minutes before adding them to your dish. That draws out the crocin and safranal. Do not use boiling water, because high heat can break down the compounds. And do not buy pre-ground saffron powder. It is easier to fake and loses its flavor faster.
One last thing. The price is a clue. Real saffron is expensive, often more per gram than silver. If a jar costs a few dollars for a big bag of threads, it is not real. Buy from a store you trust, and do the water test at home. It takes two minutes and saves you from cooking with corn silk.
There is a fuller write-up at saffron and memory.