Gold is a popular investment choice. It’s also a safe haven in the event of a personal or economic emergency.
But this makes it a tempting target for crooks. The good news is, there are some ways to avoid gold buying scams. These include identifying fraudulent dealers, avoiding leveraged investment scams and investing with a reputable broker.
Fraudulent dealers
A reputable dealer will have a strong reputation in the industry and deliver on their promises. They should also have a buy-back policy for the coins you purchase.
Some dealers take advantage of people who are in a rush to sell their gold or silver coins, according to Michael Fuljenz, America’s Gold Expert(r). These con artists may use aggressive marketing tactics or high-pressure sales techniques to convince their victims to send them thousands of dollars for their gold.
The worst gold scams target seniors, who are often more vulnerable than younger investors. These scams often involve bogus inheritance claims, law firms and executors of wills.
These schemes may even involve a bait and switch tactic, where a shady coin dealer markets one product as being rare but then offers a much lower price for a different coin. This is called a valuation scam. Many unsuspecting gold investors can’t spot the difference and wind up paying a lot of money for fake coins that are worth much less.
Scam artists
Many scam artists target elderly investors who have a lot of money in their retirement accounts. They use high-pressure sales techniques and make grandiose claims that will appeal to the potential investor.
One of the most common scams involves gold bars and coins that are sold for an inflated price. These are often plated with copper, tungsten or lead, resulting in a product that is worth far less than its actual value.
Another common scam involves the sale of gold jewelry that is not actually made out of gold. In this case, the jewelry may have a fake gold label that makes it appear more valuable than it is.
These types of scams are easy to spot, and there are some simple steps you can take to protect yourself from them. For example, always ask to see a certificate of authenticity for any gold item you purchase. Then, check its weight and dimensions. Also, do a Google search to find reviews from other investors to ensure that the company you’re dealing with is legitimate.
Ponzi schemes
During market downturns, investors are drawn to precious metals such as gold because of their perceived value and stability. Scam artists take advantage of this sentiment and use it to entice people into investing in questionable financial products.
Ponzi schemes involve swindlers who promise investors a return on their investment, but they fail to pay back the money they borrow from new investors. This leads to a crash in the scam and robs the original investors of their money.
Scammers may also try to entice customers with a jargon-laden sales pitch and rush them into making an investment. For example, they may advertise a well-known gold coin at a fair price but then switch to talking about a very ‘rare’ coin that’s worth more if you hurry.
Some companies who offer gold IRAs will sell you counterfeit coins or bars, which will not be worth as much as the ones they claim to be. You may also find that they are unable to deliver the coins you buy to your IRA.
Leveraged investment
Many gold buying scams involve leveraged investment schemes. These schemes usually begin when the company offers a guarantee of a certain return and then asks for more money than was originally agreed upon.
These schemes are not always legitimate and can be very dangerous to older people who may have more money than they can afford to lose. They are not for the average investor, so you should never sign up with them unless your financial advisors say it is safe and appropriate for your situation.
Leveraged investments are a powerful tool for investors and traders who want to amplify their gains, but they can also multiply their losses if they go wrong. This is why it is important to understand the risks of using this strategy before you start investing with leverage.
