Buyer Beware! Gold Scams and Dealer Fraud
There’s been a fair bit of scuttlebutt about fraud and dishonesty on the part of gold and silver dealers over the last month or two. One prominent precious metals dealer that has sold $100’s of millions in gold and silver (if not billions) has reportedly just closed their doors after what could be millions of dollars in fraud and unshipped orders of clients who have already paid for the metal, but may never get it. Don’t worry, not every dealer is a crook. But based on the actions of many gold dealers and scammers, there are a few things we think investors should be aware of. Some basic common sense in this industry can go a long way.
Be Very Careful Who You Buy From
One of the biggest problems you can face as a gold and silver investor is buying from someone who isn’t telling the truth. Of course, you’d think it would be fairly rare, but you might be surprised how many major, well-known companies have been caught using bait-and-switch sales techniques, charging exorbitant premiums for low-value items because they are “rare and collectible,” and similar strategies. As you might imagine, most of America’s investors (especially with gold and silver) tend to be near or past retirement age. This means that many dealers tend to prey on the honesty and straightforward faith of older investors, and because the investor isn’t very internet-savvy, often times no ones knows until it’s too late. Even well-known companies do this, unfortunately, including one nationally known firm out of California.
Especially watch out for dealers who promote “numismatic” or “collectible” coins. Often, the coins aren’t as rare as they purport them to be. Also, when you are getting a quote on any item, make sure you determine if there are additional commissions, shipping, insurance or other fees. No dealer will sell a coin below their cost, and all the major dealers buy from the same basic sources, so if the story seems too good to be true, it probably is!
5 Tips on Checking Out a Gold Dealer
- Check out their BBB rating. This doesn’t tell you everything, but it can tell you a lot. Watch for number of complaints, how they were resolved, and the length of time the company has been part of the BBB. Some major companies have been declining in their BBB reviews.
- Type “[dealer name]” with “fraud” or “reviews” into Google. Watch what comes up.
- Check out independent review sites. Even here, you have to be careful. Many of the review sites that pop up top on google are business-oriented sites that collect money from the dealers they rate, and won’t rate many of the honest dealers.
- The best reviews are from other notable writers in the industry. For example, we have been endorsed by Bob Rinear, a financial writer and analyst that provides regular updates on markets, the economy, etc. (If you are looking for interesting market news from a perspective that’s friendly toward gold and silver, we recommend checking out his regular newsletter.)
- Don’t forget, a good referral is often better than a thousand anonymous opinions.
- Call in and talk to them. If the person is pushy, distant, or rude, keep looking. Compare prices, but finding an honest person to work with is always worth the extra effort!