Due to an unstable economy, many investors are turning to gold investments as a way of diversifying their investments – unfortunately this makes them vulnerable to fraudsters looking to take their hard-earned cash from them.
Scammers prey upon fear and greed by employing high-pressure sales tactics; some even warn about impending economic collapse!
Avoid High-Pressure Sales Tactics
Step one in avoiding gold IRA scams is to educate yourself about the industry. Do your research by reading reviews online and soliciting recommendations from trusted sources, then seek transparent buying and selling procedures with no surprises during transactions – reputable dealers should clearly outline all costs related to your investment while not charging hidden fees during transactions such as vault storage costs that reduce returns significantly.
Be wary of high-pressure sales tactics such as offers to “act now” and promises of quick profits, unsolicited communications from dealers (reliable precious metal dealers will never cold call or email prospective investors), details such as spelling and grammar errors which could indicate dishonest sellers, as well as deals that appear much cheaper than their market value.
Look for a Reputable Dealer
Choose a dealer with a strong history of honesty and transparency when purchasing, such as those accredited with the Better Business Bureau or having physical headquarters if possible.
Unsuspecting buyers can often fall prey to unscrupulous dealers who make false claims about gold mining operations or rare coins they supposedly offer for sale, leading them to part with thousands of dollars without anything but empty bank accounts and broken hearts to show for it.
Another common bullion investment scam involves offering an insufficient buyback policy guarantee. If a dealer does not provide this assurance, walk away immediately as this ensures you can liquidate your investment at any given point – an essential protection for any bullion investor.
Don’t Pay Upfront
When buying gold, the key to avoiding being scammed is doing your research and selecting a dealer you trust. Be sure to ask about charges associated with services rendered – for instance a commission rate on sales – as well as what purity level gold they sell.
Some dealers may try to convince you that owning gold is an effective means of protecting against an ever-declining U.S. dollar and increasing inflation; this may be true, yet gold should never be purchased solely as an inflation hedge.
Scare tactics and mass panic are often employed by dealers to increase profits. For instance, some may market gold IRA products by warning investors that America may soon face financial collapse; this tactic can backfire; indeed the SEC recently filed charges against one gold IRA company that used such scare tactics to draw consumers in and take their money.
Don’t Be Pressured to Buy
Scammers frequently prey upon those unaware of precious metal prices and investment strategies. Social media profiles containing gold sellers from Central or North Africa urging buyers to send upfront payments for what seems to be an economical purchase of coins or bars but which in fact contain nothing more than cheap tungsten substitutes instead of the promised gold coins and bars.
Some fraudsters use scare tactics such as predicting economic instability or using graphs that purport to show past gold investment performance as means to lure victims in with false promises of safe investing strategies in collector coins, when such investments do not comply with government bullion standards.
Bait-and-switch schemes that use partial delivery of gold they think they have purchased can also be misleading; such schemes often feature gold bar scams with shiny gold plating over non-gold cores.