With the economy in its current state of disarray, more people are turning to gold to help stabilize their investment portfolios. Unfortunately, this means that the pickings are ripe for scam artists interested in stealing your hard-earned wealth, but you can arm yourself against these predators with careful research and assistance from experts in the precious metals market. Before you buy gold bars and coins online, consider the following tips to help you avoid getting scammed.
1: Understand Your Investment
Gold can be bought in a variety of forms from jewelry to bullion bars, but only certain types are traded regularly by investors. This is especially important if you are thinking about opening up a gold-backed IRA account because bars and coins must meet a minimum fineness requirement and be IRS-approved so that they may be permitted in the account. Be sure the advisor you use is 100% familiar with the IRA qualified coins. Rare coins are not allowable.
2: Know Your Gold Dealer
The Internet has become a popular way to find bargains for just about anything, but the anonymity that comes with online dealing makes it much easier for scammers to get away with fraud. While bargain hunting websites such as eBay and Craigslist might be attractive because of their low prices, it is not a good idea to purchase from these types of places unless you feel comfortable authenticating the coins yourself.
3: Research Your Gold Dealer
Like any business, the more years of experience a gold dealer has, the more informed they will likely be. When researching precious metals dealers, check to see how many years experience they have. You can also send an e-mail, make a phone call, or visit in person to see what kind of feeling you get from the business. Personable, informed, honest and reliable—these are qualities to look for.
4: Check the Buzz
Social media has increasingly become a popular way for consumers to express discontent about a company’s business practices. While scammers are aware of this and will try to seed sites such as Twitter and Facebook with legitimate-sounding customer reviews, this can still be useful way to get a general feeling about a company.
5: Don’t Submit to Sales Pressure
Scam artists know that one of the best ways to get investors to part with their money is to prey upon their fear and greed with high-pressure sales tactics. For example, many people are worried about the economy, which is why these dealers prophesy a future economic meltdown to get investors to buy their gold before it’s too late. Shady operations also promise fantastic investment opportunities with few risks, but only for investors that take advantage of them right away. Whenever you buy gold online, you should always take the time to consider your options before making a purchase, and dealers that try to prevent you from doing this are best avoided.
6: Avoid Overpaying
Online gold purchases come with a number of fees that you need to be aware of to see if you’re getting a fair deal. For example, you can check the gold spot price to see if a dealer’s markup is higher than the standard premium. Also, shady gold dealers will give low quotes to lure customers but are unable to deliver the gold at these rates. Legitimate companies will fully disclose any fees related to your purchase, but don’t be afraid to ask questions before making a purchase.
7: Start with Small Quantities
Whenever you buy gold online for the first time, there is always some risk involved, but many prefer to minimize this risk by starting small. Although gold dealers will offer discounts for buying in bulk, many think it best to test the waters before taking advantage of these deals.
8: Look for a Buy Back Policy
Reputable dealers offer buy back policies as a sign of good faith to their customers, while scam artists who deal in counterfeit goods are unlikely to buy back your gold. It might be a good idea to also make sure that the buy back policy is not limited to certain quantities of gold, as well as inquire about the repayment period. Trusted coin dealers will also provide a reasonable inspection period, enabling collectors to hire third-party numismatists to ensure the value of their purchase.
9: Know Where Your Gold Is Being Stored
Trustworthy gold dealers will offer you a way to physically deliver your gold by providing insured methods of delivery. Even if you do not wish to store the gold yourself, choosing a firm that is capable of this practice is a useful way to avoid fraud, as many fraudulent organizations will promise to store the gold onsite without giving you any proof of purchase. Whether you use a home safe, bank depository or IRA custodial firm, make sure that you receive documentation.
10: When in Doubt, Consult an Expert
While it may seem simple at first to buy gold online, you can see how easy it is for scammers to trick even moderately savvy investors. Fortunately, organizations such as ours are able to provide comprehensive information about gold investment opportunities, trusted gold venues and other precious metals investment products, which is why you don’t have to face the challenge of avoiding gold scams alone.