We’ve already covered all the major and most well known scams.
But there are plenty of “tinier” scams left.
So I decided to compile all of them into this article.
Watch out for these other ways gold dealers will try to separate you from your hard-earned dough.
Investment-Grade Doesn’t Pass
Coin collectors rely on services like the American Coin Club Grading Service or Professional Coin Grading Service to certify the condition of their coins along the 70-point Sheldon Scale.
A brilliant uncirculated 1800 US Silver Dollar is going to be worth more than the same coin showing lots of wear-and-tear.
Certification is an expert’s judgment on how well the coin has been kept. The highest grade is MS- 70, or Mint State 70, which means the coin is flawless.
Why is Grading Important?
Grading becomes very important when collectors want to appraise the exact value of a rare, old coin worth tens of thousands of dollars. It’s not at all important when you’re buying brand new bullion coins – and here’s where the scam comes in.
Many coin dealers are selling brand-new, 2014 bullion coins with an MS-70 rating at multiple times the price of the same 2014, brand new ungraded coin.
They may claim that only these certified coins are “investment grade.” That’s malarkey.
All new coins are shiny and clean, just like new cars. It’s only when you have a 1969 Corvette in mint condition that the collectible value goes up. Most new bullion coins will never have rarity value because they are so common.
That is a good thing, because you want to own coins that are easily recognized and accepted by a large market of potential buyers.
This Scam is Ridiculous
What makes the whole scam even more ridiculous is that coin grading by a reputable service like the ACCGS costs $9 per coin, no matter the coin’s value. Why pay some dealer an extra $75 or more for a coin that you could have graded yourself for $9?
The Financial Advisor Double Dip
One company we found in our research was using financial advisors to sell their silver bullion at prices up to 17% above spot!
These advisors would recommend the purchase to their clients, then they would get a huge commission on the sale, which is in addition to the markup on the coin. Even though the products sold were bullion coins, the deal was not competitive because of the high markups plus the commission paid to the advisor.
This practice might actually be illegal because financial advisors have a fiduciary responsibility to their clients to get them the best deal on purchases.
We don’t think overpaying for bullion coins fits the definition of a “good deal.” Aside from perhaps a referral, you should not have to go through a stockbroker, financial advisor, or other intermediary to get your precious metals. Just find a reputable dealer and cut out the middleman.
The Price Protection Racket
Another ruse we’ve seen is an offer to “protect” or “guarantee” your purchase price in case gold and silver drop right after you buy.
Those of us who have been around awhile know there are no free lunches in this world – certainly not in the world of investing – and this case is no different.
The way these companies are able to offer rebates and price guarantees is that they’re charging huge commissions on the initial sale.
You’ll notice that price protection is not offered on low margin bullion coins, only on high margin numismatics. Honest bullion dealers are in a very low-margin business. We don’t offer a lot of perks and guarantees because we’re focused on delivering what you should want: the most gold and silver at the lowest price.
A new craze among dealers is to push gold buyers into “leveraged accounts.”
In one of these accounts, the dealer lends you money to buy gold on the assumption that gold will go up faster than the rate of interest on the loan. In other words, if you have $5K, they’ll loan you another $20K in credit to make a $25K total purchase of gold bullion.
The sales pitch is that since we all know gold is going up, you might as well maximize your returns by leveraging up. But the fine print could leave your wallet empty and your head spinning.
The Bottom Line
The bottom line here is….do your research. In addition to what I’ve shared, make sure you CALL every single company and thoroughly investigate them before even thinking of giving them a penny of your money!
Don’t fall for celebrity endorsements, TV commercials, charming fast-talking salespeople, or any of that crap.
What matters are the facts, and the proven history of the company.
If the company has been in business for less than five years, move on.
If the company is high pressuring you, move on.
If the company dealers don’t give you a straight answer or are rushing you off the phone, move on.
If the company does not have all the patience in the world with you, move on.
I’m really fed up of companies that are day in and day out taking advantages of innocent consumers. SPECIALLY when we are talking investments and someone’s financial future.
I will not be sending you any more mail (at least for a while).
I hope you found these tips useful.
I wish you luck in the rest of your research. PLEASE PLEASE PLEASE do your research. I can’t tell you this enough.
If you want to send me a question or update me on your Gold IRA journey, you can always reach me via email:
Goodbye for now.