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, as only 24 karat bullion bars and coins from IRS-approved sources are allowable. Disreputable dealers, however, will try to pressure you into buying collectible coins because they can charge a higher premium, though these may not fit your investment needs.
2. Know Your 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 websites such as Craigslist might be a great way to find a used bike, buying gold through these places is quite risky because you have no way of knowing if your purchase is legitimate if it even arrives at all.
3. Research Your Dealer
Like any other commodity, gold is subject to market changes, and firms that have been able to weather these ups and downs for at least ten years are more likely to be legitimate. You should also look for firms with high ratings from the Better Business Bureau, as these can give you an idea as to whether or not consumers are happy with their services.
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 spot price of the gold you want to purchase to see if a dealer’s markup is higher than the standard 5% to 8% premium. Also, shady 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 and will usually list them on their website, 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 Return Policy
Reputable dealers offer return 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 return policy is not limited to certain quantities of gold, as well as inquire about the repayment period, which is usually 72 hours. 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
Legitimate 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 Scottsdale Bullion and Coin 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.
Published by: Mike Rowlands
Image credit: pandacollector.com