Lately, my thoughts have turned to the danger of gold investment scams.
While I’ve been fortunate in my dealings, I personally know a few people who’ve fallen for grifters, and there are some doozies in the literature…like the person who paid $5,000 for a polished brass ingot in a Walmart parking lot in 2009.
Events like that are rare, but they do happen, and scammers won’t hesitate to use technology against you if they think you’re gullible. Email is a particular concern, not just for investing in gold, but for all kinds of other scams. Google “Nigerian scam” for a scary example.
Danger, Will Robinson!
I bring this up because I’ve gotten emails offering fabulous investing opportunities that didn’t quite smell right. Not being a trusting person by nature (no precious metals investor should be), I’ve rolled my eyes and deleted the emails.
Now, I’m not saying categorically that the offers were scams. I do get legitimate offers occasionally due to my online presence. These just didn’t get past my B.S. detector at first glance.
Which is basically my point here. Given the sums of money involved, you have to be absolutely paranoid when offered a gold investment opportunity. It’s better to lose out on a great deal than to have some con artist make off with your life savings.
ALWAYS investigate any vendor you’re planning to buy gold from, even if it’s that nice guy at the corner coin shop. I can’t stress this enough. Do this without fail. First, go online to see if the vendor has any complaints against them. Search the online gold forums, and post inquiries, especially if the vendor is a new one.
Next, contact the Better Business Bureau (BBB) to determine whether the company or vendor has any complaints or legal action against them. Then contact the U.S. Commodity Futures Trading Commission to see if the vendor has any reparations sanctions in effect. You’ll find a searchable index here.
Tread With Caution
In general, any gold vendor you deal with should have a history in the industry, and a good reputation for fair dealing. Clearly, this leaves out any new companies; but it’s best not to take a chance until you have plenty of experience in the field, and even then you have to be careful.
If you buy stocks or EFTs, be sure they’re registered with the Securities and Exchange Commission (SEC), and purchase them through an investment broker. If you buy bullion, buy gold that you can see and handle, and make sure it has assay and quality stamps — or corresponding minting marks.
Otherwise, pass it by.
A Little at a Time
When working with a new vendor, purchase small amounts at first to see what you get. Once you’ve found them to be completely trustworthy, then you can make larger purchases. If you’re at all suspicious or concerned about the gold’s quality, have it tested by a third-party firm with no relation to the broker.
And one final thing: stick to domestic vendors that you can reasonably sic the law on if they lead you astray. If you try to purchase gold from Lower Slobovia and something goes wrong, then you’re just plain out of luck.
The Bottom Line
Exercising common sense can be hard work, but at the very least, you’ll need to do the above before you spend a nickel. If all that’s too difficult for you, maybe you shouldn’t be investing in gold. Sorry to be blunt, but with an attitude like that, you’re a ripe target for gold investment scams.