It’s inevitable: at some point in your gold investment career, you’ll run into a scammer — but that doesn’t mean that you have to wind up a victim. In the finest tradition of “forewarned is forearmed,” let’s take a look at three common gold scams that you should avoid.

Fake Gold. You surely know better than to buy gold from a total stranger without testing it thoroughly… but people get scammed this way every day.

Here’s a particularly nasty example: in February 2009, a woman approached a Wal-Mart shopper in California, asking where she could find a jeweler so she could sell three gold bars. A helpful “stranger” offered to have the bars appraised at the Wal-Mart jewelry counter. Soon after, they returned to inform their mark that the bars were worth $12,000 each… but that she could have one for just $5,000. She bit, and was left holding a polished brass ingot. D’oh!

Direputable Online Dealers. “Cash for Gold” purchasers are proliferating on the Internet faster than weeds in a rose garden. They’ll happily send you a check if you send them some gold… but they get to decide how much to pay, and usually it’s a pittance.

Recently, a San Diego news station sent three identical gold rings that cost $58 each to “cash for gold” outfits, and took a fourth to a pawnbroker. The scammers returned checks ranging from $2.80 to $7.63. The pawnbroker paid $18.50… and pawnbrokers aren’t known for being overly generous.

Gold Buying Parties. See above. These events are becoming popular, and they’re not always scams. But even in the best of cases, you’re not going to get top dollar for your gold. You’re better off selling to a reputable dealer or refiner, because they’re going to pay you at or near the spot price.  And if you don’t know what “spot price” means, you might want to check out this helpful article on gold investing terms.

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