All That Glitters Is Not Gold: Spotting Scams Before Investing In Gold

Gold is one of the easiest ways to keep something that will always have value. It's an investment that doesn't require a broker, and often, it doesn't even require special software or stocks and bonds. When you buy this precious metal, you store it yourself, and cash it in whenever you need green instead of gold. Sometimes, you can sell your gold for hundreds of dollars more than your bought it for, if you wait for the right time. However, because gold is such an effortless investment for many buyers, scams arise that can cheat you out of your money. The following are easy ways to spot a gold-selling scam.

1. The Gold Is Priced Too High

Usually when you buy gold, the price mark-up over market value should be between 5-8%. The reason you can't usually buy gold at precise market value is because the United States Mint needs to put a 3% mark-up to cover costs or shipping and minting American Eagle cold coins. Dealers who sell these coins to public need to cover that premium, plus make a slight profit. So, they add another few percent. Anything higher than that means that the gold is marked up too much, and that the dealer is pocketing the extra cash. 

Sometimes, mark-ups might be hidden. Come into a gold buying situation with a the past few days of stock gold history, so you are informed about the market price. Some sellers will "look up" the market price themselves, saying that it is much higher than it really is. 

2. The Seller Is Fencing Fakes

It's difficult to make counterfeit gold to fool a jeweler, but it is easier for the general public. If you have not handled gold very often, you could be deceived by gold coins of bars that are simply gold plated, instead of pure gold all the way through. If you are concerned that the gold you are buying might be fake, take an experienced gold buyer with you to provide a second opinion. If you buy fake gold at the going rate for gold sales, you will not have any success when you go to sell that gold at a later date. In fact, counterfeiting legal tender, like American Eagle coins, could mean 20 years in prison

You can avoid buying fake gold by always examining the gold in person. Gold bars and some gold coins have authenticity certification that comes with them when you buy. If you must buy online, always order it through a certified dealer that has a good seller history. Never buy large quantities of gold for investment purposes from online markets where anybody is allowed to post items for sale. Sometimes, an item online that looks like gold may even just be painted gold in color. 

3. The Offer Is Too Good To Be True

The bottom line is there is no such thing as "cheap" gold. If somebody calls you, offering the sale of a lifetime, where real gold coins are only a fraction of market price, then you should know something is wrong. No seller is going to give you something for nothing. There is never a reason to liquidate gold assets at a low price, no matter how convincing the argument might be. Some common reasons that seller might give for selling gold at such a low price are:

  1. The mine is closing and they need to get rid of the gold fast.
  2. They have found a new source in a poor country, so tariffs, taxes, and mining costs are lower. 
  3. They are liquidating family assets, or have found a reserve of gold that nobody knew about before.

Usually, if you invest in one of these schemes, you never see any gold; you only see an empty bank account. If you recognize one of these scams, you can report the seller for fraud in order to stop them from stealing money from others. Choose to invest in gold from a reputable buyer in your area, who can give you a good, honest deal on price and a guarantee that the glitter is 100% authentic.

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