How to Avoid Gold Scams
Scammers typically contact victims through unsolicited communication channels such as email, text message, social media or pop-up ads and pose as law enforcement officers, government officials, financial or investment experts or fake tech support experts.
As soon as they’ve convinced their victims that their bank accounts, money or valuables have been taken by thieves, they suggest turning it all into gold to protect it and send a courier to collect it.
Do Your Research
Be wary of unsolicited communications when buying or selling, particularly outside secure environments with proper documentation. Legitimate dealers and investment advisors do not cold call or send messages unexpectedly.
Fraudsters may employ tactics such as overcharging for gold coins or bars. A quick online search can help verify prices and detect over-priced items.
Fraudsters may make misleading or fraudulent claims regarding the benefits of investing in gold, including promising high or guaranteed returns – this should serve as a red flag, since all investments carry risk, including gold.
Others use personal fear to manipulate victims into parting with assets – for instance by convincing them they are facing financial or legal ruin in order to coax them into handing over assets (a classic investment scam). Finally, fraudsters often use an empty vault scam in which they promise physical gold storage but then vanish when the time comes to deliver it.
Don’t Give Away Your Gold
One of the more prevalent gold scams involves people wanting to sell their gold for cash. This usually takes place over the phone or online and usually begins when an overly optimistic estimate of its worth is given over the phone or online, then when sent in, some outrageous excuse is offered as to why it’s only gold-plated or 10 karat, thus depriving the seller from their investment.
Criminals frequently impersonate representatives from the government in order to convince victims that their bank accounts have been compromised and require them to convert their savings into gold bars for handing over to them. This scam allows criminals to gain access to millions from unsuspecting consumers.
Avoid these scams by conducting proper research and working with reliable buyers. Always ask for an independent appraisal and never accept offers significantly below current market values.
Be Wary of Sense of Urgency
At times of financial insecurity, many turn to precious metals as a safe haven investment. Unfortunately, scammers also see this as an opportunity to prey upon unwitting investors by exploiting this fear-inducing trend. Therefore it is imperative to remain alert for red flags that might signal gold investment frauds.
One of the key warning signs of gold sellers who offer prices far below market value is an urge from them for buyers to make immediate purchases, or any messages or advertisements from them urging buyers to act quickly. Also be wary of those offering prices significantly below what would normally be expected from the gold seller.
Another telltale sign of fraudsters and scammers alike is lack of transparency regarding fees. Scammers may hide extra charges in complex contracts and jargon; therefore it is vital that you read carefully and ask any necessary questions in order to fully comprehend your investments.
Be Wary of Unsecured Derivatives
An illegal gold-related investment often takes the form of an unsecured derivative investment. Such investments tend to be riskier and less liquid than an underlying asset such as precious metals contracts, so they should only be made through trusted custodians or depository.
Therefore, it is vital that you conduct adequate research and only work with reputable dealers that offer buy-back guarantees, have excellent industry reputations and belong to renowned associations. Doing your due diligence will protect you against scammers while assuring the highest return for your precious metals.
Gold has quickly become one of the hottest commodities today, and many investors are investing their hard-earned savings into precious metals. Unfortunately, with such high demand comes many scammers hoping to take your hard-earned savings and run scams against it. Be wary of counterfeit items, falsified documents and gold IRA fraud schemes as these can all present scams that you should avoid becoming victims of.
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