5 of the Trickiest Gold Scams and How to Avoid Them
Thanks to the economic crisis and falling dollar prices, gold value is at an all-time high and continues to rise in the global market. For coin collecting enthusiasts, this might be good news as their gold coins have a higher market value than before.
On the flip side, the shiny yellow metal’s profit-making potential is attracting several unscrupulous gold scam and con artists. Whether you’re an expert or a first time buyer, here are 5 of the most notorious gold scams you need to watch out for:
When it comes to gold coins, the MS-70 is considered to be the “mint state” for all coins. A typical MS-70 grade gold coin sells for over $2,500. One of the easiest scams is when a vendor charges you the price of an MS-70 and hands you an MS-63. It’s really hard to differentiate between the two gold values as they appear to be almost the same. However, the latter is worth only $1,000. As a result, you end up paying much more than what you bargained for. To avoid Grading Scams, it is best to consult independent valuation services.
When it comes to coin valuation, many vendors charge you extra to recover coin holder charges. Ornamental holders prevent you from examining and determining the value of the actual coin itself. This allows some dishonest dealers to put low quality (even counterfeit) coins in fancy packets and packages and prevent you from inspecting the piece. To avoid this scam, it is always best to check out the gold coin itself (without the holder), observe the weight and dimensions, and then make the final choice.
Gold coins offer the best hedge against inflation as well as generate the highest ROI. If you’re investing in gold coins as a protection against rising price levels or as a source of investment, it is an admirable step. Yet, it is prone to risks and scams. Some dealers provide a skewed pricing index that shows appreciation of up to 20% on a YOY basis. Such indexes are based upon rare coins and do not reflect general gold coin price movements. It is unlikely that American Gold Eagles can fetch 20% every year. Therefore, always be skeptical when buying gold coins.
Another scam to watch out for is when your dealer tries to be nice and offers to keep your gold coins in escrow so as to keep them safe. The dealer knows the art of playing with your fears and reminds you how your gold coins are always susceptible to theft or robbery if you place them at home. In reality, such dealers never have any gold coins to offer! They’re just “pretending” to have gold coins and often custodial services in exchange for high premiums. To avoid this scam, invest in the right coin collecting supplies and keep your gold coins safe with you, in your home.
Many of you will find it hard to believe, but the single largest gold coin scam was conducted in the name of National Policy. In April 1993, Uncle Sam introduced the infamous Executive Order 6102. The law forbade mass hoarding of gold coins. This resulted in seizure of gold coins from most of the bank vaults and safety deposit boxes. Consequently, many gold coin owners had to transfer their coins to Switzerland. Others had to settle for a meager $21 per ounce offered by the government. Whether such an order will be executed again remains a question. But one thing is for sure: do not keep your gold coins in banks.
To learn more about the popular coin scams, contact CS Supply Centraltoday!