You might have heard a lot of experts say that during tight economic situations such as what we have now, turning to gold is a good investment gambit.
Gold is an overly reliable asset that withstands any kind of financial uncertainty. Even when the stock market is plunging like an elevator whose brakes have failed, gold’s price still rises. You can consider gold as a form of insurance to financial crunches.
Gold can also protect you from the effects of inflation. Remember that it is a store of value because the worth of major international currencies (the US dollar included), depending on the price of gold. It is also a global currency that has kept its significance and value in all countries for thousands of years.
If you want to deal in gold, it is imperative that you do some research on how it goes so you can become confident. Never go on a buying spree without first equipping yourself with the necessary knowledge. As they say, not all that glitters is gold – and you don’t want to lose your money to some enterprising counterfeiters and scammers out there.
The most vulnerable targets of these schemes are mostly senior citizens because more and more of them are learning how to use the Internet. More than 10,000 seniors have fallen prey to hoaxers who offered to sell them gold as an investment, which, in the first place is not a good investment in many cases. These victims parted with their money without even seeing a speck of the precious metal. Although it’s okay to buy some collectible coins, you should exercise care when buying them.
1. Fake Gold
This is the most common scam. The buyer gets what looks like the real thing and without a close examination, he can’t tell that it’s not real.
However, when one cautiously checks the structure, the design of the coin and most importantly, the material of the coin, the disappointment sets in. It’s not gold but instead, a couple of different metals molten together to form a blurred design that approximates an original gold coin.
2. Fake Documentation
Because of advanced technology, scammers can now easily manipulate documents, so they can use and reuse documentation almost endlessly by photoshopping signatures from one form to another, altering dates, changing descriptions and other schemes.
Among gold coins, MS-70 grade is the favorite lures of fraudsters because most people want to own a ‘mint state’ coin. So, scammers get away with increasing the value of a coin by simply lying about its condition.
For example, a 2002-W $50 Gold Eagle with a grade of MS-60 is in a very clean condition although not perfect would sell for about 30% less than grade MS-70 which is a perfectly clean coin.
Untrained buyers may not discern the difference and may unknowingly overpay for their purchase by hundreds of dollars.
3. Partial Delivery Scam
This scam is fairly simple but very common, particularly if you buy gold online from unverified and unrecognized websites. A partial delivery scheme usually comes in two forms:
- The buyer pays for partial delivery of the gold, but the seller never delivers anything.
- The buyer pays a pre-agreed amount and gets a small part of the entire purchase. Once the buyer becomes convinced of the gold’s legitimacy, he makes full payment for the rest of the gold. Either he never receives the shipment or he gets a shipment of fake gold.
One way to prevent this is by doing a background check on the online company before placing any order. Make personal calls to their customer care and check the office address online. As much as possible, do not make advance online payments but insist on cash on delivery.
4. The Vanishing Company
This scam begins by convincing the buyer that he can buy gold (usually at a lower price) and pressuring him to send money. The supposed company will take the money but will never send the agreed-upon product. The reverse side of this trick to ask the seller to ship their gold coins for which the purported buyer will never pay a cent.
These types of the con will rely on how fast the fraudster can execute because they have to strike as quickly as possible to elude arrest. The only thing that the victim will get is a voice message from their old number telling callers that the number is no longer in service and the company is no longer there. Usually, the con men move their operation to another place and change their names.
5. The Inheritance Scam
This scam and its other variations became popular on the Internet and people lost millions of dollars to the scammers. One example is a scammer pretending that he has just inherited money and gold and needs a partner, a bank account and some bribe money to move his inheritance out of his country. They will offer the partner half of the total wealth. Except that before the victims realize there is no inheritance, they’ve already given the money to the ‘poor and helpless’ fraudster.
Another popular scam is one that preys on lonely women by con artists befriending them and promising to visit them in their country but there’s something the victim must do. The scammer pretends that someone stole his wallet while on the way to the airport and he needs some cash or gold to pay for his ticket and hotel and all other expenses. These fraudsters would just try to milk their victims as long and as hard as they can.
The scams can come in different variations but they all appeal on greed, loneliness, sympathy, or the temptation to earn a quick buck. The scammers will always promise that they are legit and will pledge to give only good things to their intended victims.
6. Collectible Gold Coins
Sometimes, you want to buy gold coins for your collection that have unusual and intricate designs, shapes, textures, and symbols. This is what some con artists are waiting for. If you are a neophyte collector of rare gold coins, there’s a very big possibility that you will be unable to differentiate a quaint, antique artifact from one that’s counterfeit or purely fictional.
You might end up buying something under false pretenses thinking that it is very valuable and paying ten times more than its actual worth. To lessen your chances of buying a fake coin, consult with a trusted expert before you make your decision.
7. Coins That Don’t Exist
As unimaginable as it may seem, some cunning dealers transact not in fake gold coins, but in coins that don’t exist at all. The ruse is to convince the buyer that it’s very risky to keep a large amount of physical gold in their homes or offices. There’s always the danger of theft or exposure to disasters like fires and floods. Of course, these players have a ready solution: a place to store a bulky coin collection.
These dealers conveniently volunteer to keep the coins in escrow to avoid such risks. The bigger problem is, the buyer does not get to see his gold because, in the first place, there isn’t any. And to add insult to injury, these quacks will even collect a storage fee and even insurance from the buyer for the imaginary gold coin collection.
8. Over Priced Shipping Cost
In case you stumble upon a really tempting offer on a website selling gold at a promotional price, don’t be too quick to click – do some investigating first. It could be a legit website and the offer could look reasonable enough, but the catch is the humongous shipping cost that they only reveal at the check-out stage. You might argue that since it’s an online sale, therefore, shipping is part of the cost, so what’s the commotion all about?
Well, what if you find out that the shipping cost is double the price of the gold they sell? Often, they will hide this from the buyer. The fine print will just say that the shipping cost varies and increases according to the amount of gold you bought.
The sad news is, these scammers would not stop and will continue to use the methods we enumerated above plus some new ways to try and trick people.
The good news, however, is there are many ways to spot these gold scammers (check out our article on how to avoid gold-buying scams). Keeping safe from these crooks is just a matter of doing your due diligence before you let go of your money, making a careful review of all the important details of the gold you want to buy, and also, dealing only with reputable and reliable gold dealers.