In every industry, there are unethical and dishonest people, and precious metals/gold is no exception, particularly since this market is largely unregulated. As an investor, it’s wise to educate as much as possible on the industry before committing and becoming familiar with the potential scam activities.
As a rule, there are two sorts of scams to be mindful of, including scammers explicitly involved with precious metals or gold in particular or self-directed individual retirement account scams. In either scenario, the goal is to gradually (or in one fell swoop) swipe the investment wealth of investors.
Not all firms in the market participate in scamming clients. The vast majority can say they are honest. For instance, when an investor asks the question, “is Lear Capital legit,” you can rest assured it’s a company with the investor’s best interest as a priority. They have followed that premise for a couple of decades.
When you run into a business with years under its belt, it will unlikely participate in unethical activity. Let’s look at a few scams, so you know what to look for.
What Are Some Gold/Precious Metal Scams To Be Mindful Of
Many investors turn to gold IRAs as the ideal hedge for paper-heavy portfolios. In order to find an excellent firm to work with, it takes considerable forethought and careful research to avoid the potential of being scammed.
That doesn’t mean that all companies in the industry are out to make a dollar on their clients. For the vast majority, the goal is to help investors reach their goals, especially for well-established companies with decades in the business like Lear Capital.
Not only do companies like these hope for the best interest of their clients, but they also benefit when an investor achieves financial success. When other clients see they can help, a business like theirs can help; these investors also want to work with that firm.
Unfortunately, criminals can ruin the image of everyone in the industry with their scams. Learn a few tips to avoid scams when buying gold at http://www.securities.arkansas.gov/press-release/1126/investment-tips-avoiding-a-pot-of-fool%E2%80%99s-gold. Let’s look at some of these crooks’ tactics to defraud clients out of their wealth.
It’s vital to purchase gold from reputable and recognized precious metals dealers in the industry. These providers are established and would have something to lose if they gave you an outstanding deal on valuable coins meaning that’s not likely to happen.
You also won’t be paying an exceptionally excessive amount for worthless coins either. The scammer will show you the valuable coins in the counterfeit scheme, ask you for a “bargain-basement amount,” and then distract you while they pull out the fake coins.
The criminal will take your money with you, not realizing you’ve been conned until well after the crook has disappeared.
Some of the more common counterfeit coins include the Canadian Maple Leaf, St. Gaudens, Chinese Pandas, and Liberty Head $20 coins. There is rarely an occasion where a legitimate seller will lower their price below spot.
When buying for your own collection, you can purchase precious metals, including gold in every form. Those products purchased for an IRA need to be specific since federal law has restrictions that dictate no collectible coins or coins that are rare. When purchasing for retirement accounts, the focus is fineness, purity, and weight.
When looking at “exclusive mint” or “rare” options, these are meant for personal collections, not for retirement investments. Some of the ineligible choices:
- Dutch guilders
- Austrian Corona & Ducat
- Chilean Pesos
- Belgian Franc
- Mexican Pesos
- British Sovereign/older Britannias
- Hungarian Koronas
- French francs
- Swiss francs
- German mark
Anyone attempting to sell ineligible coins for IRAs should be avoided since these are not allowed as investments with individual retirement accounts.
● Self-directed IRA
Some scams relate to self-directed IRAs overall instead of being directly associated with precious metals or gold specifically. The physical commodity is a subcategory of self-directed IRAs, which are accounts that the conventional financial entities don’t administer but instead give more owner-direct control. These investors need to be mindful of red flags pertaining to scams like:
- Guarantees for profits or returns
- Being bullied or having a high degree of pressure to buy
- Low-risk promises
In some instances, scammers will convince an investor to make out a substantial check and then disappear with the funds. It’s vital to deal with reputable, well-established firms. That means checking for licensure and never making out a check or providing cash to a sales representative as a way to open a new account.
If you find yourself a victim of fraud, it’s vital to contact the Federal Trade Commission to get help for yourself and so that it doesn’t happen to anyone else. It can’t be stressed enough to research and only do business with a reputable and well-established firm that is recognizable. See here for guidance on precious metals fraud.
These companies will be involved with traditional associations and have licensure and other qualifications. You don’t want to lose your wealth because you don’t do your homework.