Precious Metals Investing? Beware of These Scams.

Keep your hard-earned money safe from fraud with these tips for avoiding precious metal scams.

The increasing value of precious metals has led to a rise in fraudulent activity aimed at exploiting unsuspecting investors.

Investing in precious metals can be an excellent way to diversify your portfolio and protect your wealth, but unfortunately, it can also make you vulnerable to scams. The increasing value of precious metals has led to a rise in fraudulent activity aimed at exploiting unsuspecting investors. Whether you’re a first-time investor or a seasoned pro, it’s important to know how to avoid falling prey to precious metal scams.

In this article, we’ll discuss the different types of precious metals, common scams, red flags to watch out for, and how to stay safe.

Types of Precious Metals

Before we delve into the details of avoiding precious metal scams, let’s take a quick look at the different types of precious metals.

1. Gold: Gold is a highly valued precious metal known for its beauty and durability. It has been used as a store of value for thousands of years and is often seen as a safe-haven asset during times of economic uncertainty.
2. Silver: Silver is another popular precious metal, valued for its beauty and versatility. It has a wide range of industrial uses, from electronics to solar panels, and is often used as a more affordable alternative to gold.
3. Platinum: Platinum is a rare and valuable precious metal that is used in a variety of industrial applications, including diesel engine catalytic converters, jewelry, and medical equipment. It is often considered more valuable than gold or silver due to its scarcity.
4. Palladium: Palladium is a silvery-white precious metal that is similar in appearance to platinum. It is a versatile metal with a range of industrial applications, including in the automotive industry for gas engine catalytic converters and in the electronics industry for capacitors and fuel cells. Like platinum, it is a relatively rare and valuable metal.

Precious metals fall under the category of commodities, along with other goods like grains, oil, lumber, and beef. Unlike securities like stocks and bonds, which represent interests in companies or governments, commodities are tangible, material goods that are traded on various markets. While securities represent ownership, commodities represent the physical supply and demand of the goods themselves.

6 Common Precious Metal Scams

There are several types of precious metal scams, but some of the most common include:

1. Fake Coins or Bars: These scams involve selling counterfeit precious metal coins or bars to unsuspecting investors. The fake coins or bars may look identical to the real thing, but they are often made of a cheaper metal and are worth far less than the price paid by the investor.
2. Bait-and-Switch: In this scam, the investor is promised a particular type of precious metal, but upon delivery, they receive a different type of metal altogether. For example, they may be promised gold coins but receive silver instead.
3. Selling Damaged Precious Metals: In this scam, the seller tries to trick you into buying precious metals that have been damaged or tarnished, often for the same price as undamaged metals. They do this to make money off something they couldn’t sell in its original state, taking advantage of unsuspecting buyers who don’t know any better.
4. Loan Financing Scam: Some scammers may offer loan financing with an independent financial institution, but actually charge phony interest rates. Investors should always be wary of any financing offers that seem too good to be true.
5. Storage Fees Scam: Some scammers may offer to store precious metals with an independent financial institution or storage facility, but charge exorbitant storage fees. Always carefully read the terms and conditions of any storage agreement before agreeing to it.
6. Failure to Disclose Fees Scam: Some scammers may fraudulently fail to point out that investors who are not paying the full price for the metals will have to send the company additional funds if prices move unfavorably. It’s important to be fully informed of any additional fees or costs associated with your investment.

Red Flags to Watch Out For

To avoid falling prey to precious metal scams, be aware of red flags. Here are a few things to watch out for:

• Unsolicited phone calls or emails. If you receive an unsolicited phone call or email from someone claiming to be a precious metals dealer, be wary. Legitimate dealers don’t typically make cold calls or send unsolicited emails.
• No time to decide. If a dealer is pushing you to buy quickly, without giving you time to think it over or do your own research, it’s a red flag. A reputable dealer will give you all the information you need to make an informed decision and won’t pressure you into making a purchase.
• Prices that are too good to be true. If a dealer is offering prices that are significantly lower than market value, it’s likely a scam. Precious metals are valuable commodities, and legitimate dealers won’t sell them for significantly less than their market value.
• Trying to get you to pay in advance. Be wary of dealers who ask for payment upfront before delivering the precious metals. Legitimate dealers typically require payment upon delivery.
• Asking for payments via gift card or money wired overseas. These payment methods are often favored by scammers because they are difficult to trace and recover once the payment has been made.
• Asking for your personal information. Legitimate dealers don’t need personal information such as your Social Security number or financial account information to sell you precious metals.
• Difficulty in verifying the company’s license: Before working with a dealer, make sure to verify their license with the relevant authorities. If you’re having trouble verifying their license, it may be a red flag.
• Missing documentation that seems necessary. Legitimate dealers will provide documentation such as a sales receipt or certificate of authenticity. If the dealer can’t provide this documentation, it’s a red flag.

How to Stay Safe

To avoid falling prey to precious metal scams, it’s important to become informed and work only with reputable dealers. Here are a few tips to help you stay safe:

• Do your research. Before working with a precious metals dealer, research their reputation online. Check reviews, ask for references, and check with the Better Business Bureau to see if any complaints have been filed against them.
• Check credentials. Look for dealers who are members of reputable organizations, such as the American Numismatic Association (ANA) or the Professional Numismatists Guild (PNG). These organizations require their members to adhere to strict ethical standards.
• Check registration status. Contact the Commodities Futures Trading Commission (CFTC) or the National Futures Association to check the company’s registration status, business background, and disciplinary history. This can help you avoid unregistered or fraudulent companies.
• Stick to established dealers. Stick to established dealers with a proven track record of success. Avoid working with unknown or unproven dealers.
• Trust your instincts. If something feels off about a particular dealer or transaction, trust your instincts and walk away.

If You’ve Been Scammed

If you believe you’ve been scammed, it’s important to act quickly. Here are a few steps to take:

• Contact the authorities. Report the scam to the authorities, such as the Federal Trade Commission (FTC) at reportfraud.ftc.gov, the Securities and Exchange Commission (SEC) at SEC.gov, or your state attorney general’s office at naag.org.
• Gather evidence: Gather any evidence you have of the scam, such as receipts, emails, or phone call records.
• Contact your financial institution or credit card company: If you made the payment with a credit card, contact your credit card company and dispute the charges. If you paid with a check or wire transfer, contact your financial institution and see if they can stop or reverse the payment.
• Seek legal advice: If you’ve lost a significant amount of money, consider consulting with an attorney to explore your legal options.

Remember these tips – and save precious time and money! To learn more about protecting your investments, talk to your financial institution today.