Consumers Should Do Their Research Before and After Investing in Gold Coins
For much of human civilization, gold has ignited the imagination of investors. That enchantment continues to this day as surges in the price of gold have made the commodity seem like an attractive alternative to more volatile markets. While there are many reputable dealers in gold, this market’s desirability and investment potential makes it vulnerable to fraudulent business practices.
If you have been thinking about buying or selling rare or bullion-value products containing precious metal, the Attorney General of Texas has three words for you: research, research, research. Before entering into a transaction, you need to research online the background of the coin dealer including how long they have been in business and Better Business Bureau (BBB) rating and number of BBB complaints. You should also independently verify the dealer’s membership and status in leading industry organizations. That advice applies to all transactions whether done by phone, in person, online or by mail.
Leading industry organizations you can contact include the American Numismatic Association and the Professional Numismatists Guild. You might also verify if the dealer is an Authorized Dealer of the PCGS (Professional Coin Grading Service) or NGC (Numismatic Guaranty Corporation), the two most recommended grading services.
Be aware you will probably be buying coins or bars at retail prices and later selling at wholesale prices. Selling in a short period of time often results in losses.
Here are some tips to avoid becoming a victim of fraud:
- Seniors make up about 14% of the U.S. population but account for 60% of callers to the National Fraud Information Center. If you are a senior, be extra careful.
- If coins you bought as an investment would have to double or triple in value before any gain could be realized, you may have been a victim of fraud.
- If a dealer does not pay you, return your coins or deliver your purchased product in 30 days or less, you may have been a victim of fraud. Don’t Delay Action!
- Do not respond to callers not previously contacted. Cold callers often are not registered in Texas to legally telemarket and often try to pressure customers to act quickly.
- Use credit cards for first transactions, as credit card companies offer extended fraud protection.
- Do not do business with a dealer who guarantees your purchases are totally safe, will go up in value or can’t go down, stresses government gold confiscation or says he will buy them back for what you paid at any time.
- Counterfeit coins and bars as well as counterfeit grading service holders are a possible risk, especially with online transactions.
- Be wary of Home Storage IRA plans, as these have not been thoroughly tested with the U.S. Treasury or IRS. Stick with reputable independent custodians.
- Reduce theft risk by storing your coins in a financial institution’s safety deposit box. That institution would also be a safe place to meet buyers/appraisers. Do not allow a relatively unknown dealer/appraiser to remove coins from your sight.
If you believe you were the victim of fraud, do not hesitate to contact the authorities. Here is a list of helpful resources:
- Attorney General of Texas (800-252-8011)
- Numismatic Crime Information Center (817-723-7231)
- Numismatic Consumer Alliance Inc. (908-781-7947)
- Professional Numismatists Guild (760-728-1300)
- Credit card companies used to make the purchase
- Local Police Department or Sheriff’s Department