Gold IRA Scams: How to Spot a Fraud and Protect Your Money

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If you're thinking about investing in a gold IRA, it's important to be aware of the many gold IRA scams that are out there.

Falling victim to a gold scam can cost you dearly, so it's crucial to know how to spot a fraud and protect yourself. In this blog post, we'll discuss some of the most common gold scams and provide tips on how to avoid them.

We'll also give you some warning signs to look out for and tell you what to do if you think you've been scammed. So read on for all the information you need to stay safe when investing in gold.

Before we get started with this article:

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What is a Gold IRA Scam?

With inflation wrecking the economy gold is becoming more and more popular with investors. 

The bad news is some businesses have unethical practices in selling their Gold IRA services and it's critical to your wealth to avoid these commons scams.  

The common theme through all gold IRA scams is that they mislead the facts and often pressure you into making a quick sale. 

The easiest way to avoid a gold IRA scam is to work with one of the most reputable companies in the industry. And the second way to avoid scams is by learning about them so you can avoid them. 

Non-Delivery Scams/Ponzi Schemes

Non-delivery scams and Ponzi schemes are the two most common gold IRA scams. In a non-delivery scam, the gold dealer does not deliver the gold to the custodian. This type of scam is more common when gold is bought outside of the United States. 

Ponzi schemes are investment scams that have been around forever. The scammers take money from new investors to pay off the old investors.

Classic signs of these are promised guaranteed returns, dishonesty about how long delivery of metals takes, and ridiculous too good to be true tactics. 

How to Spot a Non-Delivery Scam:   

There are a few red flags that can help you spot a non-delivery scam. First, if the dealer is pressuring you to buy gold without giving you time to do your research, that is a major red flag. 

Second, if the dealer refuses to give you the name and contact information of the custodian, that is another red flag.

Finally, if the dealer is not registered with the Better Business Bureau or has a lot of complaints against them, that is a sign that you should avoid doing business with them. 

How to Spot a Ponzi Scheme:   

There are also a few red flags that can help you spot a gold IRA Ponzi scheme. First, if the gold dealer promises unrealistic returns, that is a major red flag.

Second, if the gold dealer asks you to cash in your retirement account or take out a loan to buy gold, that is another red flag.

Finally, if the gold dealer encourages you to keep your gold in their possession rather than having it stored by a custodian, that is a sign that you should avoid doing business with them.

Rare Coin Valuation Scams

A rare coin valuation scam is when a gold seller company tells you that your gold is worth way more than it is, and then charges you huge fees to store it or sell it back to you. They might say that your gold is worth $20,000 when it's only worth $2,000. 

This type of scam is common because gold is a valuable commodity and people are often not familiar with how to value gold properly. This is especially difficult with very old and rare coins and is one of the reasons why numismatic coins are not allowed in gold IRAs. 

If you're thinking about selling your gold, do your research first and find a reputable gold buyer who will give you a fair price for your gold. 

These scams can be very costly, leaving victims without their hard-earned savings. To protect yourself from these types of scams, it is important to educate yourself on how to properly value gold.

With this knowledge, you will be able to identify a gold valuation scam if you ever encounter one. 

This is also a way to identify reputable gold IRA companies. The best ones will offer their clients tons of educational materials so they can make informed decisions.

Home Storage Gold IRA Scam

A home storage gold IRA scam is a gold IRA investment scam that involves gold being stored in an investor's home instead of in a gold depository. The gold is typically stored in a gold ingot, coin, or bar form. 

The problem with this type of scam is that there are many risks associated with storing gold in one's home. Gold can be stolen, damaged, or lost. Additionally, if the gold is not properly insured, the investor may not be able to recoup their losses. 

One of the biggest problems with a home storage gold IRA is that you will likely incur massive IRS penalties because gold must be stored in a gold depository to be considered an IRA-eligible asset. 

If you are thinking about investing in gold, make sure you do your research and only work with a reputable dealer. Otherwise, you could end up being the victim of a home storage gold IRA scam. 

If any gold dealer is trying to sell you gold and telling you it's ok to be stored at your home and still be IRA eligible, they are either being dishonest, or they so don't understand the market that doing business with them can be financially devasting to the investor. Best to avoid dealers that recommend this tactic.

Counterfeit Gold

Counterfeit gold is gold that is not real gold. It is made to look like gold, but it is not gold. Counterfeit gold is probably the oldest gold scam in existence. 

There are many ways to spot counterfeit gold.

Here are a few:  

-The weight of the gold piece is different than the weight of a real gold piece of the same size. 

-The color of the gold is off. Real gold is a deep yellow color, while counterfeit gold may be more orange or greenish. 

-The texture of the gold may be different. Real gold is smooth, while counterfeit gold may be bumpy or have other irregularities. 

Working with a reputable precious metals IRA company makes this scam easy to avoid. The reason is that they have to go through third-party audits of their metals because the IRS mandates that gold and silver meet minimum purity levels to be eligible for an IRA.

Gold Scam Warning Signs

Some warning signs to alert you to a potential gold scam are if the gold dealer:

-Asks for your Social Security number or another personal information upfront

-Pressures you to make a decision quickly

-Guarantees that you will make a profit

-Tries to get you to invest in numismatic coins for your IRA

-Doesn't ship your gold right away

-Overcharges you for shipping or storage fees

-Asks you to pay with a wire transfer or prepaid debit card

Shaved Coins

Shaved gold coins are when someone shaves a tiny bit off the coin’s diameter. This increases the gold value because it makes the gold coin appear to have more weight than it does.

The problem with shaved gold coins is that they are difficult to sell because most gold knowledgeable buyers will not accept them. 

While this is one of the easier scams to spot, people still fall victim to them so it's important to be on the lookout.

Unsolicited Offers

If a salesperson calls randomly calls you and offers to help set up a gold IRA, it’s likely a scam. These gold IRA scams are becoming more common as the price of gold increases. 

The salesperson may try to rush you into making a decision and will pressure you to act quickly. They may also claim that there is limited availability or that their offer is only good for a short time. 

If you receive unsolicited emails or calls about gold IRAs, be wary. Some scammers have been known to pose as representatives of legitimate companies to get personal information from unsuspecting victims.

If you would like to learn more about gold IRAs you might want to read our article about: gold IRA taxes, our gold IRA rollover guide, or our article about how to avoid gold IRA tax penalties.

Conclusion

If you think you may have been the victim of a gold valuation scam, there are a few things you can do. First, contact the company that sold you the gold and try to resolve the issue with them.

If that does not work, you can file a complaint with the Better Business Bureau or your local consumer protection agency. Finally, you can also contact an attorney who specializes in gold scams to see if you have any legal recourse. 

The bottom line is that gold IRA scams are becoming more and more common. If you do your research and invest with caution, you can protect yourself from these scams and keep your retirement savings safe.

It may sound redundant at this point but the best way to avoid gold IRA scams is to work with one of the reputable precious metals companies that we have written about on this website.   

Precious metals IRAs can get a bad reputation from the dishonest operators but you can avoid them by reaching out to the best companies in the industry that have helped thousands of investing protect their savings with physical gold.

You can get a Free Gold Investors Guide from our top gold and precious metals company recommendation by clicking the link above or you can read our article of the top companies we reviewed this year:

Click Here for Our List of the Best Gold IRA Companies to Invest With