Gold fraud scam artists prey on the elderly, courting prospective customers as if they are old friends by using scare tactic sales pitches. They also utilize misleading and sometimes illegal, high-pressure sales tactics to misrepresent coin values, sell counterfeit coins, or persuade consumers to finance purchases with home mortgages or retirement savings. They convince you to buy higher-priced items that they claim are a better deal.
Investing in gold and other precious metals may be accomplished in a number of ways, including buying mining company stocks, purchasing collectible coins, and investing in bullion or bullion coins.
Profile of A Gold Fraud Scam Artist
The coin and bullion industry is largely unregulated. Gold fraud scam artists are often difficult to identify. They frequently have professional-looking offices, employ “account executives” or “investment counselors,” distribute glossy brochures, boast of their expertise, and generally portray themselves as reputable businessmen.
Disreputable coin and bullion dealers often use marketing techniques employed by legitimate dealers to attract buyers—such as advertising in newspapers and magazines and meeting prospective clients through financial planners and insurance agents. Dishonest promoters often pay top dollar to celebrities and high-profile personalities to tout their coin and bullion inventories.
Many gold fraud scam artists play on history by warning customers that the government could seize their gold as it did in the 1930s when rare or collectible coins were exempt from seizure. No current federal law or Treasury Department regulation, however, supports any of these claims.
Once a prospective customer becomes an actual customer, gold fraud scam artists often engage in elder abuse by utilizing deceptive trade practices, such as “buying” coins from a captive “dummy wholesaler” and re-selling them to the customer, thereby resulting in a double profit to the dealer.
They also send coins to customers that were not ordered, charge customers’ credit cards for unauthorized coin or bullion purchases (a practice known as “banging” or “burning” a credit card), promise to send customers certain coins but send others (“bait and switch”), guarantee that coins will appreciate in value, and give customers the run-around when they call to complain about a purchase or seek a refund. Most require any refund to occur in a very short time to take advantage of your lack of knowledge; and, if they refund your money, they charge a “re-stocking” fee that is not based on actual business expense but just another method of taking your money or scaring you away.
Common Ways to Purchase Coins
Collectible Coins / Numismatics
Collectible coins, commonly referred to as “numismatics,” have historic or aesthetic value to coin collectors. Most collectible coins have a market value exceeding their face value or their metal content—known as the numismatic value. Investors purchasing collectible coins must typically hold the coins for years before realizing a profit because coin dealers sell collectible coins for big profits.
The collectible coin market is different from the market for bullion or bullion coins.
It is quite possible that the price of gold or silver could increase while the value of collectible coins decreases.
Bullion / Bullion Coins
Bullion is a bulk quantity of precious metal, usually gold, platinum, or silver, assessed by weight and typically cast as ingots, bars, or coins. Bullion coins are minted from precious metals, usually gold, platinum, or silver. Bullion coins are not used in daily commerce. Their value is determined by their precious metal content rather than by rarity, condition, or grade. Prices may change throughout the day, depending on the prices for precious metals in the world markets. The most popular bullion coins are the American Gold Eagle, Canadian Maple Leaf, Australian Gold Nugget, and South African Krugerrand.