Innovative New Gold Forgery and Fraud
Gold forgeries and frauds are nothing new. Consider how back in the ancient world over 2,000 years ago one of the earliest scientists Archimedes was called on to investigate and uncover what turned out to be a gold crown fraud in the Kingdom of Syracuse, Sicily. The difference today is that gold fraud is sometimes more sophisticated and utilizes newer technologies to fool innocent would-be buyers. This is the case with individuals selling fake gold on online websites like Craig’s List.
Other more prevalent frauds are using new twists on the age old gold forgery concept. Out of China these days there are numerous gold coin counterfeits emerging on the markets. Fake gold and even silver American Eagles coins and other bullion ingots have been discovered in a number of cases. Forged precious metal coins like these are simply mixtures of baser metals like copper, zinc, and nickel which are finally finished when the forger applies tiny gold or silver platings.
This affects the coins’ weights, but forgers sidestep this by making the coins slightly larger to adjust for it. A newer, craftier trick is to fool buyers with clever boxes or packages which make it harder to detect the counterfeit. Owners are afraid to open the packs, tubes, or holders because they know it will diminish the value of the coins or coin inside. This is how tricksters are able to fool even savvier buyers.
Ways to Avoid Gold Forgeries and Fraud
The good news is that there is no reason to fall victim to these types of forgeries and other increasingly common fraud. By following five simple guidelines, you can stay away from the shadier types who might actually be peddling faked or overpriced gold goods.
• Consider the Source You Buy From
It is probably a smart idea to avoid buying gold from online sources that you do not know, and from sites where vendors have gained a seedy reputation for fraud like with Craig’s List. Instead, you should obtain gold that you are buying either for your retirement accounts or personal holdings from a precious metals dealer. Equally important, it is better to make sure that the dealer you trust is a reputable vendor with credentials. One such organization that vets its dealers is the American Numismatic Association. This site allows you to search for dealers using specialty type or via location. Another such professional dealer organization is the Professional Numismatists Guild that will also enable you to look for dealers who are accredited. Where Gold IRA dealers and mints are concerned, a list of reputable outfits can be found reviewed here. The American IRA is the equivalent of RRSP in Canada.
• Beware of Free Storage Schemes
The old saying about no such a thing as a free lunch is still true in the overwhelming majority of cases. Free storage does not exist except for in some occasional promotional periods with a Gold IRA. Even reputable and best in class Gold IRA companies like Regal Assets charge storage fees each year. If you are buying gold for your personal holdings, you should have it sent to you by a fully insured form of shipping and then store it safely yourself. This can be in a safe deposit box at your bank or at least in a safe if you keep it at home.
• Watch Gold Coin Markups
There are dealers out there who are eager to sell you coins which are rare and collectible. It is not really that they are partial to these interesting pieces, but that they are able to mark up non bullion coins like these even 20-30% over spot gold prices. This is not exactly fraud, but it is unscrupulous to be tricked into paying more than 5% over spot gold prices for one ounce collectible coins when you can instead buy bullion types of coins and bars. You can obtain free gold spot prices each day on several different sites like cnbc.com or kitco.com.
• Do Not Buy Into the Home Gold Storage Idea
When you are buying gold for your retirement account, you may come across the idea that you can store your bullion gold at home as if it were personal use holdings. The IRS specifies that IRA gold should be kept by approved third party vault custodians who are registered to hold retirement gold accounts like IRAs. The idea that you can work around this rule by becoming a gold custodian yourself and keeping your metals at home has not been ruled on by the IRS yet, but is not likely to be looked favorably upon when they do address it.
• Be Careful When Selling Your Gold
You should also be cautious about to whom you sell your gold should you decide to part with it. You can be cheated when you sell it just as when you buy it. Again make sure you are dealing with a reputable dealer and not an individual. There have been cases of simple fraud where an unscrupulous dealer or a third party buyer gave sellers a worthless check. It is always a good idea to check your spot gold prices to keep the dealer honest as well. There is also nothing wrong with getting two quotes from different dealers, especially if you are trying to sell non bullion gold coins.
Because gold is so valuable, it encourages fraud of various types. The fact that prices have been increasing significantly in 2016 only aggravates the situation more. It is easy to avoid cheats and forgeries by doing a little bit of research before you buy your gold either for your personal holdings or your retirement accounts.
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