It’s hard to know who to trust when it comes to gold IRA investments. There are a lot of scams out there, and it can be tough to tell which gold IRA companies are legitimate and which are just looking to take your money. So, to ease things up, we’ve put together a list of the 13 most common gold IRA scams, so that you can avoid them and invest with confidence.
If you want to learn more about the common lies that precious metals dealers tell, and what you can do about them, I have a free report/guide for you.
“The same information that American former football quarterback Joe Montana used to make an investment in gold is what this is”
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Which Are The 13 Most Dreadful Gold IRA Scams?
You should always watch out for these gold IRA scams when working with a gold IRA company.
1. Selling Non-IRS Approved Precious Metals
Also known as rare coin valuation scams, the IRS only approves certain types of gold, silver, and platinum for IRAs, and if you’re not careful, you could end up buying metals that won’t be accepted by the IRS (deemed as collectables instead of gold investments)
Related: What Is IRA Eligible Gold? Full Details And Specifications
Some rare coins are ineligible, including the Belgian Franc, French Francs, Mexican Pesos, Austrian Corona and Ducat, German Mark, Hungarian Koronas, Dutch Guilders, British Sovereigns, Swiss Francs, and Chilean Pesos.
The following are some of the available options: American Eagles Canadian Maple Leafs Austrian Philharmonics Chinese Gold Pandas among others
That means when it comes time to retire, you’ll have to pay taxes on the full value of your investment, plus any penalties and interest charges that may apply.
Related: 7+ Gold IRA Tax Rules To Live By
How can you prevent being scammed?
Quite simply, do not engage with a salesperson who is convincing you to buy certain collector’s items because of how much they’re worth. With a retirement account, your focus should be on the weight and discount from the spot price.
If a seller claims that a particular coin is “rare,” it might be wonderful for your collection, but it’s horrible if you’re buying them specifically for your IRA.
You will definitely lose money in this manner.
2. Bait and Switch Scam
A popular scam targeting people looking to invest in gold is the bait and switch.
In this scam, the perpetrator will advertise gold at an incredibly low price, often too good to be true.
When potential buyers contact them, they are informed that the gold is no longer available but is offered a different, more expensive product.
This bait-and-switch tactic is designed to take advantage of people who are not familiar with investing in gold and drives up the price of what they ultimately purchase.
While there are many legitimate companies that sell gold, it is important to do your research to avoid being scammed.
3. Home Storage Gold IRA Scam
Home storage gold IRA scams are becoming more prevalent as the price of gold continues to rise.
The scam typically works like this: you receive a call from a company offering to set up a gold IRA for you.
They tell you that you can store your gold at home, which is much cheaper than paying for a storage facility.
They may even offer to ship the gold to you for free.
However, there are several red flags that should warn you that this is a scam.
- First, the Internal Revenue Service (IRS) does not allow gold to be stored at home for gold IRAs.
- Secondly, most reputable gold IRA dealers will offer some free gold/silver coins, to lure you in if you go for home storage.
- Finally, if the company pressures you into making a decision quickly or refuses to provide references, that is another sign that you are dealing with a scammer.
4. Counterfeit Coins & Bars Scam
This gold scam typically involves convincing potential investors to purchase gold coins, which are then sold at a much higher price.
The scammer pockets the difference in price, and the investor is left with worthless coins.
Or a gold IRA dealer will try to sell you counterfeit gold coins.
These coins may look like they’re made of gold, but they’re actually made of cheaper metals.
As a result, you could end up losing a lot of money if you invest in these counterfeit coins.
Because they are usually based outside the United States, these businesses are subject to federal laws rather than state rules, making it more difficult for law enforcement authorities to locate them.
These counterfeit coin vendors frequently tempt customers with low prices but bear in mind that a real seller would not sell anything for less than the spot price. If the rate being offered is significantly less, it indicates that you should avoid dealing with them.
Do your research before buying from anyone, especially if you are new to collecting coins.
That way, you know that the dealer is reputable and won’t end up getting scammed out of your money.
Better to take the time to do things right than have all your money stolen by someone who isn’t ethical.
5. Shaved Or Damaged Precious Metals
Shaved gold bars are when a small amount of gold has been shaved off of the bar in order to artificially inflate its weight.
Sometimes they drill holes in them and fill them with a lower-quality metal like tungsten.
The gold is then sold at a higher price than the precious metals market value, and the buyer is left with a bar that is not pure gold.
The bars may appear to be made of solid gold, making this scam difficult to detect.
However, if you take the bar to a professional for an appraisal, they will be able to determine if it has been tampered with.
Always purchase gold bars or coins from a reputable dealer and have them appraised by a professional before purchasing them.
Check the coin or bar thickness using several testing methods, such as calibers.
6. Leveraged Investment Scams
These gold scams typically involve a company offering to buy gold for you and then store it in a retirement account.
However, what these companies don’t tell you is that they’re actually using your investment to purchase gold futures contracts, which are incredibly risky and can lead to massive losses.
Even worse, if the price of gold falls, the company may try to convince you to invest even more money to make up for their losses, putting you in an even worse position.
Sometimes, the seller tries to get you to borrow money to invest in gold.
The seller will usually make enticing speculations that the prices are about to skyrocket and that this is a once-in-a-lifetime opportunity to make a fortune.
However, the reality is that gold prices are highly volatile, and there is no guarantee that they will continue to rise.
This type of scam can often be difficult to spot, so it’s important to be aware of the warning signs. If someone tries to pressure you into gold investing, or if they make overly optimistic predictions about future price movements, be wary.
The worst thing, this scam can be integrated with a few of the above ones such as Ponzi schemes, fake storage, and counterfeit gold.
7. False Grading Scam
One of the most common scams in the gold IRA industry is known as the false grading scam.
Here, a company will claim to have all the expertise and resources necessary to grade your gold coins for authenticity and value.
However, what they don’t tell you is that their grading standards are far lower than those of the leading independent grading companies.
As a result, your coins will be given a lower grade than they deserve, and you’ll end up paying far more than they’re actually worth.
If you’re considering investing in gold bullion coins, be sure to do your research and only work with a reputable dealer who uses independent grading services.
Otherwise, you could end up being scammed out of your hard-earned money.
8. Nonexistent Purchase Scam
This is where a custodian promises to buy gold for you but never actually does.
This can be a real problem if you’re relying on that gold to fund your retirement, so it’s essential to be aware of the potential for this type of scam.
The best way to protect yourself is to ensure that you only work with a reputable custodian who can provide you with a certification that your gold has been purchased and is stored in a safe, insured depository.
With this documentation in hand, you can rest assured that your investment is safe and sound.
9. Misleading Contract Scam
With this type of scam, the company you’re working with will promise to buy physical gold on your behalf and then place it in your account.
Related: Gold IRA vs Physical Gold: Which is Better for You?
However, the contract they give you will be very misleading.
It will likely include a clause that allows the company to change the terms of the agreement at any time.
This means that they can charge you fees or penalties that you weren’t expecting.
It’s important to read any contract carefully before signing it and ensure you understand all the terms and conditions.
If something doesn’t seem right, don’t hesitate to ask questions or consult your lawyer to get a second opinion.
Protecting your money is always worth it.
10. Offering Free Gold/Silver Scam
In this scam, someone will contact you and offer to set up a gold IRA for you, and they’ll even offer to give you some gold or silver to get started.
However, what they don’t tell you is that they’re not actually going to give you any gold or silver.
Instead, they’ll just take your money and run.
Another common gold IRA scam is the “guaranteed returns” scam.
In this scam, someone will promise you that if you invest in their gold IRA, you’re guaranteed to get a certain return on your investment.
However, there’s no such thing as a guaranteed return on investment, and if you invest in a gold IRA through one of these scammers, you’re likely to lose all of your money.
11. Affiliate Scam
In an affiliate scam, the criminal exploits shared affiliation to build trust and then exploits the mark.
This type of scam is often seen in churches, synagogues, and veterans organizations.
The scammer takes advantage of other members of these groups to gain the trust of their victims.
Once they have gained the victim’s trust, they exploit it by stealing money or personal information.
These scams can be very difficult to spot, but there are some red flags that you can watch out for.
If you are contacted by someone who claims to be affiliated with a gold IRA company, be sure to do your research before investing any money.
There are many reputable companies out there, but there are also a lot of scammers.
Be sure to ask questions and get as much information as possible before making any decisions.
12. Self-Directed IRA Scams
As anyone who’s been following the news lately knows, there are all sorts of scams out there targeting unsuspecting victims. And unfortunately, self-directed IRAs are not immune to these schemes.
Here are three of the most common types of scams to be aware of:
12.1. Ponzi Schemes
One of the most common gold IRA scams is the Non-Delivery Scam, also known as a Ponzi Scheme.
In this type of scam, the gold dealer collects money from investors but never actually purchases any gold.
Instead, the dealer uses new investor money to pay promised returns to earlier investors, creating the appearance of a successful and profitable investment.
However, eventually, the scheme collapses when there is not enough new money coming in to keep up with investor withdrawals.
This can leave many people stranded without their savings and can even lead to criminal charges for the individuals involved in running the scheme.
12.2. False Endorsement Claims
One common scam is false endorsement claims, where dishonest companies claim that well-known figures endorse their products.
These endorsements are often fake, or the celebrities may have been paid to say positive things about the company without actually knowing anything about their gold IRA products.
Don’t be fooled by these scams – do your research and only work with reputable companies to ensure that your retirement savings are safe.
12.3. Unsuitable Rollovers
This is where someone tries to convince you to roll over your traditional IRA into a gold IRA without considering your specific financial situation.
Related: How To Rollover 401k to Gold IRA In 7 Simple Steps?
This can be a terrible idea if you don’t actually have the money to invest in a gold IRA, or if you’re not comfortable with the risks involved.
If someone tries to pressure you into an unsuitable rollover, just say no and walk away.
Related: Gold IRA Rollover Versus Transfer: What’s The Difference?
There are plenty of other retirement options out there that might be better suited for you.
5 Tips To Avoid Gold IRA Scams
Here are five tips to help you avoid gold IRA scams.
1. Avoid Pushy Sales Tactics
If a company is pressuring you to make a decision quickly or make an unusually large investment, it’s probably best to steer clear.
These types of tactics are often used by scam artists who are trying to hook unsuspecting customers before they have time to research the company and check for legitimacy.
Trustworthy companies will give you time and space to make informed decisions about your investments.
So remember, if someone is pushing too hard for your business, it’s better safe than sorry.
Just say no and find a more reputable company that respects your right to take your time and do your due diligence.
2. Verify the Gold Deposit From Your Custodian
Your custodian should provide a gold verification report, listing the exact type and amount of gold in your account.
It’s important to check that this matches up with what was originally promised to you by the seller. In addition, keep an eye out for any fees or storage costs related to your gold IRA.
These should be clearly outlined by your custodian and agreed upon before depositing any funds into the account.
3. Beware of Shaved Coins
One red flag to watch out for is the use of “shaved” coins.
These are coins that have had small amounts shaved off their edges by unscrupulous dealers, decreasing their weight and thereby lowering their value.
In addition to shaving, some dealers may also try to pass off counterfeit or lower-grade coins as pure gold. So how can you protect yourself?
Always purchase from a reputable dealer and check the weight and purity of any gold coins you buy using an electronic scale or acid test kit.
Don’t be afraid to ask questions and request certification before making a purchase.
And if a deal seems too good to be true, it probably is – trust your gut and walk away.
4. Verify the Contract Carefully
Unfortunately, scammers will often include hidden fees or unclear language in their contracts in order to swindle investors.
Never feel pressured to quickly sign a contract, and make sure all fees and terms are clearly stated before agreeing to invest with a company.
Additionally, be wary of companies who promise unrealistic returns or guarantee a certain amount of profit; while investing in gold can be profitable, there are no guarantees in the world of finance.
By taking your time and being attentive when reading through contracts, you can avoid falling victim to gold IRA scams.
5. Avoid Collectible Coins
One common scam in the gold IRA world is the push to buy collectible coins.
While rare coins may be exciting and have a high value in the collectibles market, they do not align with IRS guidelines for gold IRAs.
The IRS specifically prohibits including collectibles in a gold IRA.
So, when evaluating potential gold IRA providers, steer clear of any sales pitch trying to get you to purchase collectible coins as part of your investment.
Stick to investing in IRS-approved precious metals and avoid this potential scam altogether.
How to Report Precious Metals Investment Scams
If you believe you may have been the victim of a precious metals investment scam, there are a few steps you can take to report the scam and get your money back.
First, reach out to your state’s attorney general’s office or the FBI for assistance.
These authorities can launch a formal investigation into any illegal activity.
You can also file a complaint with the Federal Trade Commission or the U.S. Postal Inspection Service if you suspect mail fraud.
Finally, make sure to utilize the Internet Crime Complaint Center (IC3), where you can alert authorities of potential scams taking place online.
Don’t let fear of fraud prevent you from making wise investments – just stay aware and know how to report any red flags you may come across.
4. Finally, it’s always a good idea to consult with an experienced attorney who can help you assess your legal options and decide whether taking legal action is right for you.
Other Precious Metals IRA Scams FAQs
How can I buy gold without getting scammed?
There are a few things you can do to protect yourself from gold IRA scams:
1. Do your research. Don’t invest in a gold IRA until you’ve done your research and compared several different companies. There are many reputable companies out there, but there are also a lot of scammers.
2. Ask questions. Ask the company questions about its products, services, and fees. Make sure you understand everything before making any decisions.
3. Get referrals. Ask friends and family members if they have any recommendations for reputable gold IRA companies.
4. Read the fine print. Be sure to read the terms and conditions carefully before signing up for any gold IRA products or services.
5. Stay vigilant. Be aware of any red flags that could indicate a scam, such as high-pressure sales tactics or unexpected fees. If something seems too good to be true, it probably is!
How do you hold physical gold in an IRA?
Gold in an IRA must be held by a trustee, who will issue you a certificate of ownership.
You can then choose to hold the physical gold in your own name, or in the name of a custodian.
The trustee can be a bank, brokerage firm, or other financial institution.
How Are You Protecting Yourself From These Precious Metals Investment Scams?
If you’re thinking about investing in a gold IRA, it’s important to be aware of the potential for scams.
While there are many reputable companies that can help you set up and manage your account, there are also some unscrupulous operators who may try to take advantage of investors.
To avoid being scammed, it’s important to do your research and only work with a company that has a good reputation.
You should also avoid any company that charges high fees or pushy sales tactics.
If you’re not sure about a particular company, it’s always best to get a second opinion from a financial advisor or someone else you trust.
Augusta Precious Metals
Augusta Precious Metals offers an unbeatable path to successful gold investing.
With their superior customer support and outstanding products, they guarantee the highest return on any conversion to a gold IRA from a 401k or physical acquisition.
By taking some simple precautions, you can help protect yourself from gold IRA scams.