Common Gold and Silver Scams and How To Avoid Them
Unfortunately, gold and silver scams are a common hazard in this industry. Scammers target gold and silver sellers and buyers because precious metals are often small pieces of property that represent exceptional wealth. Taking physical gold is easier than forcing someone to wire money through banks. Gold and silver also grow in value during times of economic uncertainty. People selling or buying precious metals may be in dire straits, making them perfect marks for fraudsters.
Gold and silver scammers know selling and buying precious metals comes with a learning curve. It takes some know-how to determine how much precious metals are worth. No one should let a lack of knowledge dissuade them from a fair deal. Below, we’ll talk about common gold and silver scams and how to avoid them.
Counterfeit Bullion Scams
Most people know what bullion is, even if they don’t know the name. Have you seen those bricks of gold and silver which, in movies, are inside bank vaults or buried treasure? Those are gold or silver bullion, and, unfortunately, bad actors can replicate them using cheap material.
Scammers create bullion that may look real when you first see it. They might even have gold and silver on the outside, but inside, the materials are far cheaper. Scammers sell them at high cost, confusing clients and robbing them of cash.
Unverified Online Dealers
If you want to sell their gold and silver, be wary of online dealers that never meet you, have no location, have no return policies, and have no third-party reviews. Anyone can build a website these days. Although some gold and silver dealers can look very attractive online, if they don’t have obvious credentials, they should not be trusted.
Often, these bad actors accept payment. But as soon as the money comes, the communication slows down, or maybe stops entirely. Unfortunately, there is a whole world of precious metal sellers who become ghosts immediately after the transaction.
Hidden Fees
This is a scam found in almost every industry. Unethical dealers may give you one price, but then, when it’s time to draft up a receipt, a whole list of hidden fees gets added. They throw in “account maintenance” costs or storage fees, none of which were agreed to when the deal was first discussed.
Unallocated Precious Metal Schemes
Some bad actors offer clients ownership over gold kept in a “secure vault.” You may be told, after paying the seller, that you own gold, but you won’t see your property. Instead, the seller says they hold the gold in a safe location so that you won’t have to deal with the risks of managing expensive assets.
You know you’re in trouble if the seller offers gold and silver but doesn’t tell you which specific coins or bullion you own. It’s likely there are no precious metals at all, or the seller has sold the same items multiple times to different parties.
Ponzi Schemes
You might remember the name Bernie Madoff, a stockbroker who committed the largest-known Ponzi scheme of all time. Ponzi schemes, essentially, are when a person promises a high return on an investment, but the money given to new investors secretly comes through capital generated by old investors. It’s taking money from Peter to pay Paul.
Ponzi schemes are more common than anyone would like to think, even in the gold and silver industry. They can sometimes last for years before they fail. People who manage gold and silver Ponzi schemes will tell clients everything is great, they’re making money, that is, until they stop accruing new victims. The second new money stops flowing, like in times of economic uncertainty, it all blows up.
Warning Signs of Gold and Silver Scams
Thankfully, scammers come with warning signs that a smart gold and silver buyer or seller can detect. Before you buy or sell gold and silver, make sure your partner doesn’t give themselves away with these common tells.
High-Pressure Sales Tactics
Any time a gold and silver seller insists you must pay now, right now, alarm bells should go off in your head. The seller may come up with lies, like that the price is about to go up, or that the offerings will soon be purchased by someone else. Don’t let bullies stiff-arm you out of cash. Finding a fair dealer is always worth it, even if it takes a little longer.
It’s Too Good to Be True
We all know the expression. If it’s too good to be true, it probably is. Every day, the value of gold and silver is available to any consumer with an internet connection. If someone offers a price way, way above what is publicly available, you should be very nervous around them.
No Transparency
Gold and silver dealers should be transparent about their approach. If the dealer doesn’t explain why they’re giving you a specific price, they should not be trusted.
Conclusion
Any industry dealing with valuable assets is susceptible to scammers. Hopefully, this article arms you with the knowledge needed to avoid gold and silver scams. Stay vigilant, stay smart. And, if you want to work with a transparent, fair gold and silver buyer, talk to DMK Metal.