How to Avoid Gold Scams
In 1993, a prospector named Michael De Guzman emerged from the dense rain forests of Busang, Indonesia, unironically claiming “we’ve struck gold!” This moment would act as the catalyst to the world’s biggest gold scandal: the 1997 Bre-X gold mining fraud.
Defrauding the world would cause a ripple effect that reverberated throughout world markets. What began as penny stock trading at 30 cents on the Toronto Stock Exchange soaring up to $170 in just two years would crash down even harder resulting in a loss of $583 million dollars for Bre-X as the stock fell 80 percent. The end result led to De Guzman’s helicopter suicide, crashing the Toronto Stock Exchange's computerized trading system and the untimely demise of Bre-X after filing for bankruptcy in 1997.
Since it has been a store of wealth throughout the turbulent times in human history, the allure of what gold promises is often irresistible. Although not every gold scam is as juicy as the Bre-X gold mining scandal, the negative externalities of gold swindlers can be felt on an individual level and within the ecosystem of the globalized gold industry. To avoid portfolio devastation, it is imperative that investors acquire gold purchases through verified gold sellers. But how do you know the difference between being conned and capitalizing on an investment opportunity?
Which Gold Scams Should You Be on the Lookout For?
Scams lure investors into a false sense of security by exploiting a lack of experience with a promise of something that is most likely too good to be true. Scams usually peak in tandem with rising gold prices in an attempt to take advantage of demand momentum and a squeeze in supply. Doing your due diligence can help you identify and avoid gold scams, so here are some scams to be on the lookout for:
From social media to private sellers, the internet has created a petri dish of opportunities for online scams to take place. By now the somewhere-in-Africa prince scams have gained enough notoriety that hopefully even your great uncle Albert knows to avoid them. Other sellers might be less ostentatious in their approach, finding more subtle ways to swindle you out of your investment capital. Regardless, you’ll want to start looking for red flags with some basic private investigating of your own. You can start out by simply googling the seller or checking to see if they are listed with any official agencies.
Collectible coins are more valuable than bullion gold because of their rarity, presenting lurking con artists with an opportunity to dupe novice enthusiasts. Intricate designs, patterns, symbols, shapes, and textures make differentiating between authentic and artificial coins a difficult task. When it comes to coins, it is highly recommended you consult with a trusted expert to avoid a worthless fools’ gold investment. Make sure to get your gold in hand, as an alternative to counterfeit coins is a ruse in which the scammer convinces you of coins that don’t exist outside of a fake escrow agreement. In this scenario, the scammer convinces the investor that it is more prudent to store gold coins purchased from them with their facilities to protect your investment by virtue of protecting the coins from thieves, the elements and natural disasters.
Diamonds should cut teeth and teeth should cut gold — or at least leave an imprint. This has been promoted as a failsafe against gold fraud by the likes of swashbuckling pirates in cinematic caveats. While it’s true gold is malleable, other soft metals exist that can mimic similar physical properties. Also keep in mind the phrase “all that glitters is not gold.” If you feel uncertain about evaluating the composition of your gold investment, get it appraised by a verified seller.
Scammers may try to hoodwink investors with partial delivery scams. One instance of delivery fraud involves a buyer paying for a partial gold delivery without ever receiving anything from the seller. Bait and switch swindlers lead an investor to make a partial payment, receiving a small amount of the purchase. This allows the seller to lure in the buyer with a false sense of security and legitimacy. The buyer then pays the investment amount in full and never receives the remaining investment or is rewarded with fool’s gold instead. Last, a gold seller may seem reputable and uses shipping fees as a trojan horse to extort investors.
The Vanishing Venturist
This scandal exists on both sides of the same fraudulent coin. On one side, the scammer pressures the buyer to send money to buy gold quickly, usually at a lower spot price. On the reverse, the buyer convinces the seller to ship their gold coins without ever receiving any compensation from the purported buyer. All the investor will be left with is the unsympathetic voice of an automated voice mail revealing that the number is no longer in service and the company is no longer there. More than likely, the con artist will have relocated their operation to ensnare their next unsuspecting victim.
Why Trust the U.S. Gold Bureau with your Gold Investment Needs?
A reputable gold seller should be professional and transparent throughout your gold investment acquisition process. The U.S. Gold Bureau aims to be the premier supplier of precious metals by bringing trust and integrity to all aspects of the precious metals acquisition process and continually raising the bar on what our customers grow to expect from their investing experience.
We are directly compliant with all industry regulations set by the Federal and governing associates and our parent company, Lone Star Tangible Assets, was selected by the State of Texas to build and operate the only state-administered precious metals storage facility in the country: the Texas Bullion Depository.
Schedule a consultation today with any one of our extensively trained Precious Metals Specialists who is well-equipped to assist you at all stages of the gold-buying process.