Beware: All that glitters is not gold. Fake gold glitters too. And for criminals, so do gold scams.
It is a commonly-held belief that during uncertain economic times, gold and precious metals are a sound investment. After all, they are physical substances and have been consistently valuable for thousands of years. You can probably imagine that as the value of precious metal prices rise, the number of investment scams related to these commodities rises as well.
With this in mind, if you are considering investing in gold or other precious metals, you must conduct serious research into the market before you begin. You also need to be familiar with the following scams to ensure that you don’t become the next victim.
Types of Gold Scams
The fake gold scam appears to be the most popular choice in the criminal’s arsenal. An unwitting buyer, new to the trade, receives what appears to be real gold. Closer inspection by an expert, however, reveals that what was thought to be gold is, in fact, fake. If you want to see the difference between the real thing and the imposters, just do an internet search for “fake gold” and watch the videos.
Advances in computers and technology have made it a lot easier for scammers to manipulate documentation for their criminal benefit. Signatures, stamps, descriptions, and dates can all be manipulated to create authentic-looking certifications. If you do not have expertise in this area, find someone who has the ability to recognize if the product and its certification are not the real deal.
Partial Delivery Scam
With this scam, there are two methods that criminals use to defraud their victims:
- The purchaser pays for a limited delivery of gold to inspect and nothing is delivered.
- The purchaser pays a small amount for a portion of the order. Once the purchaser affirms the gold’s legitimacy, the purchaser settles the full amount. Delivery of the order either contains fake gold or the scammer doesn’t bother to send the goods.
Gold Inheritance Scams
This elaborate scheme involves a scammer who pretends he has just inherited a large sum of money and/or gold. The scammer will claim that he needs a partner to assist with moving it out of the country. To do so, he needs a bank account and some money as an incentive to get the inheritance abroad. As a reward, the scammer is willing to part with half (or some other ridiculously impressive percentage) of the inheritance. However, before the victim realizes this is all an elaborate scheme, the scammer has jumped ship with the money. Criminals also have been known to combine their gold scams with romance scams by convincing the prospective partners they deceive into transferring large sums of money to ostensibly enable them to underwrite the export of their gold.
Collectible Gold Coins
The identification and collection of rare coins attracts millions of enthusiasts worldwide. Those new to the trade will find it difficult to differentiate between a genuine artifact and a counterfeit one. These are the types of victims that scammers prey upon. If you don’t know the tricks of the trade, you could end up purchasing something under false pretenses. Worse, you could pay significantly more than its actual worth.
Gold Coins That Don’t Exist
There are some scammers who are so brazen that they often trade in coins that don’t exist at all. The idea is to convince their victims of the risks of holding large amounts of coins or gold at home. Rather, they should store the coins or gold in secure, monitored premises that the scammer offers as a service. The problem, however, is that the coins and security facilities do not really exist. In addition, really crafty scammers may even charge the victim a holding fee and the cost of insurance that also doesn’t exist.
Gold Investments That Don’t Exist
In August 2011 the founder of a Florida-based company called Gold Bullion Exchange pleaded guilty to fraud after pocketing almost $30 million from over 1,400 people who were told that they were investing in a fund that would acquire gold at a discount. The discount was supposed to have been made possible by margin financing. But there was no margin financing, no discount and no bullion. Gold Bullion Exchange was a scam.
And in September 2020, the U.S. Commodity Futures Trading Commission (CFTC), joined by 30 different states, filed charges against two dealers of gold and silver based out of Los Angeles, as well as the firm that they ran. They were accused of running a scam that defrauded elderly investors of $185 million.
You may stumble upon an official website with bargain prices for gold or other precious commodities. The catch, however, comes when it is time to check out and you’re hit with an exorbitant rate for shipping.
Operators will do their best to disguise shipping costs and other related fees until the last moment. The fine print might advise that shipping costs fluctuate according to the amount of gold purchased. By this time, you have already invested so much time attending to other due diligence pertaining to your purchase that you gloss over this critical detail. Finally, there is the old, reliable scam of simply overcharging for the gold itself. It is not uncommon for gold scammers to charge 100% to 300% more than the going rate for gold coins or gold bullion.
How To Protect Yourself From Gold Scams
There are a number of strategies that gold experts advise to reduce the chances of getting scammed. First, ensure you trade with established, reputable dealers. Second, familiarize yourself with the Financial Industry Regulatory Authority website where broker licenses can be verified. Third, do your research ‒ online reviews can give excellent, honest advice on a particular broker. Finally, identify dealers in similarly recognized products with a proven trade and business track record.
If you think you are the victim of a gold scam, contact the fund recovery experts at MyChargeBack.