IRA 101: Well-Known Gold Scams to Watch Out For
The gold industry can either be a risky or rewarding trade. So it is standard that gold IRA companies must comply with strict ethical rules. It makes investors feel safe knowing they can work with reliable IRA companies, especially if they invest in precious metals. However, a few scammers undermine the trust of the group as a whole. A gold IRA investor may come across one of two scam types.
These scammers target both self-directed IRAs and precious metals. If you doubt it, you can check with a trusted IRA service provider. You may also visit https://yourgoldiraguide.com/u-s-money-reserve-review/ and read the first-hand testimony of a gold investor.
To protect yourself from fraud, you must know all the different types and how they operate as investors.
Here are a few of the most famous frauds.
Popular Gold Scams
Investment scams frequently target gold. Unfortunately, few people outside the gold market know how it operates. That makes it easier for thieves to appear as experts even when they are not.
Bait and Switch Scam
A gold company may approach a prospective client with a tempting offer. Once they have your confidence, they introduce you to a broker who immediately alerts you to a different product that might better suit your needs, not knowing that the broker is an outsider. That is risky since if you want to chase a company, they would have outsiders not accountable to them.
Many people are duped by sellers’ claims of authentic old gold coins. This kind of scenario often takes place with selling special edition coins. The customer would discover the coin or relic has been “switched up” for a replica.
83 tons of fake gold
The second instance of a well-known gold scam concerns Kingold, the biggest privately owned gold processor in the central Chinese province of Hubei.
Kingold Jewelry Inc., a gold jewellery company, once traded on the Nasdaq stock exchange in New York, deposited millions of gold bars with more than a dozen different banks. This transaction was a security for a $2.8 billion loan to invest in the Chinese real estate boom.
The problem is that it was found that at least some of the 83 tons of gold bars offered as collateral were just copper that had been gold-plated or fake gold.
The incident came to light when one of Kingold’s lenders, Dongguan Trust, had to review for Kingold’s assets to cover unpaid debts. Many of the gold bars the bank discovered were made of gilded copper after inspecting the gold bars that were on deposit.
There are plenty of ways that you can take to protect yourself from faulty investments and mine for metal fraud. The first thing to do is learn to identify counterfeiting networks criminals use to carry out their schemes.
Coins, rounds, and bars with damage or shaved edges
Selling shaved coins, rounds, or bars is another typical con act by gold scammers. Because of this, the gold you are purchasing has been tampered with and is not worth what you paid.
Some con artists drill holes in the coins and bars and fill them with lead, which weighs nearly the same or remove a few grains of metal from them.
Scammers are smart. They can make fake metal weigh as much as the real one.
You need to step up your assessment skills if you want to avoid falling for this scam.
Use various testing techniques, such as calibres, to determine the coin or bar thickness or even check the gravity.
By doing this, you can spot any coins or bars that have been shaved or have had another metal inserted into them.
The Wrap Up
There are scams out there that you need to be aware of if you’re considering investing in gold or a gold IRA.
Some cunning schemes have duped even the savviest investors.
According to the IRS, you cannot purchase physical gold or other precious metals as part of your retirement plan.
You need to look out for those giving promises to buy gold on your behalf and then transfer it into an account in your name while selling you an “IRS approved” gold IRA.
Physical gold can only be used as loan collateral because the IRS does not classify it as a retirement asset.
A company may be operating an illegal Ponzi scheme if it offers to lend you money based on the value of your actual gold.
