Where there are financial opportunities, there are potential scams. Sadly, gold IRA scams are becoming common. You may have come across the concept of gold IRA account while looking for alternative modes of investment. This a lucrative and promising option, but it comes with serious risks. You should do everything in your power to avoid gold scams while choosing a precious metal or gold IRA company.

As the price of gold continues to climb, the number of investment fraudsters will also increase. There are now more gold IRA scams than ever before. Learn about invaluable tips to avoid gold IRA scams, warning signs to look out for, and where to report if you are a victim.

Top Tips for Avoiding a Gold IRA Scam

Gold IRA has to be a self-directed account, which means you cannot have your assets analyzed by a neutral custodian. You are basically responsible for yourself. The only line of defense you have is to conduct business through a reliable gold dealer verified by the Business Consumer Alliance or Better Business Bureau.

Keep these points in mind while opening a gold IRA:

Avoid Pushy Sales Pitch 

Be very careful of smooth-talking salespeople. They may try to trick you into making a hasty purchase by claiming the price of gold will continuously rise. They may try to scare you by using terms like, “you will miss out on the chance of a lifetime” or “the price will never be the same again.” While the price of gold will rise, you don’t need to rush your decision. Always prioritize due diligence.

Read the Contract Carefully

You should always read the various clauses and terms and conditions before signing any contract. Establishing a gold IRA is no different. It may feel like a hassle, but this can protect you from fraud. Many investors thought they were engaging in a typical transaction, only to later discover that their investment was not safeguarded by the contract. Don’t sign anything that you don’t understand or completely approve.

Confirm the Gold Deposit

The custodian is responsible for purchasing gold and other precious metals on behalf of the investor as part of the gold IRA and depositing it with a reputable depository. You should ask the custodian for the necessary documentation proving that they purchased physical gold, which is being stored at a depository in accordance with industry standards. Further, the depository should be adequately licensed and insured to safeguard your interests.

There are a few gold IRAs that offer self-storage. You will be responsible for the physical possession of your IRA gold in such cases. This method has not been formally sanctioned by the IRS. You may want to consult with an experienced attorney before considering this path; otherwise, you may end up paying stiff penalties and taxes.

Stay Away from Collectible Coins

The IRS allows precious metal IRAs for the purpose of purchasing gold, silver, platinum, and palladium as a commodity. They don’t approve collectibles to be a part of the gold IRA. Hence, don’t fall for any sales pitch to purchase rare collectible coins. These items don’t have any place in a gold IRA.

It’s likely you may be overcharged for the item on offer if you are not an expert in numismatics. There is a whole different market for rare coins, which is both exciting and fun. You shouldn't make the rookie mistake of thinking that you can include collectible coins in your gold IRA.

Look Out for Shaved Coins

There are some unscrupulous dealers that have no problem removing a few grains of gold from every coin they sell. You lose money as a result of the gold dealer’s greed. It’s best to stick to retailers with a good reputation and transact with integrity. You should thoroughly investigate the retailer; never purchase from a shady establishment, even if they offer a lower price.

Warning Signs of Gold IRA Scams

These are a few red flags that indicate a potential scam:

  • Sign 1: Fraudulent Sales Pitch

    This can be through individuals that identify as metal dealers or merchants. You may come across these sales pitches on the internet, radio, or television. Fraudsters may call you and request for personal information, including your residential address, phone number, and email address. You may get a call from the sales representative or company broker about purchasing additional precious metals at a lower than market rate. The salesperson uses high-pressure tactics to entice you to invest in gold IRA.

  • Sign 2: Undue Persuasion

    Don’t believe anyone who claims that your wealth will quadruple in the next few years. The person may claim to be from a prestigious company or a high-ranking officer. For instance, “I will never sell a losing investment as the senior vice president of XYZ Metals Merchant.”

    There have been scams in which the salesperson says they will share 50% of their commission, among other dubious claims. They may create a sense of urgency by saying something like “the Asian market is opening soon and only two units are left – so sign up right away!”

  • Sign 3: Minimizing Risk

    The salesperson may claim that you will gain a lot of money with minimal risk through the “financial agreement.” You may be pressured into purchasing the precious metal. They may ask you to complete the payment or finance the remainder of your acquisition through a loan.

Reporting Precious Metals IRA Scams

You can get in touch with various state and federal regulators if you suspect an IRA dealer may have taken advantage of you. These are a few options for reporting gold IRA scams:

Gold is a risky investment, and you should never trust anyone who claims “guaranteed profits”. You can lower the risk by always dealing at market prices with respectable, successful, and licensed retailers, custodians, and depositories.

About the author Greg Lorenzo

Greg is a financial expert who has been advising his audience on loans for over 10 years. He has a wealth of knowledge and experience in the area, and he is passionate about helping people get the best possible deal on their loans. Greg is an expert in negotiating loans, and he has a proven track record of getting his clients the best possible terms. He is also a strong advocate for financial literacy, and he regularly gives workshops and seminars on the topic.

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