Scam Companies Emerge To Take Advantage Of Newbies Looking For Gold And Silver

As with every crisis, the COVID-19 pandemic has brought about a number of opportunities. As the saying goes, there’s an opportunity in every crisis, and sometimes, it’s the best thing that can come from an event that’s often devastating in other ways.

Unfortunately, the nature of opportunity is such that it makes no distinction between the ethical and the corrupt.

What’s clearly astounding is the depth of imagination that a crisis can bring to those who are desperate enough to make a buck at the expense of honest people who are simply trying to get by. We hear of fake cures, fake COVID-19 charities, fake masks, and, most unsurprisingly, fake investment opportunities.

The precious metals industry is not immune to the infections of illicit opportunity. And with a surge in demand for safe-havens amid economic uncertainty, fake gold and silver coins are showing in plenty of places. So, we’re going to say it: buyer beware!

Scammers’ targets are largely those who are new to precious metals investing. Their means of communication include robo-calls, online ads, radio shows, and podcasts. Recently, our beneficiaries at the Anti-Counterfeiting Educational Foundation issued a warning about fraudulent gold and silver schemes, which you can read about here. But for those new to the industry, how might they have received this crucial information?

The schemes include overpriced numismatic coins, often in plastic cases, flashing fake certifications. If you have very little knowledge about certifications or grading services, then you’re vulnerable to getting scammed for thousands of dollars, as false “Certificates of Authenticity,” or otherwise fake credentials can artificially inflate the price of worthless coins ranging downward from cheap to zilch.

There is one way to avoid these fraudulent schemes, however; and it’s where you might least expect it. Narrow your investment search to non-CUSIP coins that are .9999 gold or silver, and have them checked by a depository providing authentication services prior to being delivered to your home. By taking this simple step - namely, sticking with non-CUSIP coins selling at relatively low premiums and seeking professional authentication - you can eliminate the risk of getting scammed.

Here is some information on our partners at the Delaware Depository, which is the largest bank-regulated trust of this type.

There’s another thing to look out for: legitimate coins that are exorbitantly overpriced. Many dealers who’ve been caught participating in this unethical practice have been prosecuted. It’s important not only to learn about gold and silver pricing, but also to do your due diligence toward investigating a dealer’s industry and BBB rating prior to any transaction.

If you find a dealer that has plenty of advertising, yet isn’t well-rated by customers or among industry peers, that alone is telling you something important. Be wary of such dealers.

Another thing to look out for is gold and silver mixed with a filler. For instance, there are many one-ounce gold American Eagles that are mixed with tungsten (a chemical element) and sold without disclosure. These are hard to detect in terms of physical composition, but you can probably sense a scam when the price is discounted far below market value and the offer is coming from a dealer that’s either unknown or disreputable.