Gold IRA Scams: How Gold Investors Can Avoid Getting Scammed

We often hear about gold scams on the radio, TV, or even in the press. And sometimes we’re not even sure if it’s a scam or not.

This article will help you to understand what a gold IRA scam is and how you can know if you are being scammed.

Gold IRA Scams – Introduction

An IRA (Individual Retirement Account) is an account that individuals use to save money for their retirement.

It was created by Congress in 1974 as part of ERISA (Employee Retirement Income Security Act).

The purpose of this act was to help protect workers’ pension benefits and create incentives for saving for retirement.

By law, all employers are required to provide a 401(k) plan for their employees, but they are not required to offer an IRA plan.

Well-Known Gold Scams   

 Gold scams are all too common. Here are some of the most prevalent ones.

Gold Rush Fraud

This scam has been around since at least 2012, when it was first reported in South Africa. Basically, this is where someone offers to pay you for your gold jewelry that they can buy from you for cash.

The buyer will then send you a check for more than the price of your gold and ask you to deposit it into your account and wire back the difference. The check will bounce, leaving you responsible for the money.

Overpayment Scams

This is an oldie but goodie that has been around since at least 2008 and still going strong today. The basic premise is that someone will contact you online or by phone claiming to be interested in buying something from your online auction site or eBay store.

The scammer will offer to pay more than what you’re asking for and ask that you send them back the difference via Western Union or Moneygram wire transfer service (often with instructions to use a pre-paid debit card). 

Non-Delivery Scams/Ponzi Schemes

If you’ve ever ordered something online and had it never arrive, you’re not alone. In fact, according to an April 2011 Consumer Reports survey of more than 7,000 readers, about one in five has had a bad experience with an online retailer in the past year.

The most common problem was no delivery or slow deliveries (21 percent), followed by poor customer service (19 percent) and defective merchandise (9 percent).

   

What is a Ponzi Scheme?

A Ponzi scheme is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors rather than from legitimate business activities or profit of financial trading.

‘Rare Coin’ Valuation Scams

If you are a coin collector, or interested in starting a collection, you may be looking for ways to value your coins. However, there are many scams out there trying to take advantage of inexperienced and naïve collectors.

One common scam is the “rare coin” valuation scam. The scammer will call you up and tell you that they have a rare coin worth thousands of dollars that they want to sell to you.

They will then send you an email with the details of this ‘amazing find’ and ask if you would like to buy it from them. When you agree, he will send you some photos of the ‘rare coin’ and ask for payment via Western Union or MoneyGram wire transfer.

Unfortunately, when the buyer sends money via Western Union or MoneyGram, it is virtually impossible for him to get his money back.

So, if anyone offers to sell you a valuable item at an incredibly low price and asks for payment via Western Union or MoneyGram wire transfer, please be aware that there is a high probability that this person is running a scam!               

Gold IRA Scams

Gold IRAs are a popular investment vehicle for people looking to diversify their portfolios with a precious metal. But you need to be careful when choosing an IRA custodian or broker.

The U.S. Securities and Exchange Commission (SEC) has issued warnings about several scams involving gold IRAs.

The SEC says that investors should beware of salesmen offering free gifts or prizes in exchange for sending money to a government agency or “sponsoring company”  this is not how legitimate investments work. Also, be wary of companies that claim they can sell you gold at below-market prices; these firms often charge high commissions for their services and fail to disclose the fees until after the sale has been made.

The best way to protect yourself from scams is by researching potential brokers before opening an account with them.

The Home Storage Gold IRA Scam           

 The Home Storage Gold IRA Scam, a scheme that has been around for years, is back with a vengeance. It’s not so much a scam as it is an alluring pitch to get investors to buy gold, which is then stored in their IRAs.

The pitch goes something like this: You need to diversify your IRA investments and protect yourself in the event of a stock market crash or hyperinflation. So you buy gold and store it in your IRA account.

The problem with this pitch is that there’s no reason why anyone should trust their retirement savings to someone else’s storage unit. And even if you do trust them which you shouldn’t there are plenty of other ways to diversify your portfolio without paying commissions or storage fees.

Gold IRA Scams Affiliate Scams

 The gold IRA scam is one of the most common scams in this industry. This is because it’s something that almost anyone can get involved with.

If you have a website and some affiliate marketing skills, you can get involved with this scam. In fact, there are hundreds of thousands of people out there who are running these types of scams right now.

   

You might be wondering how they are able to do this though, right? The truth is that they use special software that allows them to create fake websites all over the web. These websites will then link back to their main site where they sell their products or services.

One thing that these scammers usually don’t understand though is that their websites don’t even work properly! They think that if they create a few hundred websites, then they will all rank on page 1 for their keywords and start making money but it doesn’t work like this at all!           

Gold IRA Scams Counterfeiting     

 If you are considering investing in gold, you should be aware that there are many scams and unscrupulous companies out there. A gold IRA scam is one of the most common types of frauds that people fall victim to.

The following are some of the most common gold IRA scams:

Counterfeiting – The most common type of fraud is counterfeiting. Many people who are looking for gold coins or bars for their IRA accounts have been fooled into buying fake products.

These counterfeit coins and bars may have been made from real gold, but they will not be worth as much as advertised. This can result in a huge loss for those who are duped by the scam artists.

Check out an online auction site before buying any gold items from an unknown seller. This will help ensure that you are purchasing authentic products and not fakes that will lose their value over time.               

Gold IRA Scam Warning Signs       

 Gold IRA scams are one of the most common scams in the retirement planning world. They prey on people who are looking for a way to invest their money, and often prey on those who are unfamiliar with the retirement planning process.

The best way to avoid being scammed is to know what to look for. Here are some warning signs that you may be at risk for an IRA scam:

They have no website or phone number. If you can’t find their company online or in any directory listings, it’s likely that they don’t exist or are deliberately hiding their information.

   

You should always check local business registries and/or contact your state’s division of corporations to see if they exist as a legitimate business entity.

They want you to send them money up front. This is a common tactic used by scammers because it gives them access to your funds while preventing you from getting your money back if something goes wrong with their service or product delivery.

The only time you should ever pay anything up front is if you’ve worked with the company before, or if they’re willing to give you a full refund within 30 days if you’re unsatisfied with their service (which is rare).

They have no physical address or phone number listed on their website or marketing materials.

How to Report Precious Metals Investment Scams

 If you have been the victim of a precious metal investment scam, we urge you to report it. You can make a complaint online at https://www.ic3.gov/complaint/default.aspx or by calling the FBI’s toll-free tip line at (800) CALL-FBI.

The FBI takes the threat from precious metals investment scams seriously, and has investigated these crimes for more than a decade. In 2008, the FBI created an undercover operation in which an agent posed as an investor interested in buying gold coins.

Over the course of several months, he was solicited by multiple individuals who claimed they could sell him gold coins at below market prices if he agreed to purchase them through their companies.

After investigating these individuals, many were arrested and convicted on charges related to wire fraud, mail fraud and money laundering schemes involving precious metals investments.

Gold IRA Scams – Wrap Up

If you are thinking about investing in gold or a gold IRA, there are some scams out there that you need to be aware of.

Some of these scams are quite clever and can even fool the savviest investors. Here are some things to watch out for:

The IRS does not allow you to take ownership of physical gold or other precious metals as part of your retirement plan.

So if someone is selling an “IRS approved” gold IRA and promising you that they will buy the gold on your behalf and then transfer it into an account in your name, they are lying to you.

Because physical gold is not considered a retirement asset by the IRS, it can only be used as collateral for loans.

However, if a company offers to lend you money against the value of your physical gold, they could be running an illegal Ponzi scheme.

This means that they would use new deposits from investors to pay off existing investors until there were no more deposits coming in.