News Common Forms of Gold Fraud

Common Forms of Gold Fraud

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Gold is a popular investment. People feel that if they hold physical gold they will be protected against collapse of the economy, because even if the money system fails gold will still have value. However, these people are often left wondering where to buy gold, so they just head to the nearest gold dealer. Most people will get a good deal, however, there are some who will be swindled because they don’t watch out for these common gold frauds.

Over Packaging – Most gold is sold in the form of coins. These coins are specially packaged to help preserve their integrity, and to help them retain their value. They are sent to a specialized grading service and that service will seal them in packaging. Unscrupulous gold dealers will make their own packaging that obscure the view of the coin. They claim it is pure gold, but often has some copper mixed in.

Bad Grading – Those graders determine the condition of the coin. A mint condition coin will be worth a lot more than a fair condition coin. In order to sell coins for a higher value, a scammer might forge the packaging and say the coin is top of the line mint, but it might be 3 levels under that. The difference is worth a couple hundred dollars.

Misleading Gold Values – Gold fluctuates in price daily. Because it’s hard to predict, many dealers will adjust their prices weekly. By showing falsified data a scam artist may say gold is worth one amount when it is really worth significantly less. They might also claim gold is shooting up in value when it’s actually stagnant or dropping.

Phantom Gold – This one takes a well crafted pitch. A dealer sells thousands of dollars worth of gold. But the buyer doesn’t want to store that much in his house, so the dealer offers to store it on premise (for a fee). They claim they have a state-of-the-art safe and even guarantee against theft. The trick is they don’t even have the gold. The buyer pays a fee for gold that doesn’t actually exist.

By being aware of these scams you can get around being defrauded of your money. If you are uneasy, go to a different gold seller, there are plenty of them. Always insist on inspecting the gold, and always have a return contract so if you get it appraised elsewhere you can return the gold if it appraises for significantly less than you paid for it.

Common Forms of Gold Fraud
General Contributor
Janice is a writer from Chicago, IL. She created the "simple living as told by me" newsletter with more than 12,000 subscribers about Living Better and is a founder of Seekyt.

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