Most Common Gold IRA Scams to Avoid

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With inflation on the rise, more and more investors are turning to precious metals like gold and silver for a sense of security. But as you eye up those glittering assets, it's crucial to understand that not all that glitters is truly gold. In some cases, it's deception painted in a golden hue.

Gold IRA investing shouldn't be akin to navigating a minefield. Download a FREE Buyer's Beware Guide from Augusta Precious Metals to learn how to avoid deceptive gold IRA dealers, as well as a comprehensive list of facts about gold IRAs and common scams.

The Most Popular Gold IRA Scams

●       High-Pressure Sales Tactics

No one enjoys being rushed into major decisions. When precious metals dealers use aggressive methods insisting you endanger your nest egg by switching entirely to gold, it can border on suspicious at best. Scammers often talk about unrealistic returns or claiming that their gold investments are completely devoid of risk.

When considering gold IRA investments, we warn against pushy salespeople and gold dealers who instill a sense of urgency, claiming that gold prices will skyrocket and if you don't act now, you'll miss out. Remember, if an offer sounds too good to be true — it probably is. Reputable gold IRA companies never push you to make quick decisions. If you're rushed, take a step back from any hard sell and take your time to think things through.

●       High Markups Gold IRA Scam

Overpricing is another common gold IRA scam tactic — charges skyrocketing far beyond reasonable markups are sadly not unheard of. Some gold companies charge overinflated premiums on products they sell.

When it comes to physical precious metals, bullion coins or bars are often the preferred choices for individual investors. These items are valued by their metal content, weight, and purity — their price closely tied to the current market spot prices plus a reasonable markup ranging between 5% and 10%. Due to their standardized nature, bullion products are widely recognized and relatively easy to trade or liquidate when needed.

On the other hand, numismatic coins aren't so straightforward. These could be rare antique coins or special mints designed as collectibles. While they may seem intriguing due to their rarity or historical value, they come with significantly higher premiums—somewhere between 40% to a staggering 200% above the metal’s spot price!

The sales pitch for these pieces often emphasizes an assured increase in value due to rarity—but let's not get carried away! Valuing such gold coins is highly subjective; what’s more, they don't always have a ready buyer which makes them much less liquid than commonplace bullion. If you're not careful, you might end up needing to sell your prized collectibles back at crushing discounts compared to your purchase cost.

●       Sale of Collectible Coins

Collectible coins might seem fascinating but remember the IRS directives: most collectibles don't make the cut for precious metals IRA eligibility. Stick with approved securities.

While collectibles can be fascinating investments on their own merit, they are not suitable for gold IRAs since they do not meet IRS criteria for precious metal purity and weight standards as retirement investments. Buying overpriced rare gold and silver coins from a disreputable gold dealer would not only jeopardize compliance with your gold IRA but could also lead to financial loss. Reliable gold IRA company will never sell you any collectable coins that hold no real value.

●       Dubious “Home Storage” Offers

There's also so-called "home storage" gold IRA scams. If someone suggests keeping your valuable metals under your mattress or in a home safe... red alert! Proper custodianship and authorized depositories are non-negotiables as per IRS stipulations. Some gold IRA companies offer self-storage options for your IRA-backed physical gold which may sound attractive but could conflict with IRS regulations. Legal consultation should precede any such decision as unofficial practices carry significant risks.

Gold IRA Investments: Red Flags to Look Out For

●       Feeling caged by pushy salespeople?

●       Too good to be true guarantees?

●       Ghostly web presence? All smoke and no substance?

●       Are they playing phone tag, contacting you unsolicited?

●       Hazy about pricing & delivery details?

●       Being offered gold and other precious metals at unbelievable discounts?

●       Do contract terms sound like they're from an alternate universe compared to the sales pitch?

Dodging Precious Metals Scams: Tips for Safe Investment

Choosing a trusted gold IRA company will protect you from any gold scams. Research any gold company extensively before entrusting them with your retirement savings.

Read all contracts carefully. Taking things at face value doesn’t fly — you want contracts clear enough to see through them completely before putting pen to paper.

For more information about precious metal IRAs, refer to the website of Commodity Futures Trading Commission.

This article is part of a featured content programme.
Published 17 November 2023, 10:12 IST

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