The words “Buyer Beware” have never been truer when you are talking about buying gold. A popular item automatically brings out the scammers. Your best defense is to be a wise buyer and do some simple things to make sure you get value for your money.
You first step is to find a reputable gold dealer to make sure you are getting good value.
Then you need to understand why you are buying gold. Are you purchasing gold as insurance against difficult economic times? Are you speculating that the price of gold will continue its upward movement? Are you diversifying your investments? Are you buying gold because you’re a coin collector? Are you buying gold just because it is a popular investment? The answers to these questions will help you determine what kind of gold investment is right for you. You can have more than one objective but it is important to understand your motivation.
Gold is a valuable commodity, so the next rule is to shop for gold just like you would shop for any valuable item. Compare prices to find out what is out there and understand what you need to pay to get what you want.
Beware of gold scams. If you get a call, especially from an offshore seller, giving you the opportunity of a lifetime – you would be well advised to hang up. Don’t fall for the sales pitch that you are guaranteed big profits because no one can guarantee the future. Don’t let them pressure you, if they tell you that you absolutely have to buy today or send or transfer money today it is a sign that you are being scammed. Make sure you are buying gold with a high purity level. Understand that bullion coins will most often not be 24 karat gold because alloys are added to provide the durability that is needed for currency. Look for terms like gold clad, gold wash – that is not the gold you want. Find out the troy ounces of gold and then determine the value based on the current spot price of gold. Other terms like non-minting or gold look are other tip offs to a rip off.
Watch out for dealers who try to sell you collector coins, especially if you know nothing about gold collector coins. Collector coins will sell at a premium over the spot price of gold and if you don’t know what you are doing it is easy to pay too much. The decision about the type of gold to buy goes back to your motivation, just know that collector coins will cost you much more and if you don’t know what you are doing you can easily get ripped off.
Your best defense in making a wise gold purchase to fit your objectives is to find a reputable gold dealer who has fair prices. Know that if you are buying gold bullion coins you will pay a premium over the spot price of gold, a 5-20% markup is normal depending on the coin. There are also other ways to buy gold where you do not have to take physical possession, such as gold bars in a gold vault, which will also have a minimal markup over the spot prices of gold and will also allow you to enjoy a gold investment without having to physically take possession of the gold.