Gold is the world’s most liquid reserve during economic decline and strife. Silver, too, can be a great investment. And with the US heading towards another recession (Source: www.huffingtonpost.com), the production of counterfeit gold and silver coins has increased. Why? Because con artists are familiar with the laws of supply and demand and take advantage of them as soon as an opportunity presents itself. These scammers wait for unsuspecting victims and take them for everything they are worth.
Thus, you must ward off their advances when you’re trying to purchase the best kind of wealth insurance – gold and silver. Do not get caught up in the buying frenzy when you encounter a great deal. Remember, if it’s too good to be true, that’s because it usually is. Minimize the risk of fraud and buy real gold and silver coins using the tips given below:
1. How to Differentiate Between Fake and Real Bullion Coins
The US Mint has several safeguards to prevent the replication of bullion coin designs. Unfortunately, this has not prevented counterfeit versions of popular bullion coins like the American Gold Eagles from popping up on the open market. Some fakes are so akin to the original that they fool even experienced coin dealers.
Although there is little possibility that a reputable coin store or dealer will sell you counterfeit government-minted bullion, the same cannot be said for people selling these coins through online platforms like eBay and Craigslist. So, it would help if you remain vigilant. The four red flags to watch out for include the following:
- Asking Price is Less than the Worth of Gold/Silver Content: You should be wary of bullion coins that are available for less than the spot value of the gold or silver content. The only reason someone would sell authentic coins at a throwaway price is that they are stolen, and the thief wants some fast cash. We don’t need to tell you that buying a stolen coin can land you in serious trouble.
- Weight Seems Lighter Than It Should Be: Gold is one of the heaviest and densest metals. Silver also is quite heavy. If the coin you’re planning to buy feels too light, chances are it’s made of copper or iron ore with only a thin coating of gold or silver.
- Unusual Dimensions: Counterfeiters know buyers usually weigh coins to detect fakes. So, a common practice is to substitute the gold content with another metal so that the weight remains the same. However, this causes the fake coins to have an increased thickness, diameter, or both. If the dimensions of a bullion coin seem somewhat off, it might not be a real collectible.
- Magnetic Property: A surefire way to separate a fake bullion coin from a real one is to bring it close to a magnet. If the magnet attracts the coin, it is definitely a counterfeit because precious metals lack magnetic properties.
2. Avoid Commemorative Coins
Both private and federal mints produce commemorative coins. While they are beautiful to look at and make great gifts for your children and grandchildren, they are not a substitute for gold and silver bullion. That’s because these collectibles sell for twice or thrice the melt value of their precious metal content. And once you purchase them, rarely, if ever, can you sell them at the buying price.
3. Know More About Who You’re Doing Business With
Gold and silver coin dealers increase their knowledge as the years go by. And the more informed they are, the more recognition they earn from the industry. The same applies to coin stores. You can bank on this reputation to secure a genuine deal on bullion coins. So, research the kind of person or shop you will be doing business with. Normally, trustworthy coin dealers and stores are honest and refrain from making tall claims.
On the other hand, con artists make unrealistic promises, such as the possibility of making large profits without any financial risks. These conmen also hatch schemes like ‘limited period offer’ or ‘only one left to get unsuspecting buyers into wiring them cash immediately. Never fall for such traps.
The best way to avoid cheating is by doing your due diligence. Be doubly sure of a seller’s authenticity by checking for feedback on industry forums. Yes, it is time-consuming, but you might avoid a bad investment. Another good practice is asking the dealer or coin store about hidden costs. They might ask you to pay a commission or additional fees, but make sure you understand the basis of these charges first.
4. Start Small
Are you buying gold and silver coins from a new store/dealer? Minimize your risks by starting small. Even though most dealers offer discounts when you buy in bulk, it might be a good idea to test the waters before you invest in these deals. If you are buying a small amount of gold or silver bullion, go for bars with serial numbers stamped.
5. Check the Originality of the Bullion Coins
Check whether the collectible fits inside the slab if you’re buying a slabbed coin. Fake gold normally lacks any slabbing. Keep an eye out for layers of plastic packaging or overtly ornamental plaques that might prevent you from studying the piece properly. Ask to see certification or walk away from the deal. Also, note the details of the dealer or store you buy the bullion coin from and verify the data to ensure you are not being taken for a ride.
Suppose you buy the collectible online and request documentation on the impartial grading of bullion items. Normally, all legitimate dealers carry this type of certification. An unsuspecting individual might think buying gold and silver bullion coins is easy. However, the situation is more complicated than you think, thanks to the presence of numerous scammers who are out to cheat buyers of their hard-earned money with elaborate schemes and cleverly disguised products.
Finding a trusted coin dealer to buy gold and silver coins would be best. Look for a local store that sells original collectibles at a reasonable price. You may even talk to fellow investors or coin collectors to learn more about a trustworthy local dealer.
