RSS FeedRSS

8 Gold Coin Scams to Watch Out For

Before investing in gold bullion or gold coins, the Federal Trade Commission suggests that you do careful research in order to educate yourself and avoid being taken unfair advantage of.

Here at Certified Gold Exchange, we could not agree more. At Certified Gold Exchange our commitment is to educate and inform you, our client. With that in mind, we think this an opportune moment to caution you on common gold coin schemes and scams that dubious and unscrupulous dealers out there try to perpetrate on unsuspecting purchasers of gold.

 A gold coin scam is a type of fraud in which the customer is offered an apparently legitimate coin in exchange for money. Once the perpetrator of the scheme has received payment, the coin – if delivered at all – turns out to be an overpriced purchase, a sham, an imitation or a valueless trinket.

Become educated, become aware. Avoid the pitfalls of these 8 common gold coin scams.

1. The Replica Gold Coin Scam

In this scheme, common on late night TV info-commercials, naïve viewers are offered a copy or a replica of a famous gold coin. The words clad in gold are often used and should immediately tip you off that this is not a legitimate, “through-and-through” gold coin. Clad means thinly coated, not solid. The true value of these coins is often presented as $50, even though the gold content doesn’t even break into double-digits. Don’t waste your money even if the coin is offered to you at a “deeply discounted” price. It’s a scam, pure and simple.

2. The Irresistible Offer

The Irresistable Offer is a bait-and-switch scheme that works like this: You see a seemingly legitimate offer in an aboveboard newspaper or magazine, on TV or on the internet. You may be offered gold bullion at something that says 1% over cost. This may seem like a good deal, so you go ahead and call the toll-free number. A broker will take your information and while he or she has you on the line will begin to undermine your confidence in your response to the original offer. The broker may intimate that the government has the power to confiscate gold bullion, and that gold coins may be the better alternative. The suggested gold coins will generally be overpriced, but in the confusion of the moment may seem like a pretty good deal to you. The new offer is almost always a rip-off. In California, the Santa Monica Attorney’s office has won judgments against various precious metals dealers for engaging in this type of bait-and-switch scheme.

3. The Certified Gold Bullion Coin Scam

The American Gold Eagle is the official gold bullion coin of the United States, produced by the United States Mint since 1986. The U.S. Mint does not designate any coins as first strikes or first releases, striving to reproduce the exact same quality in each and every coin that it produces. The U.S. Mint does not track the order in which its coins are released, so there is no way to prove that a coin was struck first. The American Gold Eagle is guaranteed by the U.S. government to contain the stated amount of actual gold weight in troy ounces. No certification is offered nor required. Beware of any claim that states otherwise.

If you wish to verify the gold content of your purchase, you may submit your coins to a third-party business to have its gold content certified. 99.6% of all coins submitted to third-party businesses are certified MS(mint state)-69 or MS-70. In other words, all American Gold Eagle coins are pretty much the same. Buying a certified gold bullion coin has little meaning. Avoid paying an extra premium for a certified MS-70 American Gold Eagle coin. You are pretty much getting the same coin as anyone else.

4. Forgettable Commemoratives

Commemorative coins are impulse buys. You may get caught up in the moment of July 4th or the Queen of England’s birthday and think let’s do it, let’s celebrate the moment. Pull out the credit card, dial the number, and while you’re at it, maybe even buy extras for the family. Right?

Wrong. Don’t do it. Be rational. The coins that arrive in the mail a couple of weeks later may well never see a profit. Just like the tabloid newspapers at the grocery store check-out line, commemorative gold coins are often impulse buys with little or no real value.

5. The Rare Gold Coin Scam

In this scam, you may be told that you are being offered a numismatic or a collector ‘s coin whose value far exceeds its gold content because it is unique or rare. The Swiss Helvetia, the British Sovereign and the French Rooster are not exactly rare coins. But in this scam they and other coins may be presented as such. In this scam, you may be shown charts that emphasize how rare gold coins have surpassed bullion in value over a certain period of time. And some rare coins have indeed been profitable investments for their owners in the past. Other vintage coins have not. Neither age nor rarity necessarily adds value to gold. More than likely, the coins on offer in this scam are not the same coins represented in the charts being shown. Unless you have done intensive due diligence, buyer beware. And buyers should also be aware of an even more important issue; rare coins could be difficult to liquidate in times of need if you are unable to find a legitimate buyer. Savvy investors often target the “common date” rare gold coins because they have a stable buy/sell market. This way, your gold investment is liquid, just like cash.

6. Counterfeit Gold Coins or Going Fisching

Recognizing fake gold coins is not an easy task by any means. Laser technology has made the reproduction of gold coins a sophisticated science.

However there are steps that you can take to protect yourself. Odd but true: gold is a soft metal. Biting into pure gold will leave a tooth mark. It may also devalue the coin, so you may have a hard time convincing the seller to allow you to bite into his coin! And if the coin is not pure gold, you may end up at the dentist’s office.

Get to know the importance of weight before negotiating to purchase a gold coin from a private individual or from a coin dealer without an established track record. Know in advance how much an authentic gold coin should weigh. Use a scale to verify weight. A fake gold coin will almost always be too lightweight.

• a 22k American Gold Eagle weighs 33.93 grams

• a 22k South African Krugerrand weighs 33.93 grams

• a 24k Canadian Gold Maple Leaf weighs 31.1 grams

• a $20 Liberty Head Gold Coin weighs 33.43 grams

• a $20 St. Gaudens Gold Coin weighs 33.43 grams

• a 500 Yuan Chinese Gold Panda Coin weighs 31.103 grams

And be aware that the diameter and thickness of authentic coins are established units. They do not vary. A counterfeit coin or a metal fake will not be able to replicate these authentic measurements. You may want to buy a caliper, an instrument that measures thicknesses and diameter before handing over any hard cash for unsubstantiated gold coins. Going one step further, you could invest in an instrument called the Fisch, a device that takes the guesswork out of gold coin buying. The Fisch instrument for Krugerrands, American Eagles and Maple Leafs will run you $259.

7. The Gold Coin Storage Scam

There are endless documented fraud cases where dealers have offered buyers the convenience of storing their precious gold for a monthly fee. You may be reminded that your home is not a safe place for gold storage. If you agree to this arrangement of having the seller store your gold for you, remember that you are storing a product that you have never seen. You have no guarantee that these gold coins exist unless you have first taken

delivery of your gold. Always demand physical delivery of your purchased coins to insure that you are truly the owner. Then proceed to investigate your storage options.

8. The Sheldon Scale Scam

Dr. William Sheldon developed a 70-point grading scale for coins in the late 1940’s. This Sheldon Scale, in slightly modified form, has become the standard for grading coins today. However, a dealer might give a coin a 64-point rating with a simple visual check, noting an imperfection or a scratch. This is a very subjective evaluation. Buying such a coin could lead to difficulty when selling. The 64-point rating may be disputed by a new buyer who will give the same coin perhaps only a 61-point rating.  Essentially, dealers police themselves when giving Sheldon Scale ratings. You as a buyer should be extremely cautious when negotiating Sheldon Scale gold coin purchases, and it is highly recommended to buy and sell only PCGS or NGC-graded gold coins, since the grading has been standardized by those two organizations.

At Certified Gold Exchange, we encourage you to familiarize yourself with the scams mentioned above. Become an educated consumer and a knowledgeable purchaser of gold. Only then do we recommend giving us a call toll-free at 1 (800) 300-0715.

You can feel confident in buying your gold coins directly from the Certified Gold Exchange. Our PriceMatchPlus guarantee assures you our best price of the day, and we always offer free, insured, and confidential delivery to your home, office, or P.O. Box in the United States. For a free gold coin buyer’s guide or to request authentication of your gold coins, call the Certified Gold Exchange directly at (800) 300-0715 today.

Get Your Complementary Award Winning Guides Below

 Publish Real Money Magazine

 Publish Gold Investment Magazine

 Publish IRA 401K Kit Magazine

 Real Money Magazine

captcha