In addition to the fact that gold has become a powerful hedge against inflation in these turbulent economic times, not to mention that a majority of individual investors are flocking to invest a good portion of their IRAs into gold because of future prices – there are other things you must understand, and that is the fact there has been a ridiculous increase in the amount of gold IRA scams.
There are several unmonitored and unregulated bullion dealers that are trying to take advantage of this gold rush by playing uninformed investors for fools, making huge amounts of profits by selling fake gold. And they do it by employing shady marketing and business tactics, forceful marketing to compel the individual to buy the gold and charge high amounts in hidden fees.
However, several gold scams can be spotted and unraveled – which is if you know and are properly informed in regards to what to look for.
However, because so many people are easily compelled to make a purchase as a result of the cunning and smooth sales pitch of gold scammers – most don’t bother to do any research.
The last thing you want to be is inexperienced when it comes to investing in a gold-backed IRA, even if you’re doing it for the very first time.
On the other hand, it is a truism that differentiating a reputable, legitimate gold dealer from a scammer who has mastered the art of a sales pitch and is highly profit-driven, demanding excessive charges on his fake products.
Companies that continue to employ shady tactics when it comes to precious metals-backed IRAs benefit entirely as a result of the increasing demand for gold-backed IRAs by investors who are reaching their retirement age.
What these companies do is re-route their zeal for making high profits, convincing such investors to buy gold products, which are more often than not sold at significantly higher prices than that of the market.
And in a majority of cases, the gold bullion coins sold by such companies aren’t even standard products – which makes the product unauthorized to be deposited or stored in a gold IRA.
In light of this, mentioned below are some of the most common scams in the gold IRA market to look out for:
When you talk about gold, you have to understand that you could be a victim of custodian theft. The possibilities, however, of this happening are quite rare though, but it can happen.
You have to realize the risk that the company/custodian you have chosen to store your gold with can as a matter of fact steal your gold and disappear without a trace. And if or when this happens, there is little to nothing that you could do that would get your gold back.
You could only put your faith and trust in the proper authorities that they would recover the gold. Apart from that, the purchase of gold for the purposes of supplementing your IRA is never backed by FDIC insurance, unlike a couple of other investments.
And a lot of gold dealers and retailers that offer gold products for individual investments are not particularly well-known like a majority of brokerage companies that offer different types of securities. So, what this means is, you will have to trust and work with a gold company you don’t know.
When you invest in a physical precious commodity such as gold, there is always a high chance that it could very well be stolen by a third party. A lot of people that have gold-backed IRAs never indulge in having the gold physically transported for storage or make the delivery themselves.
What they do is appoint a third-party to store and hold the gold for them – the investors in this case only have authentic gold certificates, which proves they are the owners of the gold – but there is a high risk that the third-party of the company you appoint to store the gold could lose your physical asset, which can be seriously devastating to your Individual Retirement Account and funds.
And if this happens and you don’t have any sort of insurance on the physical asset, your funds will be as good as gone – which means you would have lost a major chunk of your IRA investment funding or perhaps your entire investment portfolio.
There is a list of a plethora of gold companies that have indulged in illegally and dishonestly handling the sale of gold.
For instance, a majority of companies have sold unscrupulous gold certificates to individual investors, which proclaim that the buyers are the actual owners of the gold – when they really don’t have any gold in their hands.
This is an increasingly risky situation, which exposes your IRA portfolio; because you might decide to sell the gold at a good price and then find out that you don’t have any.
Until and unless the gold dealer who issues you an authentic gold certification, which makes you an owner of the physical of the precious asset, doesn’t actually have any gold in his possession can seriously damage your investment making it tough to gauge whether or not it is a valid one.
However, there are laws that prohibit investors from selling more gold shares that can actually be backed by their gold IRA; there have been numerous gold companies and brokerages that have casually indulged in this illegal methodology.
Moreover, enforcing the laws surrounding selling gold shares has become increasingly difficult because it can be an increasingly frustrating endeavor for a gold inspector to count and check how much gold you have.