7 Gold IRA Scams Investors Need to Avoid

gold scams

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When you’re looking to make alternative investments for your retirement, you might be interested in the inflation-resistant and diversification-friendly gold IRA option.

However, you must be careful, as there are a lot of gold IRA scams that take advantage of new investors.

People generally invest in self-directed individual retirement accounts through stocks, bonds, and mutual funds, but gold IRAs can carry significant value.

There was a 360% increase in the market price of gold from 1990-2020.

While the benefits and pay-off from this type of investment come in droves, it can be tricky to navigate through the sea of Gold IRA scams currently out there.

To help you avoid falling victim to one of these common scams, we put together a comprehensive list of the seven most common so you can safely and assuredly prepare for your retirement with a legitimate gold IRA account.

1. Collectible/Numismatic Coins

Whether it’s for hobby purposes, investment purposes, or both, collecting gold coins centers on their specific value brought about through condition, rarity, and category.

A numismatic coin holds high regard amongst the scholarly collectible coin community based on its characteristics.

Collecting rare coins can be fun and profitable on the open market, but they should not be your main contribution to an IRA.

IRA restrictions do not allow for contributions of collector coins. Silver and gold US Proof coins are the exceptions; however, they always come at a higher cost despite lacking an increase in precious metal content.

It is not a wise financial decision to spend the extra money upfront just to have ordinary gold coins when you could spend that same amount on gold bars or bullion coins with higher content and value.

It is also fairly simple for a fraudulent broker to dupe someone looking to buy rare coins by assigning false value or providing counterfeits.

Senior citizens commonly fall victim to gold IRA scams by purchasing gold or silver coins with a small fraction of precious metal content.

It is also key to avoid the marketing ploy of offering a free appraisal on your collector coins. It is possible that the “broker” picks up the coins for evaluation and disappears with the valuables.

2. Home Storage Gold IRA

The IRS spells out strict guidelines for legally maintaining a precious metal IRA. One of these guidelines dictates that the investor cannot have physical possession of the precious metals.

The contributions have to be in either a bank’s possession or an IRS-approved custodian. Any gold IRA company discussing the option of home storage is not legitimate because home storage, such as in a safety-deposit box, is illegal.

Reputable, legally-operating gold IRA companies handle the full process from start to finish, including precious metal storage.

If the company you’re looking at doesn’t have storage options, it is probably a gold IRA scam. IRS-approved holders have specific safeguarding systems in place to protect gold and other precious metals.

There are a variety of official domestic and international options.

3. Pushy Salespeople

The confiscation-scare tactic is one of the primary threats that gold scams throw around to try and intimidate people into overspending on US proofs.

There are many gold ira gimmicks scammers will try to use to confuse you. If a salesperson mentions President Roosevelt’s 1933 Executive Order concerning the Federal Reserve confiscating gold, they are misusing a moment in history that does not apply today.

Another hoax swirling around is the guise of providing future financial security through unwise means.

The biggest red flag in a broker is if they push you to invest “all-in.” Any financial professional knows that the diversification of a portfolio is the ticket to security, so don’t fall for this one!

Another common gold scam caveat is a dealer encouraging you to take out a loan in addition to putting forward a cash investment.

A business that tries to persuade you to borrow money to pay for gold is not trustworthy. Like in any investment advertisement situation, a reputable salesperson reads the market and makes suggestions that reflect the ongoing trends.

Their job ultimately is to advise where you should put your money for long-term growth and not aggressively push anything.

4. Unsolicited Offers

Unsolicited gold scams are usually sent over email, but can sometimes come via junk mail or cold calls and telemarketers.

Normally, an unknown sender will contact someone multiple times about IRA investing without making any financial requests until the receiver gains familiarity.

These dealers sending unsolicited offers are hoping to land on the doorstep or in the inbox of someone who lacks education or experience in investing to take advantage of them and make a quick buck.

These offers tend to advertise the opportunity to make big, easy money. Words to be wary of include when a business calls itself “the best gold IRA account on the market.”

A golden rule to live by (pun intended) is that if an offer appears to be too good to be true, it probably is.

Legitimate gold dealers rarely utilize this style of marketing, because informed individuals who want to invest in a self-directed IRA, seek out the service themselves.

5. Misleading Contracts

Federal securities laws exist to prohibit misrepresentations and dishonesty in the sale or purchase of securities, but bottom-feeding businesses still prey on investors using lies and vague misdirections.

Shady companies hide extra commissions, fake certification fees, and other illegitimate, inflated costs in the fine print of their contracts.

If there are lines in the contract that you find to be confusing, suspicious, or otherwise unclear, seek legal advice before signing.

6. Non-Existent Precious Metals

A common gold IRA scam is offering the sale of previously undiscovered types of diamonds, gold, or platinum.

Faux financial advisors will milk the promise of an exciting opportunity for extremely profitable returns on these magical, original precious metals and might even encourage you not to tell anyone else about them.

A legitimate discovery of new precious metals is never kept secret and is always verifiable with simple fact-checking.

Shady companies might go through the transaction process with you on paper without ever giving access to actual, physical gold.

A legitimate gold IRA custodian will present you with official certification to validate a real gold or precious metal purchase with all of the information surrounding its IRS-approved storage location.

Ensuring that you have genuine, legal documentation is critical.

7. Rare Coin Scams

Here we see again the opportunity for scam artists to falsely advertise rare coins as viable, unseizable IRA contributions.

This gold IRA gimmick tries to get unsuspecting investors to purchase false goods. Everything is taxable by the IRS, so don’t believe this lie.

We also see shady dealers lying to people about rare coins having exemptions from sales reporting and capital gains taxes.

This is one hundred percent false.

Are Gold IRAs a Good Idea?

An investment in gold is an ultra-secure financial move to make for your retirement. It is one of the best ways to diversify your retirement portfolio and preserve your money over decades.

Be extremely mindful of brokers and businesses that push financially reckless practices on you with the promise of a big payoff.

Ensure that you’re receiving the proper transaction documentation from an IRS-approved institution.

Remember that collectible or rare coins, home storage options, vague contracts, and unsolicited or outlandish offers are all signs of a gold IRA scam.

Follow our list of avoidances and do your research on a gold IRA company before working with it.

If you track customer reviews and verify a company’s legitimate standing with the IRS, your investment should be safe.

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