13 Gold IRA Scams You Need To Be Aware Of

Gold IRA Scams You Need to Avoid Today

Gold IRA scams are more prevalent than ever. The recent heartbreaking COVID-19 pandemic has changed the world: the way we protect ourselves, the way we work, the way we live. The economic downfall caused by this unfortunate crisis has led to a new perspective: what should be our future investments and how can we make sure that not only that we will be safe years from now, but also how to make money.

One of the debates created is if the gold IRA investment would be the answer. However, there are pros and cons – yet tons of fraudulent actions (below) that everyone should be aware of first.

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Let’s take a look at the whole scenario, including all details to get familiar with, from deceptive practices to what would get you to top-rated gold IRA companies.

What is the Gold IRA – Gold Investment Retirement Account

The Gold IRA (Individual Retirement Account), also referred to as Precious Metals IRA, is the account which allows users to store gold bullion, coins, or other types of precious metals. The precious metals stored are usually kept as investments and not for their direct monetary value.

A Gold IRA is different from other investment accounts because it deals with gold coins or bars instead of mutual funds, stocks, bonds, etc. This type of account can be opened with pre-taxed funds or a Roth IRA. Usually, the Roth IRA is bought with post-tax money. Both the traditional IRA and Roth options can only handle investments in physical gold.

According to the Internal Revenue Service, owners of Gold IRA accounts are permitted to trade bars and coins minted from gold or other precious metals, including platinum, silver, or palladium. These funds can be used to purchase gold-related “paper investments,” own stock in gold mining companies or purchase mutual funds based on these precious metals. A Gold IRA is a term used to describe an account owned by an individual, which is used to invest in precious or hard metals.

However, unlike other IRAs, these accounts require that users physically store and purchase precious metals. Due to this, the owner of a Gold IRA will utilize the services of the custodian, in the form of a bank or broker, to ensure that they handle the account properly.

Gold Investment Retirement Account (IRA) Fraudulent Practices

As the world’s most precious metal, gold is one of the most stable investments in any portfolio. However, not all dealers who try to sell you chunks of gold or gold coins have your best interests at heart; some may try and manipulate you into buying more than you need, or for products that don’t exist. Learn to recognize the signs of investment scams, especially during these hard times and avoid being caught in an unlawful practice.

Listed below are 13 common Gold IRA Scams, followed by strategies you can use to steer clear from master manipulators.

1. Shaved Coins Scam

​Watch out for gold dealers who shave off a few grains of gold off each coin, which will inherently diminish the value of the coin. Make sure you purchase from legitimate dealers with a strong reputation.

2. Extra Commission

You may find yourself a victim of a scam when you’re working with a financial advisor is paid commission on the sale of precious metals, and ends up recommending you to their partners in bullion dealing. Don’t agree to pay any large sums of money, especially if they’re asking for up to 20 percent higher than the current market price. The money will likely end up in the advisor’s pocket.

The best way to avoid this scam is by working directly with the bullion dealers, rather than through brokers and advisors. Bullion dealers have direct relationships with IRA trustees and custodians, which makes for a much simpler process. You may also get the advantage of negotiating for a discounted price.

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3. Fake Certificates

Another scam you need to be aware of is when your dealer manipulates you into buying a gold IRA but then presents you with only the certificates, which may not be worth anything. Investors often realize this too late that there is no physical gold, and the company you’re purchasing from may not even have any amount of gold issued in certificates.

In order to avoid being manipulated into buying worthless documents, do some research about what form your precious metal investment will take place in. Make sure you go through the written contracts and confirm the dealer’s image before you pay any money.

Let’s look at more Gold IRA scams.

4. Best Gold IRA Promise

One of the most common gold IRA scams is drawing people’s attention to an offer that’s far too good to be true. Their tactics are cleverly drawn up so that their offers appear to be legitimate, and their sales pitch will try and convince you to believe whatever it is they’re trying to sell you. Oftentimes, they refer to it as the best Gold IRA investment on the market.

In order to avoid falling for a bogus sale, make sure you confirm all the information they’re feeding you. Don’t succumb to the pressure they’re putting on you to make a purchase and take your time to do some research, including on the company making the offer and the person selling you the product. Check online reviews to see what other people’s experience has been.

5. No Physical Gold

Gold IRA scams are about confusing potential clients with a bunch of options, with no value.

The first thing that might happen is that the sales associate will start telling you about the benefits and advantages of investing in gold IRA or other precious metals; they’ll tell you how low their prices are initially but with a high return on investment. They will then take you through the investment transaction, which makes it appear as if you’re finalizing a sale by adding gold into your portfolio. If the deal is a legitimate one, you’ll receive a legal document of your purchase, as well as the right to organize, view and recover your gold from where it’s being kept.

If you find that there is no access to physical gold, you’re buying from the wrong dealer and are likely the victim of a scam.

6. Charges For Pointless Endeavors

Be aware also of dealers offering you a gold grading or certification service. The scam occurs when the dealers promote overpriced certification as a part of their sales pitch and frame it as a highly recommended measure to ensure proper grading. They would ask you to pay a sum of money for certification of a coin that they could otherwise do themselves for a far lower price. Also, there’s never any need to pay for certification services when your investment includes new gold bullion of a Mint State 70 condition.

This scam takes advantage of the investor’s fear of buying lower quality gold and is best avoided by researching the condition of the gold and the standards of certification. Knowing the information beforehand will help protect you from these kinds of gold IRA scams.

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7. Numismatic Coins Scam

Numismatic coins are pieces of rare gold coin. They have an exceptionally high value and are usually found in private coin collections. The scam occurs when dealers push investors into investing numismatic coins instead of bullion coins.

While bullion coins are allowed to be stored in the precious metal IRA vaults, numismatic coins are not, as they have extremely low liquidity. It’s essential that you analyze the coins before you invest money in them in order to save yourself from high risk or dead investment.

8. Keep Your Gold at Home Scam

No investment company should ever try and convince you that you can store your gold IRA at home. In fact, it’s clearly stated in the IRS guidelines that gold IRA cannot be stored at home; it can only be kept in a depository that is maintained by a trustee or a custodian. It’s illegal if your dealer tries to persuade you to open an LLC and have your company’s name as the custodian.

The IRS requires that a custodian be a financial institution or a treasury that complies with IRS guidelines. An organization that fits this criterion must complete a detailed application process in order to be approved by the IRS. Failure to comply and to pay taxes can lead to a splitting of your assets or other penalties.

As always, it is essential to do your research to find a trusted, IRS-approved custodian. This custodian should ideally have a legitimate track record that can help you spot scams and keep your gold safe.

9. All-in Mistake

When planning for retirement, it’s recommended that you purchase a number of different investment options to diversify your portfolio. When shopping for new investment purchases, be aware of profit-driven salespeople who are pushing you into converting most of your investments into gold or some other precious metal. They will try and convince you that your assets are at risk unless they are converted to precious metal IRA

Remember, precious metals are more valuable in the long run as they retain their value during periods of economic collapse. Therefore, they provide less in the amount of short-term gains or profit. For the immediate future, consider other investment options that can help serve your immediate financial needs.

Watch the video below to see how a victim lost $25,000 by buying gold coins:

10. Borrow Money Push

Another scam occurs when the dealer pushes the investor to borrow money, which will then be used to buy gold in addition to a cash investment. Essentially, you’ll be persuaded to purchase gold using borrowed money.

Once you start paying back the loan with interest, you’ll be led to believe that you’re now the owner of a large sum of gold and will then earn a sizeable return on the gold assets in the long run – a sum that is much higher than the interest payments. The dealer will convince you to believe that if the return is higher than the rate of interest, the leveraged account will be extremely beneficial.

As usual, not all is what it seems, especially if you’re a new investor with little knowledge or experience about the markets. You can find yourself at risk of losing big due to unforeseen high fees and interest rates. It’s best to stay away from high-risk investing options and not to open any leverage accounts.

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11. Non-Existent Purchases

You want to make sure that your Gold IRA custodian is actually buying gold for you and storing it at a respected depository. The custodian should furnish you with certification that you did indeed purchase physical gold and that it is being appropriately stored at an insured depository.

Some new Gold IRAs promise to provide self-storage, in which you take physical custody of your IRA gold. It sounds good, but the IRS has never officially approved this practice, so it’s best to speak with a well-informed lawyer before taking this route.

12. Hidden Fees

Another common scam is the failure of dealers to disclose all the fees associated with your purchase. The last thing you want is to find out that you’re being charged much more than was originally discussed, or to find out that you “agreed” to terms without them being clearly communicated to you. Many scammers will hide the fee structure in the early stages and won’t actually introduce them to you until you’ve already invested a certain amount of time and money.

In order to avoid falling victim to hidden or undisclosed fees, ask plenty of questions before making any payments. Learn more about the company’s ratings, IRS licensing, policies, storage or any other fees that are associated with investing. Walk away if you have any suspicions.

13. Fake IRAs

Always make sure that the gold IRAs you’re receiving are legitimate; sometimes, people will try and sell you ones that are fake and have no value. They’ll convince you to transfer your money and then will steal it from you. By the time you realize anything, the scammers will be long gone without any way to get in touch, because they were using a fake identity.

Gold IRA Scams: How to Avoid

Purchasing gold can be a great way to maintain the value of your investments, as they will retain their value when the markets are more volatile or during periods of economic collapse and recovery.

In order to avoid falling for one of the above scams, look around for a reputable company with high ratings and a solid reputation. Ask for recommendations from your friends, coworkers or your trusted advisors at your bank. Then, make sure you have a clear understanding of what you’re paying for and why certain charges or fees are there. Ask plenty of questions and ask to see legal documents should you feel the need.

Before you start investing, find about the depository and where they will be storing your gold. Meet with your trustee often to discuss and verify all the conditions as they pertain to the storage of your gold IRA. When you do buy, make sure you only invest in bullion coins; stay away from numismatic coins.

Finally, don’t trust a dealer who tries to manipulate you into paying more than market value, or who’s charging you for unnecessary certifications or brand-new bullion coins. Make sure the person you’re working with can show you the necessary IRS license and who can present you with FDIC insurance for your gold. It’s always a good idea to check with your lawyer to make sure you’re receiving a good and fair deal. When in doubt, if you feel something is off, don’t spend any money and walk.

Unfortunately, gold IRA scams are more common than you think. Do your research, ask lots of questions, and ask to see licenses or other forms of legal tender.

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Shall You Invest in Gold IRAs?

How beneficial is it to own a Gold IRA? Based on historical facts, it hasn’t been known to be a great idea. The gold has to be stored but offers no dividends or earnings on ownership. The metal is used for a variety of applications, including industrial and jewelry applications. Usually, most of the gold we have around are found in banks and safety deposit boxes. A lot of people have resorted to using precious metals to store value during periods of crisis.

The value of gold increases exponentially during the early 1980s and was valued at $400 – $500 per ounce until 2006. During the financial crisis of 2008-2009, the value of gold rose to $1,700 per ounce. However, the value has since dropped to $1,100 to $1,300. This means that the value of Gold went downwards for about 30 years. However, if you invested in gold between 1982 to 2006, your IRA would have increased five times.

Well, this doesn’t mean that gold is a bad investment, but if you use history as a guided gold will have to come a long way before being as profitable as you may expect.

Considerations Before Getting a Gold IRA

What would you earn from owning a Gold IRA? Are there any risks or variables to consider before investing in it? When you create a Gold IRA, it means that you’re building a personal gold chest. Learn what you need to about this IRA if you’re interested in creating your own gold chest.

Take the Gold Price Change as a Sign

As established earlier, the price of gold has fluctuated over the years. It has varied from a mere $255 in 1999 to a peak value of $1,839 in 2011. As of March 2020, the price of gold was $1,627/ounce. This means that there has been a significant amount of growth in its value but a slight reduction too.

A Gold IRA appeals to anyone who wants to have a different type of retirement portfolio. Gold has been proven to rise or fall in the opposite direction of paper assets. This makes it a great insurance policy against inflation. However, it’s quite clear setting up the IRA is quite complicated and only determine investors are able to complete the whole process. Investors have to get themselves a trustee or approved depository. After this, approved gold or other precious metals are to be purchased and stored in the depository. The custodian has to be able to account for any transactions in the IRA.

The financial crisis of 2008 marked a turning point and since a lot of people have signed up for a Gold IRA. This increase in the number of gold investors has been boosted by the creation of more companies to help investors in handling and simplifying transactions. There’s also another reason caused by the inflation created by the Federal Reserve’s stimulus programs and a heightened risk of geopolitical challenges. It seems like with the coronavirus outbreak, there will be some major changes, too.

Get to Know the Gold IRA Rules

The first factor to consider is if you’ll prefer to have a traditional investment in your portfolio or a gold-related one. Anyone choosing to have a gold portfolio must comply with certain criteria. The quality of the gold has to meet IRS standards and be kept in possession of an IRA trustee. The gold must also be stored in an IRS-approved depository. Investors are not allowed to store their precious metals in safety deposit boxes, home safes or closets. Several other IRA rules still apply to be a gold investor.

Finding the Best Gold IRA Custodian or Broker

Next, you have to operate your self-directed IRA, which allows the investor to manage resources directly and permitted to invest in a wider range of investment products. In order to operate a Gold IRA, every investor needs the service of a broker to purchase the gold and custodian to store and hold the account.

Custodians usually take the form of credit unions, banks, brokerage firms, trust company and loan associations that have been permitted by to hold custody of assets for financial advisors and investors. However, it’s still the responsibility of the investor to look for an appropriate metal dealer. There may be some renowned custodians who have affiliation with numerous dealers around the city and may be willing to let you use their resources. It also works the other way round, where a metal dealer could recommend a verified custodian.

How to Find Gold IRA Companies

Choosing which company to work with can be quite complicated because not all companies are capable of doing a great job. Investors have to consider a number of aspects, which include – but not limited to:

1. The company has to have certified qualifications from the appropriate authorities. Don’t just take their word for it.

2. Transparency of the custodian is critical. You have to know if there are any hidden costs or charges. Refer to the scam presented above.

3. The goals, needs, and processes of the custodian should match what’s convenient for you. A one-size-fits-all approach isn’t usually the best. Attention to detail 101.

4. The company has to have a good track record of handling similar cases. Same thing here, make sure to check real online reviews.

gold ira fees

Gold IRA Fees: What You Need To Know

You probably know this, but owning a gold IRA means that you’ll have to settle the following costs, in aleatory order:

  • Storage fees. The gold is usually stored in a secure location for which investors pay certain fees.
  • Custodian fees. This is an annual fee paid to the whoever is storing your gold.
  • Seller’s fee. This fee is the markup paid on the precious metal to be purchased. It varies based on the type of metal and the vendor. It’s a one time fee.
  • Cash-out costs. When trying to close your gold IRA and sell to a third-party, you’ll likely lose money because he won’t buy from you at the market rate.
  • Retirement account setup. This is a one-time fee charged for setting a new IRA account.

Gold is volatile and no one can predict its future. Because of this, its a risky venture. There’s also the always existing problem of fraud wherever there is money involved. Someone could break into your depository and go away with your precious metals. However, it has remained a store of value for close to 5,000 years and there are some reasons to trust it.

Gold IRA Scams: How To Report

Warn your family and friends about these Gold IRA scams by sharing the article on social media using the buttons provided. You can also officially report the scammers to the Federal Trade Commission using the link below:

Report To The FTC Here

How To Prevent Identity Theft and More

If you want to be the first to find out the most notorious scams every week, feel free to subscribe to the Scam Detector newsletter here. You’ll receive periodic emails – we promise not to spam. Meanwhile, educate yourself with some other fraud-related articles right under this paragraph, so that you can protect yourself in many other aspects and niches. Last but not least, use the Comments section below to expose other scammers.

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selma hrynchuk
Selma HrynchukSelma is a fraud prevention specialist renowned for her expertise in private eye investigations and a remarkable partnership with law enforcement agencies. Beyond her investigative triumphs, her public speaking engagements and written works have empowered countless individuals to protect themselves and stay ahead of deceptive schemes. Selma's legacy shines as a tenacious agent of change, unyielding in her commitment to battling fraud and ensuring a safer world for all.

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