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Scams are on the rise across the map. The FTC reported that Americans lost an estimated $10 billion to scammers in 2023 alone. While scammers use all sorts of tactics to extort their victims, recently more scams have been popping up related to gold and bullion products.
How can you stay safe from gold scams? This article explores some common gold scams, what to look out for, and how to stay safe when buying or selling gold.
These are some of the most common gold bullion scams in the US currently.
One common gold scam is unscrupulous gold dealers or financial advisors selling genuine gold at inflated prices, or charging excessive fees to set up things like gold IRAs. Some dealers will target elderly people approaching retirement age, and positioning gold as a safe investment for retirement. They then mark up physical gold products excessively, or charge hefty set up fees and commissions. In one case reported to the Commodity Futures Trading Commission, a gold dealer charged a customer nearly $150,000 in fees when rolling over a $300,000 retirement account into a gold IRA.
These scams are generally not illegal, as they are selling real gold and/or genuine financial products. The problem is in the fine print or with excessive markups on physical gold products.
How to avoid: Only work with reputable dealers, and consult a trusted fiduciary financial advisor before making any investment decisions.
Another type of scam is people selling actual counterfeit gold, which is often purchased in bulk from overseas. For instance, a criminal may purchase fake American Gold Eagle coins which look and feel real, then sell them on online marketplaces or message boards. To the naked eye, these coins look legitimate – generally only expensive equipment can detect the fakes. Some are even coated in real gold, but have false cores made up of cheaper alloys like copper.
Selling fake gold coins is actually illegal, and can be reported to authorities. You generally won’t find professional dealers selling fake gold (at least not knowingly), so this is more prevalent with individual sellers listing items on Craigslist, Facebook Marketplace, eBay, etc.
How to avoid: Do not buy gold directly from individuals unless you fully trust them and/or have the equipment to verify the authenticity of an item.
Another “scam” that isn’t technically illegal is businesses and individuals buying gold for far less than it’s worth. This is prevalent with “we buy gold” shops and pawn shops, who typically offer far under market value for gold bullion, coins, and jewelry.
If you’re selling gold bullion like a 1oz gold coin, you should generally be able to get close to spot price for it – perhaps a little lower, around 96-99% of spot value. But anything less than that is likely a scam, or simply a dealer trying to take advantage of you.
How to avoid: Only work with trusted gold dealers who are licensed, insured, and have a good reputation in your community.
Another scam targets sellers on platforms like eBay, Amazon, and OfferUp. Buyers will purchase items from sellers, then attempt to commit various types of fraud in order to scam the seller. Techniques may include reporting that the item never arrived, starting a credit card chargeback, purchasing items with stolen credit cards, or abusing marketplace return policies/customer protection policies.
Each platform is different in how they work to protect both buyers and sellers. If you plan to sell on online platforms, be wary of these scams and always read the fine print of the policies you are agreeing to.
How to avoid: If selling gold online, read all the fine print first. Set a “no return” policy, and always ship with signature confirmation to help avoid scams.
Overall, the broad things to keep in mind to avoid scams include:
