Gold IRA Scams: How Gold Investors Can Avoid Getting Burned

There will always be people who want to scam others.

This is especially true when it comes to investing in stocks, bonds, real estate, etc.

Finding reputable gold IRA companies and gold bullion dealers is the first thing you need to do when looking for a good investment in gold.

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Because of its popularity among investors, especially during the last few decades, people have become increasingly vulnerable to scams involving precious metals.

If you want to protect yourself from being scammed by unscrupulous people, it's important to know the most common types of fraud and how to spot them.

Furthermore, having the right financial software to track the market and keep an eye out for scams can also help you stay away from falling prey to scams.

Here, I'll discuss some of the most common ways people get scammed when buying precious metals. I'll then give you some advice on how to avoid these pitfalls.

Before we start, if you're interested in finding out all there is to know about the lies that gold IRA dealers lie about (and what to do when they do so), here's a free report that you may find helpful.

Former NFL quarterback Joe Montana made an $8 million dollar profit investing in gold.

Well-Known Gold Scams

A major Chinese bank was caught up in a massive counterfeiting scam centered in Wuhan.

Once a large enough jeweler to be traded on the Nasdaq, Kingold deposited millions of dollars worth of precious metals as collateral with fourteen different banks and borrowed two point eight billion dollars from them to invest in the China real estate bubble.

The issue: A total of 83 tons of gold collateral was reportedly faked.

The scammer was caught when one of his lenders called him up and asked for repayment because he'd missed some payments.

Kingold didn't have enough money – especially since as many as 65 million newly-constructed homes were still sitting empty and weren't generating any rent for investors. So the banks decided to move to sell off their gold collateral.

On inspection, the bank found that most of the bars on deposit were made of gilded silver.

There was no direct harm done to any individuals involved in this case.

But the sheer size of the scam shows just how much capital, time, and resources are devoted to scams.

If 14 major banks were so easily tricked, what chance does an individual retail buyer or investor have?

There is a lot you can do if you want to protect yourself from cybercrime.

You shouldn't just sit back and take things for granted.

Many financial advisors recommend having some exposure to precious metal investments in your retirement plan.

Physical gold, silver, platinum, and palladium represent a way to diversify your investments against stock market risks, inflation, exchange rate fluctuations, and other dangers.

To protect yourself from gold scams, precious metal scams, and fake jewelry, you need to understand the different ways they approach their schemes.

China is one of the world’s largest producers of gold. It also has a large number of counterfeiting and scamming activities.

Non-Delivery Scams/Ponzi Schemes

A common type of scam involves taking people’s money instead of actually making investments.

One such case involved Northwest Territorial Mints' owners taking in millions in order to ship out their products.

They lied about their delivery times while using the money to expand their fraud into other states and for their own personal expenses.

They used the money they got from new orders to pay their old clients back.

According to the U.S. Attorney’s Office for the Northern District of Illinois, Northwestern Mint defraud­ed over 2,500 customers between 2010 and 2014, resulting in a total loss of more than $25 mil­lion and 14 felony convictions.

Hannes Tulving, who founded the company, was an expert in the field of precious metals.

Tulving's strategy was to start by not delivering the gold and precious metal promised to customers.

Instead, Tulving funded his lifestyle by using his own money, which allowed him to continue running the con for as long as he wanted.

When people asked him why their orders hadn't arrived, he would make various explanations and either deliver the metal or return the money only when they threatened to sue him.

When the Justice Department became aware of the scam, Tulving had already taken at least $15 million from hundreds of different victims.

Lessons Learned

Make noise early.

Yes, there are sometimes delays when ordering from legitimate dealers.

If you think you're being taken advantage of, it's best to ask for a refund now instead of waiting until the end, when you'll be one of the last ones left holding the bag.

‘Rare Coin' Valuation Scams

Unscrupulous coin dealers may trick unsuspecting buyers into buying rare, proof, uncirclu­lated or collector’s items at extremely inflated prices.

Sometimes the gold dealer gives a lower-quality version of the same coin.

Ordinary consumers aren't able to tell the difference between good and bad products.

A woman who was 70 years old at the time received an unexpected inheritance of 10,000 dollars when she learned that she had inherited some rare gold coins.

She accepted his offer and gave him the money. But when she went back to get the coins, they were worth less than before. He offered her $8,500 for them now.

She sensed something was wrong and refused to give him his change.

The bank returned her coins after she threatened legal action.

At last, the dealer sent her another set of new, shiny, and beautiful gold bars.

After having her coins appraised, she discovered they were worth only $1.1K.

She was never able to get back her lost coins or her cash.

Bullion coins and bars are explicitly made for their precious metal content. They sell at very close to their spot prices.

Rare coins, proof sets, and collector’s items should be avoided by non-experts.

By purchasing ordinary bullion coins and paying very close to spot prices for precious metal content, investors and collectors minimize opportunities for fraudsters to take advantage of their ignorance by offering them inferior quality bullion at inflated prices.

Gold IRA Scams

If you're looking to invest in gold for your precious metal IRA, then you should consider buying physical gold bullion coins.

If that happens, it would be wise to deal with an IRA company that specializes in managing IRAs and other retirement account investments regularly.

There are several reasons why this happens.

First, Congress and IRS have put significant limitations on the types and amounts of gold and precious metals that can be held in IRAs.You cannot purchase any gemstones, jewelry, or collectible items except certain kinds of bullion coin investments for your IRA. You must own gold, silver, and/or palladium coins, bars, or round (bullion) form.To qualify for precious metal IRAs, investments must be from a national mint or gold refinery that is approved by one of these organizations. Proof coin sets must be in good, original mint packaging, and they must also contain a certificate of authenticity. Small bullion bars must be made according to exact weights. Non-proof coins must be free from any damage and in perfect mint state.

You might be approached by some unscrupulous or uneducated people who claim to represent an IRA provider and offer you numismatic collectible coins, silver bullion, or gold coins for your IRA. These individuals may not be authorized to provide these services.

These salespeople are only interested in making a profit.

If you attempt to keep numismatic, collectible, or unauthorized coins within an IRA, you're likely to incur a penalty.

If that happens, the IRS could disallow the whole IRA and require you to withdraw the full amount from your account.

This could result in significant income tax liabilities and penalties.

The Home Storage Gold IRA Scam

You must keep physical gold, precious metals, or jewelry held inside an IRA or other retirement accounts in possession of an IRS‑authorized custodial institution.

You cannot personally own your gold IRA assets.

They cannot be stored at home or even in a bank vault under your control.

Some financial advisors have misled clients into believing they could put their money into an investment that would give them better returns than stocks by calling it a “home storage” account.

You can store these precious metals at home, but they're not guaranteed to be safe there.

It's now crystal clear: Trying to store precious metals in your home is illegal.

If you want to keep all your gold bullions and other precious metal assets in your own name, you can do so by storing them in your own name rather than in a retirement fund.

If you wish to keep the physical gold or other valuable metal in your self-directed account, you must never take possession of it.

You don't want to hold onto your precious metal IRA investments for too long because they may lose value. So instead, you transfer them into an account at a third-party depo­titory facility where they're safe but not liquid.

Affiliate Scams

Criminals exploit affiliations to build trust and then exploit their marks.

Scammers often take advantage of other people within their community.

People usually trust people similar to themselves; they're, therefore, particularly susceptible to scams and frauds.

For instance, Larry Bates and his family promoted their precious metal investment company by using Christian and Jewish TV and radio programs.

He held conferences and sold seminars across the United States, promoting fear of an impending economic crash and urging people to buy gold.

He was a good salesperson: Between 2007 and 2013, he earned more than $87 million from selling products and services to his clients.

He wasn't a good steward of the funds they gave him. According to the Justice Department, he used the funds for his own personal expenses and investments.

He spent $4 million creating an international radio network to further promote his family’s schemes, and he bought a 10,000-square-foot mansion on a 300-acre property in Tennessee.

By 2009, the firm had already defrauded investors out of $26 million in unfulfilled orders for bullion products.

They were eventually sentenced to a total of 627 years in federal prison.

Affiliate schemes aren't restricted to any particular religion. According to the FTC, black people and Latinos are also susceptible to being taken advantage of by criminals looking to exploit their trust in fellow minority groups.


There are numerous large-scale, sophisticated counterfeiting rings operating with the help of corrupt government officials in both China and Nigeria.

However, counterfeiting isn't limited to just these regions: Counterfeiters can operate anywhere in the world.

A 34-year-old man from Morristown, New Jersey, was found guilty of smuggling fake silver Morgan dollars into the United States.

He also admitted to stealing from his employer by selling them fake jewelry.

He'd often dress up as an ATF agent when meeting with potential victims to trick them into thinking they were dealing with legitimate law enforcement.

Others who are well-funded use fake gold for their counterfeits. Only the markings are fakes.

The scheme allows criminals who want to evade sanctions to transfer large sums of cash.

Many fake gold coins and jewelry items come from China. They're often made of cheap metals like tin, copper, or even aluminum. These counterfeits are then coated with a thin layer of gold.

Many of these coins are sold online, not in physical stores.

Gold dealers who are experienced at spotting fake coins can usually tell them apart from real ones just by looking at them.

Even if that method fails, savvy coin collectors regularly weigh their coins using scales and measure them with calipers, which is extremely difficult for counterfeiters to replicate.

Criminally selling fake coins online is easy because there's no way to verify if they're real or not.

And the picture from the site may not show up as the actual item you get.

When most people buy fake coins online, they don't know they've been fooled for years.

They find out it's fake from their neighbor who has some. Buy only from established and reputable dealers. Look at online customer feedback for your business.If you want to be able to tell whether something is real or fake, invest in a scale and caliper, which should quickly identify any fakery. If you're buying anything at a discount, be very suspicious of it. To ensure that you're buying physical gold from an NFA-regulated dealer, check whether the company is properly licensed by the National Futures Association. Buy a good quality digital camera, a good quality digital SLR, and a good quality tripod. Also, know exactly what each item weighs and its dimensions. For example, One-ounces 24K pure silver coins, such as American Eagle coins, should weigh exactly 31.1 grams. (For comparison, one gram of pure silver weighs approximately 1/1000th of anA kilo (2 pounds) of these coins weigh approximately 2 kg (4.5 lbs).

Gold Scam Warning Signs

Beware of anyone who tries to tell you that buying physical precious metals is not risky. It is. Buying physical precious metals involves risk. You could lose your entire investment if the metal price drops. There is no guarantee in any type of investment. You should only invest what you can afford to lose.

Based on an article from

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