Gold IRA Scams

Investing in gold has so many benefits. Gold is regarded as a secure investment since it provides an inflation hedge. Its price consistency is one of its benefits. While gold prices will never sink to zero, selling your gold on the market is pretty straightforward. The number of gold-related scams is rising due to the numerous advantages of investing in gold. To begin investing in gold, purchase gold coins, bullion, or bars from a reliable dealer. There have been a lot of gold investment scams if we do our investigation. Investing usually involves some level of risk. Risks might be significant or low, but that is the only issue. If you believe in “zero risk, high return” investments, it is simple to become involved in an investment fraud. If you don’t do your homework, you might be a victim of one of the many gold investment frauds.

Silver and gold coins and bullion are being marketed to unsuspecting investors because they are safer investments than the stock market. Many gold “investments” lose more than two-thirds of their value when they are made due to inflated costs and excessive fees. It would take years or decades of extraordinarily high gold prices to break even. In some instances, fraudsters even fabricate information regarding the gold’s quality to lower its worth. Your hard-earned money might be in danger. Unfortunately, the law is on the side of those scammed by one of these complex schemes, and you may be entitled to the return of your entire investment and fines and interest. In this post, we will address everything related to gold IRA scams.

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Gold IRA Scams

Gold and silver IRA scams represent illegal actions from various individuals and companies that use ads to hook potential clients, trick them and make money by offering safe and secure precious metal investing. However, in the market, trustworthy companies provide excellent conditions and safe and secure gold and silver metal investing, such as Augusta Precious metals.

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In our previous articles, we wrote about forex scams and forex pyramid schemes. Additionally, we offered solutions for forex scams. However, in this article, we will write about investing scams.

investment scam hook

Gold IRA investing scams are:

  • Bait & Switch

It’s possible to fall victim to this fraud by clicking on a link in an advertisement or email that promises a great deal. They try to get you to buy something else once you’re on the phone. Offering a deal that’s too good serves as the “bait.” High-pressure “limited time only” sales methods are commonly used with the “switch.” Due diligence requirements are a way to keep you from completing your research on an investment.

These people want you to buy rare and valuable coins, such as pre-1933 coins or numismatics. Furthermore, the investment they’re trying to offer you may not be suitable for an Individual Retirement Account (IRA). Then there’s the fact that they aren’t allowed in IRAs in the first place.

  • Fake Coins

Recently, a new twist on the “bait and switch” fraud has been perpetrated in Nanuet, New York. Counterfeit coins were used in this case. Unbelievably cheap Canadian Maple Leaf gold coins were advertised on Craigslist, and a guy responded to the listing. A meeting was set up at an adjacent coin store between the fraudster and the victim. There was no doubt that the coins for sale were authentic. When the victim arrived at his car, the fraudster was there, and he offered $19,000 for coins. However, the con artist began to show nervousness and returned the victim’s currency purse, which he then tucked inside his back pocket.

Once again, the fraudster slipped the pouch into his back pocket and completed the transaction. When the victim gave over $19,000 to the fraudster, the scammer returned with a new bag of coins, which the victim noticed. Fakes. The con artist had already vanished when the victim realized he’d been duped. According to Coin week, Chinese Pandas, St. Gardens, and $20 Liberty Head coins are among the most frequently counterfeited coins. Recognize how rare it is for vendors to go lower than the current market price. You should only acquire gold and precious metals from reliable merchants if you’re new to the market. Invest in firms that have a financial incentive to succeed. This is not a home run but a $19,000 waste of money.

  • Damaged & Shaved Coins, Rounds, and Bars

Scammers have been known to remove a few metal grains from pre-existing coins or bars to create new ones. Gold bars can be hollowed down and filled with lead. It weighs nearly as much as the gold itself. If you’re dealing with people you don’t know, learn how to assay. Acquaint yourself with the proper tools for verifying any gold or bullion you’d like to purchase in person. They’re getting better and better at scams. The weight of some of the better fakes is even accurate. For example, if you’re testing on coins, you may need to use calipers and other methods in conjunction, such as evaluating specific gravity.

  • Selling Ineligible IRA Gold

You can not make purchases for an individual retirement account (IRA) the same way as those made for your collection. Because of federal regulations, IRAs cannot possess any jewelry. You can only purchase American Eagle coins or bullion in the form of standardized coins, rounds, or bars of a known and acceptable purity for Individual Retirement Accounts. Gold coins, rounds, and bars must be at least 0.995 percent pure to be accepted in an IRA. None of the good coins or bars are eligible for consideration.

All your attention should be focused on the weight, discount, and premium from spot pricing regarding retirement funds. Don’t buy coins for the IRA from anybody who claims they’re rare or valuable because of their “collectors’ worth.” “Exclusive minting” or “rare coins” may be ideal for your private collection. However, it would help if you didn’t buy them with your IRA funds. The South African Krugerrand, for example, is not an IRA-eligible investment.

  • Home Storage IRAs in exchange for gold IRAs

It would be best to avoid a “home storage gold IRA” or something similar at all costs. Gold and other precious metals are not permitted to be kept at home under IRA rules. The metal must be held by a person authorized to have it. A typical sales tactic is to get customers to form an LLC so that the LLC may hold title to the gold in their IRA. However, it does not meet the requirements of the law. Your IRA might be disallowed if the IRS rules you seek to avoid under IRC Section 408 prohibit transaction restrictions.

Investors can buy and store gold in their homes, but the IRS forbids them from doing so with gold acquired with an IRA. You can purchase certain precious metals using a self-directed IRA, as defined by IRS section 408 (m). In addition, the statute states that these objects must be “physically held by a trustee.”

According to IRA laws, gold and other metals are “collectibles,” and storing them in IRAs is discouraged. A bank and an IRS-approved nonbank trustee can physically own some highly refined gold, an exemption to the rule. The Industry Council for Tangible Assets, an industry watchdog, produced a white paper in 2018 to prove that home storage is not permitted when using an IRA to acquire gold. This FAQ page from the IRS provides further information on the subject.

  • False Grade Coins

The rarity and condition of the most regularly sold coins determine their price. NGC and PCGS are two third-party grading service providers. Some dealers inflate the ratings that these independent businesses genuinely award to charge you more while preying on your gullibility. Some even go to fabricate grading paperwork or exchange coins, offering a lower-graded coin with a higher-grade certification. When purchasing gold for your IRA, you should be buying bullion. Not coin collecting. The price of bullion is based on its metal content. The price of bullion should have no bearing on the quality of grading. Dealers who try to upsell bullion by relying on third-party reviews should be avoided.

  • Leveraged Investment Scams

Specific dealers try to persuade you to take out loans to acquire gold. They may begin by claiming that gold prices are on the verge of soaring. They claim that if you merely put down a down payment, you could control 3, 4, or even 5 times that amount of gold. Leveraging gold in this way has specific valid uses. Leverage is used by institutions regularly. On the other hand, Legitimate apps do not rely on randomly selecting seniors from a database. This is standard practice when a broker gets a buyer to take out a loan with no payback other than storage cost.

By deducting payments from your gold’s value, brokers hope you’ll forget about their agreement. You’ll receive an “equity call” from the broker whenever your equity exceeds 10% of the purchase price + fees. It is comparable to a stock broker’s margin call. The dealer will sell your gold if you are unable to make payment. You’re responsible for the difference if the sale doesn’t pay off your loan. A federal court in North Lindenhurst, New York, ruled in 2015 that a consumer was duped into buying counterfeit, damaged, or worthless coins by PCA Collectibles and PCI Coin Grading Company, headquartered in North Lindhurst. These fake coins were sold for hundreds of millions of dollars using the bait-and-switch approach and an incorrect grade to fool naive customers.

  • Self-Directed IRA Frauds

Gold and precious metal scams can also affect self-directed IRAs; they aren’t limited to gold and precious metals. It is common for self-directed IRAs to include gold and other precious metals. These retirement accounts are not managed by typical Wall Street financial organizations but rather by the owners, who have greater control over their assets.

These classic scam warning flags are on the lookout for self-directed IRA participants. Any assertion that an investment in gold or precious metals is “risk-free.” Even money in the bank is subject to danger. “Guaranteed returns” or “guaranteed earnings” statements are unfounded. High rewards and little risk are promised.

  • IRA Ponzi Schemes

As recently as 2010, federal authorities cracked down on an investment scam centered in Florida that deceived investors with more than $300 million. Shell firms owned or managed by Brost and Sorenson were being purchased by investors without their knowledge. According to the SEC, the two Canadian promoters claimed that their investments were “completely collateralized by gold” and offered investors annual returns ranging from 18 to 36 percent. As far afield as Asia, Europe, and South America, investors’ money was routinely moved through various bank accounts.

Investors received “interest payments” from the money, which was then invested in a handful of failed enterprises, allowing Brost, Sorenson, and others to benefit financially. The promoters pocketed millions of dollars and supported a luxury lifestyle for themselves rather than investing the money on behalf of their investors. The bait was perfect in this instance. If you’re ready to lie to this degree about any investment, a criminal might put together a comparable deception.

  • False Endorsement Claims

Neither the IRS nor any other government agency will guarantee investments in self-directed IRAs. In some instances, salesmen say that the IRS, Federal Reserve, FTC, and other well-known organizations have approved or endorsed a particular investment. Scams like this are a given: Investments are not screened by the IRS. You must conduct your research and due diligence.

Even if it’s a hassle, reading the small print is a must before signing any contract, even to establish a gold IRA. After signing a transaction, you may discover that it doesn’t safeguard you or the money adequately. Once again, if you’re not sure what you’re signing is valid, you should see a skilled attorney beforehand.

  • IRA  Rollovers

Fraudsters may target retirees who are disappointed with their current retirement portfolio performance. Rollover fraudsters prey on the elderly during market downturns because they are more susceptible. With a rollover scam, agents can persuade clients to transfer their safe assets to more risky ones without fully revealing the dangers. To induce you to buy annuities with high fees and unpleasant surrender costs, businesses could try to convince you to pay a hefty up-front fee or surrender charge.

Your rollover money might not be a good fit for gold as an investment. This decision can only be made jointly by you and the financial advisors. On the other hand, regulators are wary of salespeople who try to persuade the elderly to switch from safer investments like bonds and certificates of deposit to riskier ones like gold. Also, make sure that anybody attempting to sell or acquire stocks on your behalf is duly licensed.

  • Phony accounts

Fraudsters get victims to write extensive checks before vanishing with the money. We only deal with well-known and well-respected companies. Ensure the salesman is licensed, and never write a check to the salesman, either personally or in cash, for the transaction. You should never provide money to someone selling you a gold IRA to start an account on your behalf.

You wouldn’t expect a reputable gold dealer to cold-call you to drum up business. They’re generally not authentic if they phone you out of the blue and try to convince you to sign up for an IRA in gold. Respond to interest, not solicit business from people you don’t know. In addition, if you are a widow, do not allow a gold salesperson to visit your home. There’s no guarantee that they aren’t out to get you. A gold IRA custodian should be able to do business as usual at a distance.


Alternative assets, such as gold IRAs, are not traded on a public market or need specialized knowledge to evaluate. Even though gold has a high return potential, it’s easy to get carried away by its glitz. A sudden drop in the price of gold is possible. When the price of gold is rising, you must also consider whether you will be buying at or near the market’s peak if you do so. Waiting may be the best option.

We hope you have understood everything regarding Gold IRA Scams. Whether you’re thinking about a gold IRA, talk to a financial counselor to see if it’s a good fit for your long-term financial plans. You should never put all of your eggs in one basket in general. No more than one-third of retirement savings should be invested in gold. If you have more than 10% to 15% of your portfolio invested in gold, either in the paper form or the physical asset form, Gottlieb suggests limiting yourself to 10% to 15% of your whole portfolio.

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Igor has been a trader since 2007. Currently, Igor works for several prop trading companies. He is an expert in financial niche, long-term trading, and weekly technical levels. The primary field of Igor's research is the application of machine learning in algorithmic trading. Education: Computer Engineering and Ph.D. in machine learning. Igor regularly publishes trading-related videos on the Fxigor Youtube channel. To contact Igor write on:

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