There’s no doubt about it, some Gold IRA sellers have been guilty of fraudulent practices and have caused grief for duped customers, as well as for the vast majority of gold broker/dealers who are honest.
Now, let’s stipulate at the outset that most precious metals dealers are on the up-and-up. Unfortunately, all it takes is a few rotten apples to give the whole industry a “gold IRA scams” black eye.
Gold is a good investment, and there is no reason for any dishonesty. Yet it happens, and you must be aware of the risks. Let’s start with an infamous case history.
House of Shame
A quick google search will find that a well known precious metals retailer once used high-pressure tactics to push its Gold IRAs. This was no fly-by-night company. You could find them constantly on the airwaves of several familiar right-wing radio hosts.
The dealer was the subject of a congressional hearing in 2010 in which a customer described how a salesperson pressured him into converting his IRA into a Gold IRA and then using the $140,000 proceeds to buy rare proof coins.
That is a no-no:
The only coins you should put into a Gold IRA are bullion coins, because you are buying the coins for their gold content, not their rarity. The company overcharged the hapless customer, causing him to lose $60,000 overnight.
Then, in 2012, the company settled a lawsuit, refunding millions to former customers and agreeing to change its sales practices. It was forced to reveal its price markups in recorded conversations with its customers, and renounced the use of bait-and-switch tactics.
We are glad it cleaned up its act - but you still won’t find us recommending them to our readers.
The Anatomy of Gold IRA Scams
A Gold IRA must be a self-directed account, meaning you can’t depend on a dispassionate custodian to evaluate your investments. In other words, you’re on your own. Your only defense is to use a well-respected gold dealer with a history of positive customer reviews from verified review sites, such as TrustLink, or the Business Consumer Alliance, as well as independent third party websites.
This video outlines everything you need to know before opening a gold or silver IRA. In addition to the information outlined in the guide, here are some tipoffs that you might be getting into murky waters when setting up a Gold IRA:
Beware the glib salesperson who guarantees that gold’s price will only go higher, and urges you to rush into buying right now or face missing out on a once-in-a-lifetime opportunity.
Some scammers sell phony Gold IRAs. They convince you to transfer your money, and then steal it. You find that you have no gold and that the seller used a made-up identity. By the time you figure out what’s happened, the thieves have moved on to a different state with their gold IRA scams to troll for new victims.
As recent as early 2023, a gold company has made the news for allegedly stealing customer money. Investors claim the funds just never made it to their gold IRA and no gold or silver bullion was purchased or sent to their depository. At the time of this writing, the CEO of this gold company is nowhere to be found...
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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 stored properly at an insured depository.
Some new gold IRA companies 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.
Selling Collectable Coins:
The IRS allows precious metal IRAs for you to buy gold as a commodity, not as a collectible. Don’t fall for sales pitches that try to get you to buy “rare coins,” because these don’t belong in a Gold IRA.
Furthermore, unless you are a numismatic expert, the chances are good that this kind of unscrupulous salesperson is overcharging you for the merchandise being sold. The legitimate market for rare coins is fun and exciting, and we certainly don’t discourage you from getting into it after thoroughly educating yourself. Just remember that Gold and silver IRAs are not set up for this purpose.
You might find this hard to believe, but some gold dealers actually shave a few grains of gold off of each coin they sell you. This adds up, to the dealers benefit and at your expense. Stick to well-respected and vetted retailers, not some fly-by-night clown who’s looking for a quick buck.
Maybe it feels like a burden, but you have to read all the fine print before you sign any contract, including one to set up a Gold IRA. You might think you are getting into a standard deal, only to find out later that the contract doesn’t protect you or your money. Once again, if you don’t feel confident that you know what you’re signing, first work with a qualified attorney to ensure that the contract is legitimate.
If a salesperson calls out of the blue trying to get you to commit to a Gold IRA, they are probably not legitimate. A respected gold retailer wouldn’t be cold-calling you to drum up interest. A legitimate gold dealer will respond to your interest, not try to gin up business from total strangers. Also, don’t let a gold salesperson come to your house, especially if you are an elderly widow. For all you know, they might be thieves looking to rob you, or worse. You should be able to conduct proper business with a Gold IRA custodian at arm’s length.
Check It Out
When researching a Gold IRA company, look for third-party accreditation. For example, a legitimate precious metals dealer with good ratings from one or more of the following are likely not be involved in any gold IRA scams:
It’s also reassuring when a gold retailer has been in business for a good number of years. Some of the most respected gold dealers have been run as family businesses for 40 years or more. The business should have a verifiable address, not some mysterious P.O box.
Also, know the current price of gold, and beware of attempts to overcharge you for bullion coins. Don’t buy coins minted in countries you never heard of. When in doubt, stick to good-old American Eagles and other coins from the U.S. Mint.
For an in depth report on how to invest in gold and silver (the right way), request your free gold IRA guide here.
Google is your friend.
Research a few companies. One or two complaints out of thousands of customers is expected...
Even the highest rated firms are going to have one or two complaints if you dig deep enough, but if you're finding patterns of negative reviews online, that's a problem. With a little bit of research now, you can open your precious metals IRA and invest in confidence.
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