What is a gold scam? Well, for the past few years, there has been an explosion of attention paid to investing in gold because gold prices are skyrocketing. The price of gold is certainly going up, and that also means that the risk of a gold scam is increasing.
Gold the hottest new “old” commodity
For some time, there has been a lot of mention in financial news wires about gold being the best investment. The value of the soft yellow metal has been trending upward for the last few years, and many see it as one of the few investments one can make that are more stable than the U.S. dollar. It’s certainly true that the value is up. According to the St. Petersburg Times, on Tampabay.com, gold is currently up almost every year. According to Reuters, gold closed in New York markets at $1,632.30 per ounce in 2011, the third record-high for gold in five days, gaining 9 percent in July alone. However, advice on any method to “get rich quick,” including investing in gold, should be taken with a grain of salt.
Big money attracts gold scam artists
As with any other hot commodity, gold being a financial hot topic means that scam artists are getting into the gold business. According to USA Today, the Better Business Bureau received 581 complaints concerning gold, platinum and silver dealers, and at the time of this writing, 408 for this year. According to the Huffington Post, The Commodities Futures Trading Commission has brought three different suits against gold brokers since March of this year. In Florida, almost 50 different commodity trading businesses opened in a three-year span in two counties alone. One company, American Precious Metals, was accused by the Federal Trade Commission of defrauding consumers of $37 million in one suit. One couple invested $100,000 in that company and lost $60,000 in a matter of months. According to CanadianBusiness.com, gold and silver scams are starting to proliferate in the Great White North as well.
Potential when done right
Cash4Gold, the company that has been putting a lot of ads on television, received 350 individual BBB complaints since 2008, according to USA Today, and that is the gold selling company that was able to finance a Super Bowl ad. Gold and other precious metals can be a good investment if done correctly, but there are a few hitches. The best way to get into gold investing is to buy coins, according to CBS. Coins should never be much more than the spot price, or the current price at any given moment, so dealers charging more than 5 percent above the market rate should be avoided. To find a reputable dealer, CNBC recommends looking at the Better Business Bureau or one of the trade organizations for numismatic dealers, or coin-sellers. Investors can also buy coins from the U.S. Mint, which has been in the coin business for some time.