4 Tips To Avoid Gold Scams

What is the worst thing that can happen to a gold investor? Consider the following situation. An investor decides to make a gold investment, after having overcome the mainstream hurdle (i.e., neglecting hundreds of arguments from mainstream media and economists why to avoid gold, ranging from gold being a “barbarous relic” to gold will sell off again because of the economic recovery). The investor, having chosen for gold because of its fundamental values as a financial and monetary asset, then analyzes the different gold investments that exist on the market. He choses one of them and feels safe … until he discovers the investment being a gold scam. The irony is that he achieves exactly the opposite as was intended, being a hedge against counterparty risk.

It is critical not to fall in one of the gold scam traps. Peter Schiff, founder of Euro Pacific Precious Metals, has released a free anti gold scam report: Classic Gold Scams and How to Avoid Getting Ripped Off. He observes that the majority of investors are currently playing the US markets and shunning gold, just like they did in 2007 and 2008, right before the financial collapse. For gold investors who are serious about investing safely, we has updated and re-released the Classic Gold Scams report. In it, he provides four tips.

Tip 1: Watch out for the “Bait-and-Switch” tactic

The majority of precious metals scams revolve around a core tactic: the bait-and-switch.

First, the company lures you in with the promise of a good deal on a product you’re genuinely interested in buying. Once they have you on the line, a fast-talking broker will try to convince you that a different product is a better match for your needs. This new product into which they’ve “switched” you is almost always a rip-off.

In the precious metals world, this usually involves an over-priced numismatic or “collectible” coin. The salesman will explain that the unique qualities of this coin make it even more valuable than its metal content. “Why just buy gold, when you could buy a piece of history?” Or so the argument goes.

The entire bait-and-switch technique is designed to confuse you. The dealer preys on your insecurities by making you feel like you don’t have enough knowledge to make a choice for yourself.

Tip 2: Gold is gold, keep it simple

Gold scammers don’t want you to know this simple truth: gold is gold is gold.

The majority of savvy investors are buying gold and silver as a hedge against inflation and the collapse of the US dollar. It doesn’t matter what form our gold takes, as long as it is pure, easily recognized, and authentic.

Sure, there may be rare, historic coins for which well-educated collectors will pay good money. But you need a firm understanding of these coins’ unique traits to correctly assess their value. Without this understanding, it is virtually impossible to select the proper coins to add to your collection or get a fair price when it is time to sell. For most of us, such coins are way beyond our expertise and carry far too much risk.

All we need to protect our wealth is pure gold bullion. Fortunately, the market for bullion is very simple and easy to understand. A complete list of common gold products is included in the Classic Gold Scams report.

That’s the only secret to beating the bait-and-switch scammers: know exactly which product you’re interested in buying ahead of time – and stick to your guns.

Tip 3: Do not believe the price protection racket

In this scam, the dealer guarantees that if the price of gold falls within a certain timeframe, the investor can buy at the lower price. Usually the price protection lasts for about a week after placing your order.

On the surface, price protection sounds great. Who wouldn’t want to be able to avoid short-term market fluctuations when buying precious metals?

Of course, there’s a catch. These price protection programs rarely apply to the common bullion coins that carry the lowest premiums. Invariably, these schemes are only applied to overpriced numismatics or collectors’ edition coins. That’s the only way dealers can afford to offer such a sweet deal. The margins are already huge on collectors’ coins, so allowing buyers to adjust their purchase price has a negligible effect on the dealer’s bottom line.

What’s more, the price protection program often includes an additional fee on top of the purchase price. This builds in an additional cushion to make sure the dealer always comes out ahead.

At the end of the day, price protection is just a scare tactic aimed at investors too concerned with short-term volatility. This fear actually reveals that they’re buying gold for all the wrong reasons.

Tip 4: Buy gold because it is gold

The right reason for most investors to buy gold is as a long-term hedge against inflation and financial instability.

Gold is humanity’s oldest form of money and wealth preservation. A hundred years ago, a gold coin could buy you a custom tailored suit. The same is true today. The purchasing power of gold remains relatively constant over the long-term.

On the other hand, fiat money has historically always failed. The US dollar has not been backed by gold since 1971, which means it has lasted more than four decades as a purely fiat currency. The history of great empires suggests that its time is almost up.

Each of the Federal Reserve’s announcements of another program of money-printing brings that crash – which I have termed the “Real Crash” – closer to fruition.

Remember, if the US economy were really recovering, the Fed’s manipulative policies would not be necessary. Also, gold wouldn’t be seeing the dramatic recovery it has thus far enjoyed in 2014. It’s up 13% since its December lows!

It is recommended to read the recently updated Classic Gold Scams report, edited by Peter Schiff. It avoids to learn the gold scam lessons the hard way, or to let fear of the unknown keep you from safeguarding your family’s savings for future generations.

If you would like more information about Euro Pacific Precious Metals, click here. For the fastest service, call 1-888-GOLD-160.

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