Gold dealers have developed a reputation akin to the stereotypical car salesmen: fast-talkers with a tendency to mislead through omission. Vetting a prospective precious metals broker can be a tedious process. You might find yourself becoming chummy with a gold broker over the course of weeks or months, only to find yourself duped when you’re actually ready to buy.
We’ve recently heard of just such a scenario. An enthusiastic gold investor had been exchanging emails and phone calls with a broker at a well-known, national metals dealer. They communicated so often, the buyer started to think of the broker as a personal friend. The buyer wanted to roll his IRA over into precious metals, and when he was ready to do this, the broker convinced him to also purchase some gold coins. It wasn’t until he received shipment that the buyer discovered he had bought half-ounce gold eagles for $400 over spot! A fast-talking broker had gained his trust and taken him for a ride. This bait-and-switch swindle is the sort of thing Goldline got in trouble for earlier this year.
The lesson? No matter how personable your salesperson is, practice cautious buying:
1. Always be wary of a salesperson trying to sell you something you didn’t come in to buy. In the bait-and-switch scenario described above, the buyer was originally interested in a gold IRA, but was talked into taking physical coins for delivery. Since he felt he was getting a good deal with the IRA, he made the mistake of trusting the salesman about a product he didn’t want or understand.
2. Get the price quoted in writing before purchasing. If they don’t list their prices on their website, a trustworthy precious metals dealer will send you an email with a firm price quote. Remember, the spot price of metals can change quickly, and they’ll likely remind you of this with a disclaimer. So while you will have a limited amount of time to act on specific price, at least you have a record of exactly what you’re buying. This was the mistake in the scenario described above: the buyer trusted the salesman so much he didn’t ask to see a written quote or description of the coins before placing the order.
3. Do some basic research before you buy. It is always a good idea to go into a purchasing situation with at least a basic knowledge of the product you want and the market rate for that product. With a car, this means checking the Kelly Blue Book value. With precious metals, it means checking prices on a site like eBay. While eBay likely won’t have the best prices for precious metals coins – especially for large purchases – it should at least provide a benchmark of the market price of the product you want.
It is smart to be cautious, but don’t let worry prevent you from protecting your savings through precious metals investing. There are gold dealers who recognize the value of a long-term client relationship and will treat you with the corresponding respect. Using the few simple practices we described, you can find a good broker who will help you for years to come.