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May 9, 2023

Common Gold IRA Scams to Avoid! Beware of The Red Flags

Are you planning to invest in gold? Before you do, it’s essential to know the different types of gold investment scams that are prevalent today. Gold investments have grown in popularity over the years, and with the rise in interest, so have the number of scams. In this article, we will discuss some of the most common gold IRA scams that you should avoid.

What are Gold IRA Scams?

An Individual Retirement Account (IRA) that lets you trade in gold and other precious metals is called a Gold IRA. But there are some risks that come with this choice. Getting scammed is one of the most dangerous things that can happen.

Kinds of Gold and Precious Metal Scams:

Counterfeit Gold IRA Fraud

Fraud at Gold

One of the most common types of gold investment scams is counterfeit gold IRA fraud. When you open a gold investment retirement savings account, you will not have immediate physical access to the commodity. This is because the IRS requires gold investments to be held in a secure depository. With this in mind, the possibility of being duped into investing in counterfeit gold should be considered. Therefore, it is good to research and choose a reputable company and become knowledgeable about gold and precious metal IRAs scams.

The “Bait-and-Switch” Scheme

In the most common form of this scam, you might reply to an ad or email that offers you a good deal. When you call, the salesperson will try to talk you into getting something else. The "bait" is a deal that seems too good to be true. The "switch" is often followed by high-pressure sales tactics like "limited time only". They are made so that you can't do your own research on the purchase. Also, the investments they want to sell you are often not good for an IRA. They try to steer you toward a rare collecting coin, a coin from before 1933, or a numismatic item that sells for a lot more than the spot price. And you can't even put them in an IRA.

Damaged or Shaved Coins, Rounds, and Bars

gold coin

Some scammers have taken a few grains of metal from coins or bars that are already in circulation. Criminals have even drilled holes in gold bars and filled them with lead, which is almost the same weight. If you do private business with people you don't know, you should learn how to test. Learn how to use a scale and calipers to check the weight and thickness of any gold or metal you want to buy in person. Remember: Scammers are getting better and better. Some of the better copies even weigh the right amount. So, if you want to test coins, bullion, or other forms on your own, you might need to use more than one way, like using calipers to measure the thickness of a coin or bar or checking its specific gravity.

Selling IRA-Ineligible Gold

You can buy gold and other valuable metals in any way you want for your own collection, but it's a different story when it comes to your IRA. Federal law says that IRAs can't have any kind of metal. For IRAs, you can only buy American Eagle coins or gold in standard coins, rounds, or bars whose purity is known and good enough. By rule, a gold coin, round, or bar that is put into an IRA must be at least 0.995% pure. Not every famous coin or bar can be used. For example, the South African Krugerrand is not eligible for IRAs, but you can still choose from a lot of other choices that are: 

  • America the Beautiful (ATB) coins
  • American Eagles
  • American Gold Buffalos
  • Australian Kangaroos/Nuggets
  • Austrian Philharmonics

Home Storage Gold IRAs

You also must be aware that one of the most common gold IRA scams is the "home storage gold IRA." In this scam, a salesperson will try to convince you to keep your gold at home or in a private storage facility instead of with an authorized custodian.

It's important to know that IRS rules say that gold and other valuable metals can't be kept at home in an IRA. An approved custodian must hold any precious metals in an IRA. Some sellers may tell you to start an LLC and give the gold in your IRA to the LLC. But the IRS is likely to say that you are trying to get around the rules in IRC Section 408 that say you can't do that, and they could take away your whole IRA. Avoid this scam by putting your gold in the hands of a trusted guardian.

False Grading

Fake gold

Fake gold

Another type of scam is giving false grading. Most coins are rated for their rarity and condition by third-party firms such as NGC and PCGS. Some dealers falsify this information and inflate the grades assigned by independent grading firms. They rely on your ignorance to charge a premium price. Some may even create fake grading documents or switch coins, selling a lower-graded coin with a high-grade certification.

If you are buying gold for your IRA or other retirement account, you should be buying bullion, not numismatics. Bullion is sold for its weight in metal, and grading should have little to do with the price of bullion. Beware of dealers trying to upsell bullion based on independent ratings.

Leveraged Investment Scams

Leveraged investment scams involve dealers convincing you to borrow money to buy gold. They may lead with breathless speculation that gold prices are about to explode. If you make a down payment, you can control 3, 4 or 5 times that amount in gold. Institutions use leverage all the time, but legitimate applications don’t involve calling senior citizens off a list.

In many cases, the broker convinces the buyer to borrow money, with no repayment due, other than storage costs. Instead, the broker will subtract payments from your equity in the gold, hoping you forget about the arrangement. Once your equity falls below a certain threshold, the broker then issues an “equity call,” similar to a stockbroker’s margin call. If you don’t come up with the cash, the dealer sells your gold. If the sale doesn’t cover your debt, you’re liable for the difference.

To avoid this scam, don't let dealers convince you to borrow money to buy gold. Only invest in gold that you can afford to buy with cash.

Self-Directed IRA Scams

Gold and precious metal IRAs are usually a subset of self-directed IRAs, which allow for more direct control on the part of the owner. However, some scams are not specific to gold and precious metals but are pertinent to self-directed IRAs in general.

Self-directed IRA investors should be on the alert for any of these common scam warning signs:

  1. 1

    Any claim that any gold or precious metal investment is “risk-free.” Even cash in the bank carries a level of risk.

  2. 2
    Promises of “high returns” and “low risk.”
  3. 3
    Any claims of “guaranteed returns” or “guaranteed profits.”
  4. 4

    High-pressure or bullying sales tactics.

Ponzi Schemes

One of the most infamous Gold IRA scams is the Ponzi scheme. This type of scam involves fraudsters promising high returns on your investment, usually by investing in gold mining stocks or other gold-related ventures. They may claim that your investment is "fully collateralized by gold" or make other bold promises to entice you to invest.

In reality, however, these promoters are usually just pocketing your money and using it to fund their own lavish lifestyles. They may transfer the funds multiple times through various bank accounts, making it difficult to trace where your money has gone.

The best way to avoid falling for a Ponzi scheme is to do your due diligence. Research any company or investment opportunity thoroughly before handing over your hard-earned money. Look for red flags such as promises of guaranteed returns or claims that the investment is fully backed by gold.

False Endorsement Claims

Some gold IRA scammers may claim that a certain investment carries special approval or endorsement from the IRS, Federal Reserve, Federal Trade Commission, or other recognizable organizations. These claims are usually false and should be taken with a grain of salt.

The IRS does not screen investments or provide guarantees on self-directed IRA investments, nor do any other government organizations. Banks are not in this business, either. It's essential to do your own due diligence and research before making any investment decisions.

Be wary of any investment opportunities that claim to have special endorsements or approvals from recognizable organizations. It's important to verify the legitimacy of the claims before investing your money.

Unsuitable Rollovers

Retirees who are dissatisfied with their current retirement portfolios' returns are particularly vulnerable during big market declines. Scammers may take advantage of this vulnerability to offer unsuitable rollovers.

In a rollover scam, agents may try to get retirees to roll over guaranteed or low-risk assets to buy riskier ones without fully disclosing the risk. Alternatively, they may try to get retirees to buy high-priced annuities with steep fees and nasty surrender charges, which can make it challenging to unwind the transaction.

Anyone who wants you to buy or sell securities should be properly licensed to do so. Be sure to verify that the person offering the investment opportunity is licensed before investing your money.

How to Choose the Best Gold IRA Company


When it comes to selecting the best IRA company, you will discover numerous options through a simple online search. However, it's crucial to note that not all precious metal markets are the same - they vary in the products they offer, the fees charged, and the states where their depository vaults are located. Therefore, it's necessary to take these practical factors into account while selecting a suitable option.

The most crucial factor is to ensure the legitimacy of the gold IRA company you choose. Some of the companies that you come across online may attempt to sell you products that are not compliant with IRA rules and regulations or that the IRS does not approve of. Thus, it's vital to remain vigilant to avoid falling victim to any such scams.

Things You must know before Investing in the best IRAs Company


-Research the Company

In addition to focusing on the types of products that are offered for Gold IRA investments, research the company itself carefully. Here are some factors to consider:

Company Reputation and Reviews

Check how many years the company has been in business and how many positive reviews it has. Look for reviews on independent websites, such as Trustpilot or the Better Business Bureau. Avoid companies with a history of complaints or negative feedback.

Customer Service

Pay attention to how transactions can be completed, such as online or by phone, and the level of customer service that is available to investors. Top Gold IRA companies provide excellent customer service and support to their clients.

Regulatory Compliance

Ensure that the Gold IRA company is compliant with all regulatory requirements, such as licensing and registration with relevant government agencies. The company should also provide transparent fee schedules, account statements, and other important information.

Storage and Security

Find out where the company stores your precious metals and how they ensure their safety. Top Gold IRA companies use insured, segregated, and audited depositories to protect their cliclient'sents' assets.

-Red Flags to Avoid

Unfortunately, there are many Gold IRA scams and fraudulent companies in the market. Here are some red flags to watch out for:

Non-IRS Approved Products

Be wary of companies that offer "numismatic collectibles for IRA investments." These types of collectible coins are not IRA compliant and may result in IRS penalties and other financial consequences.

High Pressure Sales Tactics

Avoid companies that pressure you to invest quickly or offer unrealistic returns. Legitimate Gold IRA companies provide you with accurate information and let you make informed decisions.

Hidden Fees and Charges

Some Gold IRA companies may hide fees and charges, such as storage fees or administration fees. Ensure that the company provides transparent fee schedules and that you understand all costs associated with your investment.

Final Thought

There are more gold IRA scams than you might think. But if you know what to look for, you can recognize a gold scam before you lose your money.

Even though the scams in this post aren't the only ones out there, they are the most popular ones. So, if you invest in a gold IRA with a trustworthy company like Augusta Precious Metals, you don't have to worry about getting ripped off.

 Augusta Precious Metals, also offers a free Buyer Beware guide that will teach you how to avoid deceptive IRA dealer lies.

The guide exposes all of the tricks and schemes that fake gold IRA sellers use, so if you are interested in protecting your wealth then click here to grab your free guide!

Need Information? Call Here: (844) 577-0028

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