Unfortunately there are some unscrupulous organizations and individuals out there who take advantage of consumers looking for an investment in precious metals. Remember the old adage "BUYER BEWARE"!
We've put together some of our own and some independent party advice on how to avoid being taken when buying, selling, and investing in Gold and other precious metals.
The following tips for buying and selling coins were originally drafted by the Better Business Bureau, with Gary Adkins serving on the BBB advisory group.
Do Your Research investigate before you INVEST!
- Before consulting a dealer, assess the value of your items (in the current marketplace). Dealers are not required to disclose the value of collectible items - above and beyond their precious metal content - before a consumer sells them.
- We are licensed, bonded and insured. Always deal with a licensed dealer.
- Thoroughly research a company before doing business. Make sure the business has the appropriate license and/or bond. Check the dealer's Business Review with the Better Business Bureau at www.bbb.org.
- Investigate your dealers' credentials and standing in the industry.
- If possible, locate a local dealer with an established location. Unscrupulous dealers may be found on Internet auction sites or online classifieds.
- Ask the dealer for references and be sure to check them before you do business.
- If possible, transact with dealers that are part of professional trade organizations. This way, you may have more assurance you are doing business with a dealer committed to upholding standards.
- Comparison shop to check prices.
- Before making a purchase, consumers should be aware of sales and used tax sales laws that apply - MN law requires sales tax to be paid on any retail purchases.
- Multiple evaluations of an item will provide a good estimate of its worth.
- Understand specific terms used in the precious metal industry such as spot price, bullion, precious metal, or premium. (See term definitions)
- Review local and state laws that govern the precious metal industry.
- Understand all company policies before any transaction. (returns, cancellation or delivery policy)
- If you have a dispute with the business, try to contact them first to resolve the issues.
Beware of any Business:
- That pressures you to purchase or sell NOW.
- That cannot commit to a delivery or payment schedule. Make sure you are clear about the agreement.
- Without any apparent assets or references (such as a bank, legal references or past customers).
- Which offers to pay cash to consumers - as this is a violation of Minnesota Law.
If you think you have been defrauded, contact;
- Federal Trade Commision.
- Your states Attorney General's Office.
- Your States Consumer Protection Department. Usually the Department of Commerce.
- The United States Postal Inspectors Office if it was sent by USPS.
- Your local County or City Police Department.
Red Flags to Watch For:
- Be careful when doing business with a company that is not established or reputable within the coins and precious metal industry, or if you cannot find license information about the dealer.
- Stay away from dealers that do not follow state and local laws and regulations. It's up to consumers to be aware of laws and regulations.
- Be cautious of dealers using words like "guaranteed profit" and "great investment."
- Be cautious of dealers willing to transact outside of their place of business; Minnesota state law requires that dealers must operate from the location designated in the license.
- Use your best judgment. As the old saying goes, "If it sounds or looks too good to be true - it probably is."
Common Industry Terms:
- Precious Metal - Is a rare, naturally occurring metallic chemical element of high economic value (for example: gold, silver, platinum and palladium.)
- Spot Price - The price at which the international market identifies the value of precious metals. It is also what is used by dealers to calculate what price to set for the consumers. Spot price is a reference point that can be used to calculate base value of an item.
- Bullion - A precious metal, in a variety of forms, which is traded near its intrinsic value such as bars, ingots, coins, or rounds.
- Numismatic - Items whose value depends more on their rarity, condition, dates, and place of mint rather than on their bullion content.
- Intrinsic Value - A value of a coin's precious metal content, which may be different from its collectible value.
- Collectible Value - What a collector or dealer may be willing to pay for a coin or jewelry which may be more or less than the intrinsic value of the item.
- Premium - The additional value of precious metals, coins or bullion over and above the spot price. The premium includes the value of fabrication, distribution and a dealer fee.
- Scrap - Industry term referring to a precious metal item which has an intrinsic value and is purchased with the purpose to be melted and refined into another form.
- Locked in - When a price has been confirmed between the buyer and the seller it becomes a binding contract between the two parties. Subsequent price fluctuations do not change the obligation to complete the transaction by either the buyer or the seller. Avoid verbal agreements...get it in writing.
- Read the "fine print" in any agreement. Understand the terms.
Additional 3rd party resources: