Is Gold Investing a Scam?
Gold has long been an attractive investment choice, and there are legitimate methods of doing so. Unfortunately, though, as with any investment strategy there are also scams targeting investors seeking gold.
Some scams involve false predictions of economic instability and exaggerated sales pitches; others provide gold certificates unbacked by any physical metal.
Investing in physical gold
Physical gold can be an attractive choice for investors who prefer direct ownership over indirect holdings and those concerned about currency instability or economic turmoil. Unfortunately, precious metal investments can be risky; many dealers offer unrealistically easy profits with rising prices while charging excessive fees and commissions to purchase precious metals investments that ultimately drain your savings account.
These scams often involve fraudulent practices such as misrepresenting standard bullion coins as rare or exclusive, or misrepresenting exclusive sourcing. Scam artists may try to pressure you into making an impulsive decision quickly or lure investors with low-priced items before charging exorbitant storage fees later. It’s vital to invest with a reputable dealer and check their background through the National Futures Association or report any shady activity to the Commodity Futures Trading Commission so as to avoid becoming victimized by scam artists.
Investing in gold futures
Gold investments have long been popular during times of economic unpredictability, as investors look for long-term price rises or to protect themselves against market fluctuations. Some also invest in gold as a diversifying means. As with any investment, investing in physical gold requires selecting a trustworthy seller with stringent standards.
Investing in gold futures presents different risks than investing in physical metal. While physical bullion can be held directly, futures contracts are traded on exchanges, and investors may take either a long position (buy with the expectation that its price will rise) or short position (sell expecting later to buy back at lower price).
Gold futures investors must recontract every quarter, known as rolling over. This process requires them to constantly spend money – which may be mentally draining. Furthermore, commodity prices could drop shortly before their contracts end, leaving them exposed.
Investing in gold ETFs or mutual funds
Gold ETFs or mutual funds offer investors an effective and risk-free method of investing in physical gold without taking on ownership risk. Tracking its price, they make trading easy allowing investors to diversify their portfolios while being significantly cheaper than purchasing and storing physical metal.
Some gold investment schemes promise high returns, yet are often fraudulent schemes. Be wary of unsolicited contacts who pressure you to invest quickly without providing evidence that their scheme is legal.
Gold investments are often unregulated, and some may even be fraudulent. Companies specializing in loan financing often charge excessive interest on purchases of precious metals from them; others claim to store gold professionally while actually keeping it for themselves or using it themselves; some investments don’t fall under any regulatory body and cannot be sold at any given time;
Investing in gold mining stocks
Gold mining stocks provide an alternative way of accessing the price of gold without actually owning physical metal, although their performance may differ substantially from physical prices. Therefore, investors should carefully assess any associated risks before investing.
Many consumers seek physical gold ownership but do not wish to store it themselves, filling this need through vaulted gold products that offer professional storage facilities where investors can keep their bullion. Unfortunately, such investments are typically unregulated and may lead to fraudsters taking advantage.
One of the more prevalent scams involves promising to reopen a long-dormant gold mine and promising huge returns, only for such operations to not exist or produce the promised amounts of gold. Sometimes even worse, criminals take your money and run. Before investing your funds anywhere it is vitally important to check on their credentials first.
Categorised in: Blog