The biggest factor in whether your metals investment will make money will often be whether or not you purchase your metal at a fair price.
It is easy to compare prices and avoid getting ripped off, but investors must take the time to do it. If a would-be investor’s first and only call is to (or from) a shady rare coin dealer advertising on television or radio, they are all but certain to get screwed.
We’ll share a true story from last week as an object lesson – it’s involving what we’ll refer to as a “television dealer.”
Money Metals heard from a woman who had just purchased 631 silver Wildlife series coins from a television dealer for her precious metals IRA. These particular coins were represented by as a “limited issue” with an oddball weight of 1 ¼ oz each.
She paid $59,000 for the 788.75 troy ounces contained in those coins. That’s $74.80/oz when the spot silver price was just $24.50/oz. Yikes!
She should have called us – or read one of dozens of our articles on the subject over the years – before making her decision, not after.
When she did call Money Metals, we offered 10-ounce silver bars for just over $26 oz. She was shocked to find she could purchase nearly 3 times the ounces of silver for the same dollar investment.
Unfortunately, she is stuck in a trade with an unethical television dealer – and she may not be able to get out. If she is stuck with her bad purchase, she will need silver prices to triple simply break even.
The television dealer’s crooked salesperson misrepresented at least two things about the coins he sold her…
First, the odd size is likely to make those silver coins less desirable, not more. Money Metals and other bullion dealers will buy them at a discount to 1 oz coins which are way more popular and easy to resell.
Second, while those coins may be minted in smaller lots, they are certainly not rare. We have purchased those coins by the thousands over the years. None of the series has ever commanded a significant premium to the metal price.
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Every client who paid 3-times melt value for these bullion silver coins lost their shirts.
The above is just one example of how rare coin dealers – frequently seen advertising on TV with celebrity spokesmen – routinely take advantage of Americans.
Even though they are constantly getting slapped with lawsuits and regulatory actions, these shady operators are still out there pressuring and exploiting victims in the precious metals space on a large scale, so investors must be on their guard.
Here are some red flags to watch out for:
- The salesperson claims that numismatic coins are exempt from tax, that numismatics will outperform bullion, or that bullion (but not collectibles) can be confiscated by the government.
- The salesperson calls you repetitively claiming to have a “super hot buy” and that if you don’t grab it immediately, someone else will, or uses some other pressure technique.
- You are told the resale value is higher than the current purchase price, as if the salesperson is going to sell coins to you for less than they could elsewhere.
- The dealer doesn’t publish prices at which they buy and sell.
The truth is that you are guaranteed immediate confiscation through the high premiums on “rare” coins. Bullion and collectible coins have identical tax treatment. And rare coins can hardly be expected to outperform when investors are so deeply underwater right out of the gate based on massive buy/sell spreads.
Virtually any story you hear about why you should avoid bullion and buy collectible coins instead is going to be complete BS.
One of the best ways to make sure you don’t get ripped off is to find out what the item you are thinking of buying can be sold back to the dealer for.
You must know the melt value of the actual gold or silver the items contain.
Money Metals Exchange is one of the only major dealers to publish both prices live on each of our product pages. Clients can see at a glance both what they pay to buy and what they receive to sell. They can be certain they will not be taken for a ride.
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named “Best in the USA” by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.
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