Over the past few years, precious metals such as Gold, Silver and platinum have become among the hottest commodities to invest in as the stock market keeps on fluctuating between worse and worst. Gold is especially popular because it has continuously shown a substantial rise in value every time the stock market dips. In fact, according to the World Gold Council, nearly $60 billion of gold is sold each year.
It comes as no surprise then that numerous shady dealers have also lined up to get a slice of the pie. Even though most of the gold sold is in form of exchange-traded funds and mutual funds, there is still significant investment that comes in form of tangible gold bars, coins and jewelry – and that is where you can be ripped off easily.
Below are a few costly mistakes you do not want to make when investing in Gold IRA accounts:
Do not pay more than the current market price
Some brokers may be legit but may take advantage of the rising value of Gold and the gullibility of the investors to inflate the gold prices. If you want to invest in gold, don’t forget it’s a commodity like any other, and it is your responsibility to ensure you are not being overcharged. The exact day you wish to make your purchase, confirm the spot price of gold before you begin the transactions. This information is available on numerous websites. The typical premium is 5-8 percent markup above the spot price so do not pay anything higher than that.
Do not buy “rare” coins online
Perhaps the most common way fraudulent gold dealers are using to defraud investors is to tell them they can buy “rare” gold coins online without even inspecting them. In fact, consumer protection attorneys in a number of states have issued stern warnings and indictments concerning rare coin frauds. These dealers make a hard sell in the gold market by re-assuring you of their rare coin or doubloon. If you are investing in gold as a retirement plan, just buy the common coins not the rare ones.
Do not buy fractional coins
These coins usually come in fractions of an ounce like a quarter-ounce, half-ounce or even a fifth of an ounce. Research has revealed you will usually pay higher markup prices for such coins than the one-ounce coins. There is little advantage to buying fractional coins even though some experts argue that they have their place – they would come in handy in future, if cash were to prove worthless and you needed small gold to trade.