Scam Alert: Fake Gold Bars, Phony Investments, and Shrinking Portfolios–Oh My!

Scams are everywhere. From late-night commercials selling you products that don’t live up to the hype, telemarketers toting the next best thing and then disappearing, to criminals hawking fake jewelry and knock-offs, who can say what’s true and what’s a scam? The most recent wave of scams involve imitation gold bars. They look real and the promise of money is alluring, but buyer beware—this may not be a genuine purchase. Here is background information you need to make sure you aren’t a victim of such a scam.

How it Works

Gold Bars

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Counterfeit gold bars are being created. They look legit, even weighing the proper amount. They can pass through all the necessary tests, including X-ray and weight assessments. They are created from real gold bars—from the outside, they appear in perfect condition. But they are filled with tungsten—a compound that costs merely $1 an ounce and feels just like gold.

Even serial numbers and the paper from the original gold bar come with it, fooling even the most discerning eyes. They are polished and sealed to perfection. Such gold bars have appeared in America and the U.K., which means buyers need to take notice.

Look for These Warning Signs

Authentic Gold

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Buyers should heed this advice prior to making any gold bar purchases:

  • Companies that promise large returns on your gold bar investment are not to be trusted. No investments are guarantees.
  • If you deal with a high-pressure salesperson that wants cash immediately, say no. They may take your money and run.
  • Telemarketers from offshore companies are a red flag. It’s best to garner as much information about the company and contact the Better Business Bureau. If you are still unsure, it is always a sound idea to stick with companies that have already earned a good reputation.
  • You must ask about fees and commissions—know where your money is going. If you don’t, you may be charged an excessive amount of dollars off the original quote.

Look for an Alternative

Gold Alternative

Image via Wikimedia

Rather than buy physical gold and risk purchasing a fake–exposing you to a loss of potentially thousands of dollars–you can invest in gold funds instead. Such funds include Market Vectors TR Gold Miners (NYSE Arca: GDX), RBS Gold Trendpilot ETN (NYSE Arca: TBAR) and PowerShares DB Gold Fund (NYSE Arca:DGL).

Buyers should always be armed with as much knowledge as possible when making major purchases. You are putting your own financial future at risk if you don’t know the warning signs. It is always good advice to follow your instincts when it comes to decisions like these—if you feel any doubt, it’s best not to invest. Following this mantra may save you from losing thousands of dollars, which would take years to re-coop.

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