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Beware of These Gold IRA Scams

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Most of the people working in the gold world are ethical. However, a few bad apples in the bunch give the rest a bad name through scams. There are two kinds of scams that a gold IRA investor might encounter.

These are gold and precious metals scammers and self-directed IRA scammers. As an investor, you must be aware of all the different kinds of scammers and how they operate so that you can protect yourself from them.

Here is are some of the most common scams.

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Bait and Switch Scam

In the bait and switch scam, you may respond to an email or an ad that is offering a good deal, but when you start engaging, they try to convince you to buy something else.

You may also be contacted by a company that seems to be legitimate, but once you sign up, they ask for more money than what was originally agreed upon.

Sometimes they will even promise to repurchase your old gold jewelry at an inflated price, but they will refuse to do so when you try to sell it back.

They may also claim to be selling gold coins for much less than the market value, but they will tell you that they are out of stock when you try to buy them. Their goal is to suck you into their gold investment program and then later ask for more money.

Counterfeit Coins

stack of gold coins

Another type of gold IRA scam is selling counterfeit coins. This means that the company you are working with will sell you fake coins and then disappear after your money has been sent to them.

These types of companies are usually located outside the United States, so they fall under federal laws instead of state laws, making it harder for law enforcement agencies to track them down.

There are also instances where you might go out to meet someone who is selling coins. You get to verify that the coins are legitimate, but at some point, the seller takes them from you then hands them back.

In such instances, they might hand you back fake coins that they have already switched with what you verified was legitimate. By the time you realize that you have fake coins, the seller is long gone, and you have no way of tracing them.

These counterfeit coins sellers often offer very low prices to bait you, but always remember that a legitimate seller will not go extremely below the spot price. If the price being offered is much lower, it is a warning sign that you should stay away from them.

If you are new, make sure you buy only from recognized dealers so that you are not left paying a lot of money for worthless coins. Research a seller before working with them to avoid being scammed out of your hard-earned money.

It is better to go through all the work necessary than to have your money stolen by some unethical person.

Damaged or Shaved Coins, Rounds, and Bars

gold bars

Selling damaged or shaved coins, rounds and bars is another common scam. This means that the gold you are buying has been tampered with somehow and will not be worth what you paid for it.

Some scammers shave some grains of metal from the coins and bars or drill holes in the bars and fill the holes with lead which weighs almost the same.  Since scammers are getting smarter, even the damaged and fake coins have the expected weight.

To avoid being scammed in this way, you must up your assessment game. If you are dealing with a new seller, get better at assaying. Use several testing methods, including calibers, to ascertain the coin or bar thickness or even check gravity.

This way, you will detect any coins and bars that have been shaved or have been filled with another metal.

Selling IRA-Ineligible Gold

You can buy precious metals for your personal collection in whatever form that you like, but you can't buy any forms of precious metals for your IRA.

There is a federal law that prevents IRAs from owning jewelry in any form.  For your IRA, you can only buy eligible coins and bars.

man looking at a clipboard

They can be American Eagle coins or bullion in standardized bars or coins of sufficient quality. Legally, a gold bar, coin, or round must attain at least 0.995% purity for it to be deposited into an IRA.

However, not all popular coins and bars are eligible.  

Ineligible coins include Belgian Franc, French Francs, Mexican Pesos, Austrian Corona and Ducat, German Mark, Hungarian Koronas, Dutch Guilders, British Sovereign, and older Britannias, Swiss Francs, and Chilean Pesos.

Some eligible options to choose from include: American Eagles, Canadian Maple Leafs, Austrian Philharmonics, Chinese Gold Pandas, among others.  

Avoid getting into a deal with a salesperson who is trying to convince you to buy certain coins for your IRA because of their high collector's value. For a retirement account, your interest should be on the weight and discount from the spot price.

What sellers refer to as rare coins might be an excellent idea for your collection, but they are a terrible idea if you are buying for your IRA. In most of these instances, you will lose your money.

Related Article: How to Sell a Gold IRA

Home Storage Gold IRA

gold coins protected by a lock

Many fake gold dealers will also try to sell you a home storage option and claim that it is the best way for your money. While this might be true, there are some risks involved with storing your gold at home instead of using an outside company. 

If you choose to store it yourself, make sure that you know what type of container they recommend (usually strong safes), how much insurance coverage should cost, and where exactly to keep them for maximum security.

It is, however, strongly discouraged.

False Grading

In this type of scam, the seller falsifies grading information and relies on your ignorance to take advantage of you. They might claim that a coin is worth more than it is, or vice versa.

Some go to the extent of creating fake grading documents or using high-grade certificates to sell lower-grade coins.

It's important to get your gold graded by an independent source, so you know exactly what you are getting yourself into. There are many reputable companies out there who can do this for you, so don't let yourself be scammed by one of these fraudulent dealers.

Note that if you are purchasing gold for your IRA, you should purchase bullion and not numismatics. Grading has little to do with the prices of bullion.

Leveraged Investment Scams

access denied

Another scam that is often used in the gold market is a leveraged investment scam. Here, a seller tries to get you to borrow money to invest in gold, with enticing speculations that the prices are about to skyrocket.

They will try to convince you that you will get up to thrice that amount if you make a down payment of a certain amount. Most of these dealers target older people.

While there is legitimate leveraging, it certainly does not involve targeting a vulnerable demographic.  

In most instances, the dealer will convince you to borrow money on which you will be charged only storage costs. Instead, they will charge from your gold equity, hoping you don't remember the arrangement.

The dealer then issues an equity call when your equity goes below 10% (or another percentage) of the buying price and fees. If you cannot raise the cash, they sell your gold. If the sale does not cover the amount you owe, they come after you for the rest.  

This scam can be combined with other scams like the false grading on bait and switch to rob an unsuspecting buyer of thousands of dollars.

You should remain vigilant to leveraged investment scams and stay away from brokers who try to convince you to borrow money because the price of gold is about to explode.

You can know if you are a target of this type of scam by doing research and only dealing with legitimate sellers and brokers.

Self-directed IRA scams

Some other scams are not particularly specific to precious metals but are generally applicable to self-directed IRA scams.

Self-directed IRAs refer to IRAs and other retirement accounts where the owner has complete control over what assets are deposited into their account. 

guy sitting on top of a question mark

Precious metals IRAs are usually part of self-directed IRAs. 

With these IRAs, owners have to make all the investment decisions themselves. 

Many people tend to fall victim to scams when they are trying to make these investment decisions on their own. As a self-directed IRA investor, you should pay attention to some warning signs that show you might be getting scammed.

These could be promises of low risks with high returns, claims of guaranteed profits, claims of risk-free investments, or even bullying tactics. Here are some common self-directed IRA scams that you should avoid:

Ponzi Schemes

A Ponzi scheme is when a company takes your money and uses it to pay off investors instead of investing in gold or the agreed precious metal.

They use this money to enrich themselves and others involved in the scheme while you wait on returns from your investments.

This means that you will never see your money again, and the company will most likely disappear once they have taken as much money as they can.  

These schemes are often difficult to detect, but there are some warning signs that you can look out for. If a company is asking for a lot of money upfront, or if they promise high returns on your investment, it's best to stay away.

These are usually signs that the company is running a Ponzi scheme and is not legitimate. Ponzi schemes are common in different kinds of investments, not just gold or precious metals.

All that is required is a criminal and an investment idea that they are willing to lie to a high degree about.

False Endorsement Claims

False endorsement claims happen when a salesperson or a company claims that their products and services have a special endorsement from IRS, Federal Trade Commission, or any other recognizable organization.

These are scams because the IRS, banks, and government organizations do not screen investments or provide assurances on self-directed IRA investments.

You are in charge of your due diligence, so make sure you don't make deals with anyone claiming they have received any special approvals. 

Unsuitable Rollovers

Another scam that is often used in the gold and precious metals market is unsuitable rollovers. Some scammers reach out to retired people who are not satisfied with their portfolios returns.

Older people are at high risk during market declines, which is when these scammers are most active. These scammers will try to convince you to roll over guaranteed investments to buy riskier ones.

However, they don't tell you that there is a high risk of losing all your money if the investment goes south.  

These types of scams are very common in the stock market and can be just as dangerous when it comes to gold investments.

Only your financial advisors should help you determine if a certain investment, for example, gold, is appropriate for rollover funds.

Be wary of people trying to convince senior citizens to sell their guaranteed investments for riskier ones because all they are doing is taking advantage of their vulnerability.


When it comes to buying gold, there are many scams that you need to be aware of. While gold IRA scams come in all shapes and sizes, most of them have one thing in common- they're trying to steal your money.

By knowing what these scams are ahead of time, you will be able to protect yourself from being taken advantage of.

Stay vigilant and look for a reputable dealer before purchasing any gold.

Here at BMOGAM Viewpoints we have spent a great amount of effort researching and rating the best, most ethical gold IRA companies to work with.  

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