9 Devastating Gold IRA Scams (Avoid These!)

Roy Guller

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Gold IRA scams, what are they, how do they happen, and how can you avoid them? While Gold IRA scams are still somewhat common today, it is relatively easy to eliminate your risk of falling victim to one. We cover everything you need to know in this article to keep you and your money safe and thriving.

9 Gold IRA Scams To Avoid

Rare Proof Coins

Self-directed Gold IRA accounts can only contain bullion or coin gold that is legal tender. Collectibles are explicitly not allowed in these accounts. The gold must be of 99.9% fineness or better, produced by a refinery approved by NYMEX, COMEX, or a national government mint.

American Eagle (for the United States of America), Mexican Onza (for the United Mexican States), and Maple Leaf Gold (for the Dominion of Canada) are allowed. British Sovereign Coins, Double Eagles, and South African Krugerrands are not permitted.

If an administrator claims that they can hold rare proof coins, they are almost certainly part of a fraudulent company. Self-directed IRA accounts prohibit collectibles, so there's no way that this is a legitimate business.

Completely Fake IRA Accounts

It is not difficult for scammers to create fake businesses and fake accounts, often with a stolen identity, and steal your money. For this scam, they convince you that you need to transfer your earnings over to them (and beware, they are usually quite convincing) for them to steal it. Some even go so far as to set up false social media accounts and solicit fake reviews for sites like Google and Yelp.

As soon as they have your money, you won't see or hear from them again. If they live in another country, it's nearly impossible or completely impossible for you to fight back, sue, or get your money back.

Ponzi Scheme Gold IRAs

This scam is very similar to the one above. Except for this situation, the scammers will pocket the money but pay out just barely enough money to keep the act up without raising suspicions. This type of fraud is especially heinous because it gains trust and allows the scammers to convince the investor to keep "investing" more and more with them.

One of the most notorious cases involved the Northwest Territorial Mint (NWTM). The company accepted several million orders for gold bullion coins for self-directed IRA accounts. They pushed back, lied about gold delivery times, and kept accepting orders from new victims.

The latest victims paid off the previous clients, and they kept raking in new clients. All in all, they defrauded approximately 2,500 innocent people and lost more than twenty-five million dollars for those investors. In April of 2016, the public learned that NWTM vaults were missing bullion for twenty-five of the victim investors during the trial.

The mission bullion was valued at nearly five million dollars. Fourteen federal felony convictions resulted from this large-scale scheme.

Self-Storage IRA Accounts

As we mentioned in our article Gold IRA Tax Rules, you cannot hold your own gold that is part of your self-directed IRA account. You can't even add gold to your previously owned or maintained account. You need a trustworthy account manager and third-party storage for the gold.

Suppose a salesperson or company assures you that you can keep the gold that is part of your gold IRA account at home (or anywhere in your possession). In that case, that business is not legitimate. A reputable company knows all the laws and regulations of Gold IRA accounts and would never make this mistake.

The "Tiny Sliver of Gold" Thieves

Some seedy gold dealers have been known to shave a tiny sliver of a few grains off the top of each coin that they sell to you. While each little shaving isn't much, it can add up very quickly when you have more than a few ounces of coins. This can severely impact your account, especially if you have heavily invested in gold. Always use safe, trusted, vetted, and tested dealers with long-term good-standing histories.

Because you do not hold or maintain your gold IRA account, you can't notice when a coin has been lightly shaved off. This makes having a well-respected and trustworthy dealer all the more important.

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Unsolicited IRA Salespeople

Legitimate gold dealers and legitimate IRA managers do not waste their time on cold calls or cold emails.

Safe, respected people in this industry must be approached by you. Only then will they speak to you or try to earn your business. Again, genuine retailers may make cold calls, but they are rare and not likely to be well-established or respected.

Pushy or Rude Salespeople

If someone insists that you invest in them or persistently guarantees that gold is about to skyrocket in value, run. 

If they were utterly confident that gold was a guaranteed profit, they wouldn't waste their time speaking with you. They would be quietly investing and banking on massive profits.

This is an even bigger red flag if the person is pushing you to act before a deadline or making you uncomfortable.

Not all scammers are pushy, but many are. Regardless, you should only be involved with people and corporations that make you feel safe, heard, and respected while investing. Never go with someone who tramples your boundaries.

Unsolicited, Door-to-Door Salespeople

If a sales associate approaches you at your home, do not let them in your house, and do not give them any information. These thieves are sizing you up and trying to get a look at the interior of your space.

They may be canvassing to see if your home is worth breaking into later. Some may even try to rob you right on the spot, especially if they have reason to believe that you have valuables on your person or in your house.

Some door-to-door salespeople may be overachieving fake gold IRA account managers, too. While they may not be there to rob you, they could be visiting in person to turn on their charisma and gain your trust. Again, once they have your money, they will flee the area, and it won't be easy to find them ever again.

The Fake Gold Scam

This scam did not actually affect gold IRA investors. Still, it did reveal enormous amounts of fraud in the industry, and it made lenders extra cautious with gold investors. Fourteen well-established, fully-staffed, well-educated banks fell for the scam, showing how easy it is to fall victim to gold scams.

Kingold, a false gold jewelry company, deposited billions of dollars of gilded copper alloy disguised as real gold into fourteen Chinese banks. Then, this company used the "gold" as collateral to borrow 2.8 billion dollars. They then used that nearly 3 billion dollars to invest in real estate.

Dongguan Trust, one of their lenders, eventually called in their loan in 2019, but Kingold did not have the funds for them. The investment homes were vacant, and the real estate investment venture had majorly failed. At this point, Dongguan Trust tried to liquidate its gold collateral to recoup costs and learned that the majority of it, about 83 tons, was gilded copper, not 99.9% pure gold.

Are Gold IRAs A Good Idea?

Like any other form of investment, fraud can happen in Gold IRAs. Still, Gold IRAs are a worthwhile investment and, overall, a good idea. That being said, it is imperative that you do your due diligence and go through a reputable company.

Augusta Precious Metals is our preference.

You can read our full review of Augusta Precious Metals here, but the primary reasons why it is our number one choice are as follows:

  • This forty-year-old company has zero complaints with the Better Business Bureau (BBB) and Business Consumer Alliance (BCA).
  • They specialize in gold and silver self-directed IRAs.
  • The company has fantastic communication and complete transparency. They will patiently walk you through the process and keep you in the loop with their free gold investment guide section.
  • Augusta Precious Metals offers account custodians and secure storage services for gold (and silver).
  • Their salespeople do not work off commission, so they do not pressure you.
  • They have no management fees.
  • The company has a full team of Harvard-trained economists and educators to support the clients.
  • Finally, they have lifetime account support.

Final Thoughts

While Gold IRA scams are out there, you can eliminate your risk of falling victim to these thieves by cautiously doing your research and only investing with reputable, legitimate companies. It is absolutely worth it to invest in gold, especially in IRA accounts for tax benefits.

About Roy Guller

I have been an investment adviser for more than 30 years and managed more than 500 million dollars for my exclusive group of clients. My expertise lies in retirement funds and I want to share my wealth of experience with you so you can make the right decisions for your future.

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