There are a lot of fake gold dealers out there so it pays to have some understanding of how they operate.
Indicators to watch for when it comes to fake gold margin dealers and operators include selling and trading commodity futures and options contracts fraudulently and illegally. The risks of buying gold here is that the buyer can get caught out and lose a lot of gold. Especially when it comes to dealing with any gold margin or even the comex gold margin.
You can recognise such dealers by activities such as:
Not delivering on contracts.
Making claims that the investor will make large fortunes or profits with little or no risk.
Imply an ability to predict the prices or trend of the price of the metal markets. No one can predict the future prices of any market. One can speculate or make judgments based on information and data but always it is a judgment, not a guaranteed prediction.
Imply there is little or no risk to investments in metal investments. There is always a risk when buying gold or any commodity for that matter.
A fake gold dealer will also omit information about how much the price of a precious metal may need to increase in order for an investor to break even or even make a profit by not disclosing various fees associated with transactions such as finance, storage, as well as commissions and perhaps even tax in some cases. When calculating the cost of investment all these factors and costs should be calculated in the overall price.
Some fake gold dealers might also claim to be purchasing and storing the metal on behalf of the investor when, in fact, they are not. This can apply particularly with efts but may also apply to a fake gold dealer who does not hold sufficient gold to cover all their investors or clients holdings. A reputable dealer will have a transparent audit done on a regular basis so the actual holding can be seen and accounted for.
Of course this then leads to charging "fees" for storage when there is no storage taking place of course.
Sometimes fake gold dealers will charge "interest" fees. These would be fraudulent also especially if there is no actual storage of gold or silver on behalf of the client. This can result in the client having to deposit further funds to cover such charges and may easily lead to the client making a loss rather than a profit.
So how do you detect if a dealer a fake gold dealer is shady and a scammer?
Here are seven indicators that you can watch for that can help you to pick the good from the bad.
Avoid companies that offer you predictions of high returns at little or no risk.
Do not give in to pressure tactics such as, "A once only offer", "Must invest today", "Must pay right now or today to get the advantage of high returns", etc. Either through the phone, email, mail or any other medium.
Any unsolicited phone calls encouraging you to invest in overseas or "offshore" investments should be approached with caution. Especially if the company is unfamiliar or unknown to you.
When you buy gold, it is always a good idea, before you purchase any contracts, or gold or silver bullion from a gold dealer you do not know, or who has approached you without you asking them, contact the CFTC or other authorities, including your state's securities commissioner Attorney General's consumer protection Bureau the Better Business Bureau and the National Futures Association
When checking, get as much information about the gold dealer as possible. If the dealer is reluctant to give out any information about themselves then steer clear.
Find out first what all the fees, commissions are and how they are incurred before you part with any money. Any fees and commissions, including storage fees, should be all clearly explained by the salesperson or available in a prospectus or on a website.
Always consult with your own personal financial adviser before embarking on any investment into precious metal futures contracts.
If you have any doubts about the investment, don't invest.
And lastly, don't invest any money in gold futures you cannot afford to lose.
All this may sound like there are no investment opportunities out there. Well in fact there are some good investment opportunities. But it is all about doing your homework and employing some due diligence when dealing with metal future dealers. As well as many good and honest gold dealers out there, there are also many fake gold dealers.
Indeed, it pays to ensure one has a basic education before you buy gold on margin or even comex gold margin contracts. Keeping in mind the above points will certainly reduce the risks of buying gold from a fake gold dealer.