Gold Coin Scams
Here are some examples of gold scams and what you can do to prevent them.
Proof coins are manufactured differently to other coins. The manufacturing process used imparts a special finish on proof coins made especially for collectors.
The uncirculated grades are from MS60 to MS 7, with MS70 being the highest grade possible and considered the perfect coin with no evidence of scratches or contact marks of any kind. Very few coins achieve this grade and naturally this grade commands the highest value and price from collectors.
Grades below MS60 apply to circulated coins in general.
MS70 The perfect coin showing no trace of wear. Flawless.
MS68 An attractive coin with barely discernable markings. No more than two markings or flaws. No hairlines, no scuff marks even under magnification.
MS65 A Gem Brilliant Uncirculated coin. An above average Uncirculated coin specimen. This coin may be brilliant or lightly toned with very few contact marks on the surface or rim
MS64 A Choice Brilliant Uncirculated coin. Mint luster above average with several small contact marks as well as one or two moderately heave contact marks.
MS63 A Brilliant Uncirculated coin. Mint luster impaired on portions of the design. small contact marks in groups. Some scuff marks. Quality of the coin is average for a mint coin, but overall the coin is attractive
MS60 An Uncirculated coin. This coin has no traces of wear but may have contact marks, with a spotted surface and lack the brilliant luster of the higher grades. Rims may be nicked. Coins in this grade may be unattractive, dull or have washed out mint luster.
This system of grading, although well known and used by dealers, is still open to fraud if one does not watch or take due care and diligence when buying gold coins. This based on the fact that there is a big difference in the value of cons within this grading and usually only a professional can tell the difference in the grade of a gold coin.
For example a 2002-W $50 Gold Eagle can be worth around $1,650 at the M60 grade,a very clean condition, but not perfect. MS70, however, for the same coin woudld fetch more in the region of $2,850. A collector, particularly a new one, who is unfamiliar and simply takes at face value the grade of the coin can pay dearly for a coin of lesser value than they think they have. And this doer snot show up immediately but later if and when they get the coin valued. The difference can be in the many hundreds of dollars.
Things to watch for
Some untrustworthy dealers will go to great lengths to hide the true value of a coin. Presenting it in packaging that hides some of the sides or edges of the coin. No or false certificates issued by obscure names that no one knows.
Beware of dishonest dealers quoting the Salomon Brothers Index as proof that your coin will appreciate in value quickly. The Investment bank, the Salmon brothers issues an annual index of gold coin appreciation of between 12 and 25 percent a year. This is like comparing apples with bananas as this index is based on 20 very rare coins and not on the general appreciation of gold coins which are not likely to appreciate at the same rate. The rate is for rare coins not the more common gold eagles you find in any local coin shop.
The counterfeit coin. Believe it or not there are counterfeit gold coins around.
These can be spotted easily enough by a proper valuation however.
Also if you buy gold coins sigh unseen and have them stored from you, how do you know there are actual gold coins there? There is no way you can tell if the coins you bought ever exist. Your only security is the word of the company you purchased the coins from. The saying, 'a bird in the hand...' comes to mind here when it comes to gold coin scams to watch for.
It really comes down to the dealer you are dealing with. The first thing to do to avoid buying coins not their advertised value is seek out a reliable and trustworthy dealer. Make sure the dealer is registered and bona fide. Do some due diligence.
Do they have a fixed address?If buying any mint uncirculated gold coins then, at this level, one should seek an independent check on the grade of a coin before buying it. And finally does the dealer have a returns policy in the event that it is subsequently discovered the coin is of a lesser grade than advertised. And one should always take delivery of any coins one has bought. One can organise storage oneself and then sleep in the secure knowledge that one has, indeed, genuine gold coins of the advertised grade and value
How long have they been in business?
Are they registered with the better business bureau and similar organisations and associations.