Tags: Money | gold | notable | scams

5 Notable Gold Scams

By    |   Saturday, 11 July 2015 10:32 PM

Scams using the lure of gold to defraud would-be investors take many forms, from fake coins or diluted bullion to gold that exists only on paper or in the buyer's dreams.

A "Gold Scams Exposed" list maintained by investor Peter Schiff on Facebook, for example, has scores of entries, with new cons being added continuously, and old ones cropping up again and again in new guises as gold scammers continuously enrich themselves at the expense of the unwary.

Here are five notable gold scams.

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1. The Leveraged Gold Scam
In this con, a customer takes out a loan to buy gold that will be easily repayable because, the seller says, the dollar value of gold is sure to keep on rising. In one case spotted by Schiff, a Florida company called Midwest Metals got customers to put down a 30 percent deposit on their gold purchases, and finance the rest with loans. Only, Midwest never delivered an ounce of gold, the Sun Sentinel reported.

2. Phantom Gold
Also in the category of gold you'll never see, some scammers sell coins that simply don't exist. "These 'helpful' dealers offer to keep the coins in escrow to avoid such problems," according to The Street. "And to top it off, these charlatans will actually charge you a storage fee for the gold they don't possess!"

3. Gold from Afar
An investment scheme being prosecuted in an Alabama criminal court raked in $3.2 million from 28 investors hawking gold from Ghana, Africa, AL.com reported in April. Instead of buying and selling the African gold on the international market, the sellers just pocketed the money, say prosecutors who have already secured a guilty plea from one of conspirators.

4. Golden Pyramids
The sizzle of soaring stock returns isn't the only way to sell the classic con known as the pyramid scheme, in which early investors are paid off by income from new investors until there are no more and the facade collapses. Massachusetts, for example, is alleging that an in-state company called EmGoldEx built a pyramid of its own on a false promise to buy and store gold bars for investors, the Boston Globe reported.

5. Shoddy or Overpriced Goods
The Street's aforementioned list of "5 Sleazy Gold Coin Scams" also covers coins that are marketed as "pure" gold when they're not, or packaged in pretty cases that belie their sub-standard, not-so-mint condition. And it's not just coins — gold bars get diluted and counterfeited, too, as the government of Ethiopia learned to its chagrin back in 2008, when it found itself holding substantial quantities of gold-plated steel bars.

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Scams using the lure of gold to defraud would-be investors take many forms, from fake coins or diluted bullion to gold that exists only on paper or in the buyer's dreams.
gold, notable, scams
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2015-32-11
Saturday, 11 July 2015 10:32 PM
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