When you buy gold from dealerships, they charge some fees and premiums. Oftentimes, these charges are as specified in the agreement. But sometimes, your gold dealership might be getting a lot more than they should from you.
This could even be from when you try to buy or sell your stock of gold. Here’s how your gold dealership steals from you when you get into gold buying.
5 Ways Your Gold Dealership is Stealing From You
1. Not Explaining Karats But Weighing Them Together
One thing buyers fail to grasp is the concept of karats. The ignorance of this is why some fraudulent dealers steal from them. You need to understand the karat weight of the gold you’re buying and how it relates to the price.
Lesser karats like 10 or 14 do not hold much gold like 22 karat gold. However, 24 karat is the weight that is considered pure gold.
Dealerships may sometimes weigh all your gold of different karats together. However, they will proceed to pay you the amount equivalent to the lowest weight. It is advisable to always request a separation of your gold by karats before they weigh them.
2. Not Disclosing The True Value Of The Gold
Another way gold dealerships can steal from you is by playing on your ignorance of the real value of the gold. Some gold dealerships take advantage of the fact that most naive people are after quick cash.
For this reason, they offer you gold much lesser than the actual value. Ignorant buyers go ahead and buy them without verifying current market prices.
3. The Confiscation Threat
The threat of confiscation is another way gold dealerships can exploit you without your knowledge. They sometimes tell buyers about different kinds of gold. They inform you of the type that is at risk of being confiscated and the other that is free from such threats.
Most times, the more expensive ones are the ones free from confiscation by relevant authorities. Unsuspecting buyers fall for such gold buying tricks. They pay for overpriced gold because they are unaware of this fact in the first place.
4. Offering The Option Of Either Rare vs European Coins
Again, some dealers convince their buyers to buy coins that give them the most gold for money. This is oftentimes, the pretty and rare ones. The catch to this is that whatever choice the buyer makes, the dealership still makes a large commission from them.
The choice of a rare and pretty coin gives buyers coins from before the 1930s with very expensive premiums. These coins have little or no chance of appreciating. Buyers will usually only buy them for their gold content as against their rarity.
However, a choice for more gold for money should cause the dealership to offer buyers European gold coins. This includes French Roosters or British Sovereigns.
Coins like these European ones may give more for buyer’s money, but only relative to the previous option of rare coins. Besides, buyers are made to pay more commission for them.
5. Early Release or First Strike Coins
Imagine buying coins that usually have between 2% to 10% worth of markup at about 30% to 100% of the markup. Dealers normally buy coins from the U.S Mint, like the American Eagle gold bullion for a 3% markup.
Then they have it graded by the appropriate guarantee association for as little as $50 per coin. These coins referred to as First Strikes will be marketed by salespeople as coins minted for a specific year.
Therefore, they should be considered more valuable than those minted after that period. Such first strike coins are usually not the valuable collector coin you expect them to be.
The decision to go into gold buying from dealerships may well prove profitable to you as an investor. But knowing the rudiments of the business is also important to avoid losses. Platforms like HKKO GOLD offer you transparent gold buying services to make sure you take delivery of your precious metal.