30 May 2016

Gold Scam Sites & How to identify a good bullion company

Demand for physical Gold and Silver continues to be strong as more and more investors are realizing that it is vital to allocate a portion of one’s assets to the precious metals.

The increase in demand has resulted in the formation of many new bullion companies, some of which are taking advantage of customers or are an outright scam. In this article we wanted to provide some information to help customers avoid scams and choose reputable, high quality bullion companies to work with.


Avoiding Gold Scams

About 2 years ago there was a forum thread opened under the name “Just been scammed by finegoldbars.co.uk” (click link here: http://www.hotukdeals.com/misc/just-been-scammed-finegoldbars-co-uk-1637016 )

On the form people that had been buying from this particular company called UK Metal Invest Ltd were possibly scammed. The customer ordered and then prepaid (which is a normal procedure) but never received the goods.

The company claimed it had been in the industry for 30 years. But it turns out that the company had only been registered for a short time. Physical Gold and Silver demand is only going to get stronger in the coming years.

As a result, these type of scams will increase which is why it is important to select the right bullion dealer to work with.

So let’s look at the payment processes that bullion companies use when an order is placed. Understanding the types of available payment options is the first step.


Common Misconceptions about Bank Wire Transactions

People and other bullion sites have recommended not to buy precious metals via bank transfer. Because once the money is transferred and the dealer doesn’t deliver then the money is lost.

Let’s look at the two arguments and how the situation really is:

Misconception #1- Never pre-pay gold via bank transfer

The whole bullion industry works on pre-pay. When we buy stock from distributors, bank, etc. we have to pre-pay. So every idea of receiving gold without pre-pay is pure nonsense.

Every payment provider that offers fast and easy payment processing will charge a fee. If a bullion dealer operates on a low cost philosophy then a bank transfer is always the fastest and cheapest method of payment.

CelticGold charges one of the lowest transaction fees of 1.7% in the industry. Because bullion companies operate on very low margin, the customer has to pay the transaction charges.

We at CelticGold offer customers the choice of Paypal and Credit Card payments simply because the market demands it. But if a purchase of 100,000 Euro can be 1.7% cheaper just because of the transaction fees by a 3rd party payment provider it will make a substantial difference to the overall amount of gold and/or silver that is purchased.

Misconception #2 - If the bullion company doesn’t deliver the goods; the money is lost.

This is not accurate. Depending on the structure of the purchase the customer and bullion company have engaged in a legally binding contract.

The customer agrees to pay the money and the bullion company agrees to deliver the sold products at the fixed price.

If one of the two doesn’t deliver which means the customer doesn’t pay or the customer has paid but the bullion company does not deliver then the contract is not fulfilled.

If the bullion company has not delivered then the customer can demand a full refund. In addition, the bullion company can demand the money from the customer if the customer has not paid.

There are legal options for both scenarios. Surely one doesn’t want to go down that route but there is always a way to quickly get a title from the court.

This naturally leads to the question of how does one select the right bullion company to work with.

How do I identify a good bullion company?

First of all the company should be in business for some time. CelticGold was founded in 2001 for example. If the company has been in business for a short period of time then there should be some further questions asked:

-       From where does the seller receive the products?
-       Who is behind the seller? Capitalization, etc.

-       Does the company registration check out with the Terms & Conditions

-       What other security features does the seller provide? For example a daily Anti

          Malware check, etc.

-       Is the Checkout SSL secured?

-       Is the company information easily accessible on the website, for example in

          “About xyz”

-       Is the company registration number provided, is the VAT ID live and

          active?

-       Does the seller provide a live price? (This indicates transparency)

-       Are the prices updated on a regular basis?

-       Are the prices competitive with other dealers, or the same?

-       Is a stock availability displayed?


The Importance of Testimonials

Testimonials and reviews are an important part of the due diligence process a customer must perform to select a good bullion company to work with. Testimonials provide prospective customers with direct and often very relevant details about the process and overall buying experience.

The seller should provide testimonials or the website should be registered at eKomi, Trusted Shops, etc. We at CelticGold have decided against an external service as it costs too much money and in the end prices would have to be higher to cover the added cost.

As an alternative to the external review service we have published dozens of customer testimonials and we offer prospective customers the ability to contact past customers if they choose.

There is always a risk of a potential scam with testimonials written on a website but when reading them through you can see if each testimonial has its own unique language. Also whether or not there is a variety of different testimonials from different types of people in different geographies that the dealer serves.

I’m quite surprised about the detailed testimonials our customers write about how they have experienced CelticGold. We publish the testimonial exactly as it is written to us including the critical ones.


Bullion Company Websites

All of the information that we highlighted above should be easily accessible on the website of the bullion company. For example the CelicGold.eu link below provides real testimonials that describe what customers have experienced working with CelticGold.

https://www.celticgold.eu/en/celticgold-customer-feedback.html

In addition, the terms and conditions are also displayed on the CelticGold.eu website so that prospective customers can look up and verify company information.

https://www.celticgold.eu/en/terms_and_conditions

The key is to look for transparency. If all of this information is hard to come by then. It may be warning sign to proceed with caution, or look for another bullion company. The good news is that there are many high quality, reputable bullion company in the industry to choose from.

The Price

The final consideration when looking for a bullion company should be price. Many buyers make the mistake of choosing a dealer solely on price.

While price is important, it should not be the number 1 consideration. The reason is that the industry operates on very small margins and the lowest cost providers often struggle to maintain the infrastructure to properly service customers.

Establishing a long term relationship with your bullion company is a benefit to both parties. When you decide to sell your Gold or Silver back to the bullion company you already have an established relationship.

Also, the buy back rate will often times be better from the dealer you originally bought from. So you want your bullion partner to be in business when you decide to sell.

The message is to find a reputable company to work with that has a good track record. Then look at how the prices compare with the short list that you have developed.

Summary

To finish up on the gold scams; do your due diligence before you buy, bank transfer is fine and check the website with the above catalogue.

Never buy the “too good to be true” gold or silver bargains, the industry operates on tiny margins; there is no room for generous deductions of 5% or more compared to the next bullion dealer.

Author: celticgold.eu

Older VAT on Silver Coins and Bars in Europe Newer Identifying Fake Gold Bars