One of the things that I find the most despicable are people who are peddling fake precious metals to those who have little knowledge of them. It is something that anyone can fall victim to, especially when you have a limited knowledge in metals investing. It creates a bad image of the industry and contributes to more fraudulent activity. Fakes are so common in precious metals, you could honestly be more likely to stumble upon one than a legitimate dealer. But don’t let that scare you, that’s why we’re here.
Therefore, I’ve decided to come up with this introductory tutorial on how to spot fakes, and how to avoid investing money in them ever again.
If It’s Too Good To Be True…
Then it is. Look up the current spot price of gold or silver (which you can find anytime you come to PreciousMetalsProfessor.com), and compare that to the deal you’re being offered. Reputable dealers at best will offer you the spot price, usually on a one time deal. Therefore, if you see a 1 oz coin of silver being offered for 10$, chances are it’s a fake. In fact I would guarantee that it’s a fake. Stick to reputable dealers. Small business silver pourers should be supported too, as long as they’re vetted (having a decent social media presence is a good indicator of legitimacy).
Buying On The Secondary Market
Buying on the secondary market has it’s obvious advantages. For one you don’t have to pay for the premiums that dealers need to cover their margins. On the other hand you don’t always get the pristine quality that comes with newly minted bullion. Silver is silver, so this isn’t much cause for concern. The bigger issue with the secondary market is fraud. Buying from individuals online can result in receiving fake precious metals, or potentially not receiving any silver after your purchase. One way to avoid this would be to purchase off of people who are on /r PMSforsale. The stackers who sell on this reddit group receive recognition for being reputable sellers/buyers. There are anecdotal testimonies that this can be a great way to avoid getting ripped off.
What if you receive bullion online, or have received it before, and aren’t sure if it’s a fake how do you know? Well, for one you could test to see if the product is magnetic. Silver and gold are not magnetic, so if the coin/bullion responds to a magnet they are clearly not legitimate. Silver/gold plated copper won’t test positive on this test though, so it’s not a foolproof way to test for fakes. You could also check out this collection of frauds. I’d recommend going over this list a few times if you’re ever going to purchase from the secondary market. You could also call a local coin shop and see if they’d be willing to test the products for you.
Finding Reputable Dealers
Obviously purchasing silver from a reputable dealer is a foolproof way of avoiding investing money in worthless junk. But how do you know how to find a reputable dealer? If you’re just starting to invest and don’t know anyone else who does, this can be a challenge. Thankfully if you live in the United States or Canada both of their mints have a list of reputable dealers who sell their products. If you live in the United States visit their mint, and if you live in Canada you can see their respective catalog. This is one surefire way to avoid buying any fake precious metals online, especially if you live in a region without a coin dealer. These lists might not include small businesses though, so if you want to support your local economy try browsing local reviews to ensure you go somewhere with a good reputation.
What To Avoid At All Costs
Some of what’s covered in this paragraph seems like a no brainer for seasoned investors, but we’ll go over them for good measure. Don’t buy from Wish or Alibaba. Just don’t. You’re about as likely to find actual precious metals on these sites as you are to find it in your own backyard. Along with these sites, avoid anyone who directly DMs you, emails you, or approaches you with a “backroom deal”. This kind of fraudulent activity tends to become more active during times of economic turmoil, typically when gold and silver prices are on the rise.
Buying Falsely Advertised Silver
Sometimes legitimate silver is sold but with falsely advertised claims. I’m not sure how the FTC allows for this form of sale, but it does happen. I was reading an article talking about how one woman was convinced by a T.V. advertisement to buy silver that was 3x the spot value. This erroneous form of sale takes advantage of ignorance, and can quickly reduce your bank account with false claims of increases in numismatic value where none are projected. If you know any family or friends interested in silver, talk to them, or send them this article. One less penny in the hands of these individuals means less money for them to advertise these products.
Visit Precious Metals Professor
I don’t mean to drop an advertisement about myself in this article, but I really do want to give people accurate information. There are so many false claims about metals bombarding the internet. Part of the reason I started this blog was to provide accurate information on these markets to everyone. We’ll be covering some reputable dealers on the site, as well as how to get into precious metals investing with honest information. I won’t be providing advice to everyone, but all information on this site is intended to be honest, and 100% factual.
One example I saw on r/ Silverbugs showed a dealer who had successfully sold over 100 fake precious metals. This grinds my gears. I hate the thought of someone investing their hard earned money on any products that are fact. It can leave a bad taste in your mouth and may even turn them off of investing in precious metals forever. In order to avoid this from happening to someone you know, send them this article! The more informed we all are, the less likely we are to see fakes in the future (if you find a database with more silver fakes, send me an email using the form on the site!)