What is the most common precious metals scam?

Overpriced numismatic coins sold to inexperienced investors through high-pressure sales tactics. The coins are marked up 50 to 300 percent or more above their actual market value, and the buyer typically cannot resell them without taking a significant loss.

How can I tell if a gold coin is counterfeit?

Use a combination of verification methods: check weight and dimensions against published specifications, perform an acoustic ping test, and if possible, test with a Sigma Metalytics verifier. Buying from reputable dealers who source from sovereign mints is the most reliable way to ensure authenticity.

Are 'rare coin' investments legitimate?

Legitimate numismatic investing exists, but it requires deep specialized knowledge. The scam version targets beginners who lack the expertise to evaluate rarity and grade, selling them overpriced coins positioned as superior investments. Beginners should start with standard bullion products.

Should I be suspicious of dealers who cold-call me?

Yes. Unsolicited phone calls pitching precious metals are one of the strongest red flags in the industry. Reputable dealers build their business through transparent online presence, word of mouth and advertising—not cold calls.

Can I get my money back if I was scammed?

It depends on the circumstances. Filing complaints with the FTC, your state attorney general and your payment provider may help. Credit card disputes can sometimes reverse charges. For wire transfers, recovery is more difficult but not impossible if you act quickly.

What premiums are considered normal for gold and silver bullion?

Premiums vary by product, but as a general guideline: gold coins carry premiums of 3 to 8 percent over spot, gold bars 1 to 5 percent, silver coins 10 to 25 percent, and silver bars and rounds 5 to 15 percent. Premiums significantly outside these ranges warrant scrutiny. Check our spot vs. premium guide for current benchmarks.

Is it safe to buy precious metals online?

Yes, when you buy from a reputable, established online dealer with transparent pricing, secure payment processing, insured shipping and clear return policies. Online dealers often offer better prices than local shops due to lower overhead.

How do I verify a coin's grading certification?

Enter the certification number on the grading service's website (pcgs.com/cert or ngccoin.com/certlookup) to verify the coin's details match what is printed on the slab. Also inspect the slab itself for signs of tampering or poor-quality reproduction.

How to Avoid Precious Metals Scams: Red Flags Every Buyer Should Know

Precious metals scams cost unsuspecting investors millions of dollars every year. From counterfeit coins and overpriced numismatics to bait-and-switch tactics and telemarketing fraud, the schemes are varied and increasingly sophisticated. Learning to recognize red flags and verify authenticity is essential for anyone who buys gold or silver. This guide exposes the most common scams, teaches you practical verification methods and helps you choose reputable dealers so your hard-earned money goes toward real, investment-grade precious metals.

Why Precious Metals Attract Scammers

Several characteristics of the precious metals market make it attractive to bad actors:

High dollar values – A single fraudulent transaction can yield thousands of dollars in profit for a scammer.
Emotional buyers – Economic fear, inflation anxiety and retirement concerns create urgency that scammers exploit.
Knowledge gaps – Many first-time buyers lack the expertise to distinguish genuine products from counterfeits or fair pricing from inflated markups.
Limited regulation – While laws exist against fraud, the precious metals retail market is less regulated than securities, leaving more room for deceptive practices.

Common Precious Metals Scams

1. Counterfeit Coins and Bars

Counterfeiting has become more sophisticated with advances in manufacturing technology. Common methods include tungsten-core gold bars plated with real gold, base-metal coins with gold or silver plating, and replicas that mimic the appearance of popular bullion products. Counterfeit items may look convincing at a glance but fail under proper testing.

Protect yourself by buying only from established, reputable dealers who source directly from sovereign mints and LBMA-approved refineries. Upon receipt, verify your purchase using the testing methods described later in this article.

2. Overpriced Numismatic and Collectible Coins

This is one of the most widespread and profitable scams in the industry. A dealer convinces a buyer—often a retiree or first-time investor—that rare or graded coins are a superior investment to standard bullion. The coins are then sold at markups of 50 to 300 percent or more above their actual melt and collectible value.

While legitimate numismatic coins do exist and can appreciate in value, most beginners lack the expertise to evaluate rarity and grade accurately. Unscrupulous dealers exploit this knowledge gap to generate enormous commissions. If you are new to precious metals, stick with well-known bullion products until you have developed deep numismatic knowledge or access to an independent expert.

3. Bait-and-Switch Tactics

A dealer advertises a popular product at an attractive price to get you on the phone, then uses high-pressure sales tactics to steer you toward a different, more expensive product—usually overpriced collectibles. The original product is suddenly described as 'out of stock,' 'a poor investment' or 'not what serious investors buy.' This classic bait-and-switch is a major red flag.

4. Fake Grading and Certification

Third-party grading services like PCGS and NGC provide independent assessments of a coin's condition and authenticity. Scammers may sell coins in counterfeit grading slabs, forge certification numbers, or use legitimate grading slabs for different coins than what was originally graded. Always verify a coin's certification number on the grading service's website before purchasing graded coins from secondary sources.

5. Telemarketing and High-Pressure Sales

Cold calls pitching precious metals as an urgent opportunity are a hallmark of fraud. Legitimate dealers do not need to cold-call prospects and create artificial urgency. Common pressure tactics include claims that prices are about to skyrocket, that a limited allocation is available, or that the government is about to restrict precious metals ownership. None of these claims warrant abandoning careful research.

6. Unallocated or Paper Metal Schemes

Some companies sell 'precious metals' that exist only on paper or in pooled, unallocated accounts with insufficient physical backing. If the company goes bankrupt, customers may discover their metals do not actually exist. Insist on allocated or segregated physical ownership, and consider taking delivery or using a reputable independent depository.

Red Flags That Signal a Scam

Watch for these warning signs when evaluating any dealer or offer:

Unsolicited contact – Cold calls, unsolicited emails or social media messages pitching precious metals.
High-pressure urgency – Claims that you must buy immediately or miss a once-in-a-lifetime opportunity.
Prices far above or below market – If a deal seems too good to be true, it probably is. Conversely, premiums that are dramatically higher than competitors for the same product suggest overpricing.
Reluctance to disclose premiums – A reputable dealer will clearly show you the spot price and the premium. If a salesperson avoids this breakdown, walk away.
Emphasis on 'rare' or 'exclusive' products for beginners – Pushing numismatics or collectibles on inexperienced buyers is a classic upselling tactic.
No verifiable business address or track record – Legitimate dealers have physical addresses, verifiable business histories and public reputations.
Guaranteed returns – No honest dealer can guarantee that precious metals will increase in value. Metals are an investment, and all investments carry risk.
Requests for unusual payment methods – Wire transfers to personal accounts, cryptocurrency-only payment, or cash-only transactions with no receipt are red flags.

Verification Methods: How to Test Authenticity

Even when buying from a trusted source, knowing how to verify your metals adds an important layer of confidence. Here are the most practical methods for individual investors, explained in our purity guide in greater detail:

Sigma Metalytics Precious Metal Verifier

This portable electronic device measures electrical resistivity through the full thickness of a coin or bar. Because different metals have distinct resistivity signatures, the Sigma can detect tungsten-filled counterfeits and base-metal fakes that visual inspection would miss. It is the single most effective at-home verification tool available and is used by many reputable dealers.

XRF (X-Ray Fluorescence) Analysis

XRF analyzers use X-rays to determine the elemental composition of a metal's surface. While extremely useful for screening, XRF only measures the outer layer and can be fooled by sophisticated gold-plated tungsten counterfeits. Many coin shops and dealers have XRF machines available for customer use.

Acoustic (Ping) Testing

Striking a coin and analyzing the sound frequency it produces is a quick, free screening method. Genuine gold and silver produce characteristic frequencies that differ from base metals. Free smartphone apps like 'Bullion Test' automate the analysis and compare the recorded sound against known profiles.

Weight and Dimension Verification

Every reputable bullion product has published specifications for weight, diameter and thickness. A precision scale accurate to 0.01 grams and a digital caliper can detect deviations from these specifications. This is a simple, inexpensive first check that catches many crude counterfeits.

Specific Gravity Testing

This method compares a piece's weight in air to its weight suspended in water to calculate its density. Gold has an exceptionally high density (19.32 g/cm³), making this test effective for many counterfeits—though tungsten's similar density (19.25 g/cm³) limits its usefulness for gold specifically.

Choosing a Reputable Dealer

The single most effective way to avoid scams is to buy from a dealer with a proven track record. Here is what to look for:

Years in business – Longevity is not a guarantee of integrity, but scam operations rarely last long.
Transparent pricing – Spot price, premium and total cost should be clearly displayed for every product.
Independent reviews – Check platforms beyond the dealer's own website for honest customer feedback.
Industry memberships – Affiliations with the American Numismatic Association, Industry Council for Tangible Assets, or similar organizations.
Clear return and buyback policies – A dealer willing to buy back what they sell demonstrates confidence in their products.
Educational commitment – Dealers who publish guides, market analysis and educational content are invested in long-term customer relationships.

For a complete pre-purchase process, follow our buying checklist and our step-by-step buying guide.

What to Do If You Suspect a Scam

If you believe you have been the victim of a precious metals scam, take these steps:

Document everything: save emails, call records, receipts, product photos and any marketing materials.
File a complaint with the Federal Trade Commission (FTC) at ftc.gov.
Report the dealer to your state's attorney general consumer protection division.
If the scam involved interstate commerce or mail, contact the US Postal Inspection Service or the FBI's Internet Crime Complaint Center (IC3).
Dispute the charge with your payment provider if applicable.

Frequently Asked Questions

What is the most common precious metals scam?: Overpriced numismatic coins sold to inexperienced investors through high-pressure sales tactics. The coins are marked up 50 to 300 percent or more above their actual market value, and the buyer typically cannot resell them without taking a significant loss.
How can I tell if a gold coin is counterfeit?: Use a combination of verification methods: check weight and dimensions against published specifications, perform an acoustic ping test, and if possible, test with a Sigma Metalytics verifier. Buying from reputable dealers who source from sovereign mints is the most reliable way to ensure authenticity.
Are 'rare coin' investments legitimate?: Legitimate numismatic investing exists, but it requires deep specialized knowledge. The scam version targets beginners who lack the expertise to evaluate rarity and grade, selling them overpriced coins positioned as superior investments. Beginners should start with standard bullion products.
Should I be suspicious of dealers who cold-call me?: Yes. Unsolicited phone calls pitching precious metals are one of the strongest red flags in the industry. Reputable dealers build their business through transparent online presence, word of mouth and advertising—not cold calls.
Can I get my money back if I was scammed?: It depends on the circumstances. Filing complaints with the FTC, your state attorney general and your payment provider may help. Credit card disputes can sometimes reverse charges. For wire transfers, recovery is more difficult but not impossible if you act quickly.
What premiums are considered normal for gold and silver bullion?: Premiums vary by product, but as a general guideline: gold coins carry premiums of 3 to 8 percent over spot, gold bars 1 to 5 percent, silver coins 10 to 25 percent, and silver bars and rounds 5 to 15 percent. Premiums significantly outside these ranges warrant scrutiny. Check our spot vs. premium guide for current benchmarks.
Is it safe to buy precious metals online?: Yes, when you buy from a reputable, established online dealer with transparent pricing, secure payment processing, insured shipping and clear return policies. Online dealers often offer better prices than local shops due to lower overhead.
How do I verify a coin's grading certification?: Enter the certification number on the grading service's website (pcgs.com/cert or ngccoin.com/certlookup) to verify the coin's details match what is printed on the slab. Also inspect the slab itself for signs of tampering or poor-quality reproduction.

Shop With Confidence at MintBuilder

The best defense against precious metals scams is knowledge and a trusted dealer. MintBuilder provides transparent pricing, products sourced directly from world-renowned mints and refineries, and the educational resources you need to buy with confidence. Explore our gold products and silver products today, and check our premium analysis to ensure you are getting fair value on every purchase.