Gold Investing - The Shady Side of Gold & Silver Dealers

The Minneapolis StarTribune (The Strib) recently published an article on various local precious metals dealers and who they have hired as salesmen. And what a sordid tale it is. Ex-cons, druggies, alcoholics, thieves, forgers, bank robbers, fraudsters and more. There are no licensing requirements for men and women employed as sellers of gold and silver - it is up to the owners/management to hire the "right" people for the job. And the companies mentioned in this article (except for Investment Rarities Inc.) have failed miserably.

The Twin Cities appears to be a hotbed of seedy precious metals dealers among the good ones. I would expect most major metropolitan areas would have their mixture of good and bad dealers and maybe mid-size cities too. I was fortunate to work for one of the good dealers (started many years ago and still going strong). A dealer that has been in business several years tends to be more trusted than one only in business for a year or two but that is no guarantee (some of the shady dealers mentioned have been in business since the 1990s).

I am not going to go into detail about the traits of a good dealer - that would require too much space and time (I may tackle that on my Gold Investing Simplified site at a later date). But if I were new to gold investing, here's what I would do. Concentrate on gold bullion coins - both one-ounce coins and less-than-an-ounce (fractional) gold coins. I'm talking Gold American Eagles, Gold Canadian Maple Leafs and South African Krugerrands (and maybe Austrian Philharmonics). Their price is based on the spot price of gold (easily found in several places on the Internet) plus the premium charged by the dealers. Easy to shop around and get the best deal.

The big profits for dealers are in numismatic (rare) coins and one-off gold coins (coins that are not as well known and can be priced higher). If the dealer you chose tries to "push" high priced numismatic coins when you ask for bullion coins, go somewhere else. If they start throwing around terms such as "confiscation proof", more favorable reporting requirements, better price appreciation, blah, blah, blah, go somewhere else. These dealers don't have your best interests at heart. Once you have enough bullion coins in your possession, you can look for select numismatic and semi-numismatic gold coins. I'll discuss that at a later date.

The Strib article I mentioned earlier can be found at Ex-cons make a killing in coins.

Thanks for reading.