10 Red Flags
When you invest in rare coins and precious metals, it's vital to know that you're being treated fairly by your partners. Look out for these ten warning signs that someone doesn't have your best interest in mind.
10 Red Flags To Look Out For When Investing In Rare Coins and Precious Metals
The following is an excerpt from our Company Prospectus, a primer on tangible asset investments and Coin Trader Inc.
Our Prospectus can be downloaded from our homepage, for your convenience.
High Pressure Sales Tactics: No investment counselor should try to force you into a hasty decision. When it comes to investment scams, there is almost always some reason why you must “act immediately.” In the real investment world, a good deal is as good a deal tomorrow as it is today. If a salesperson does not treat you with the respect you deserve, you should not do business with that salesperson or their company.
Promises of Guaranteed Investment Returns: There are NO guarantees in the investment world. If anyone guarantees you a return on a numismatic or bullion investment, remember the old saying: “If it sounds too good to be true, it probably is.”
No Written Buyback Policy: Legitimate coin and bullion dealers make a two-way market in the products that they sell you. In other words, honest coin dealers both buy and sell. If a dealer does not have a written buyback policy, you should neither assume that they will buy your coins back nor should you rely on the verbal representations of a salesperson.
No Return Policy: Honest coin dealers allow you to return your numismatic purchases for a full refund if you are not satisfied, usually for somewhere between 7 and 10 days. If a dealer does not have such a written policy, don't assume that they will allow you to return an item. Don't depend solely upon the words of a salesperson. Keep in mind that such policies cannot apply to bullion products, whose value changes constantly.
Unusually High Prices: With the advent of the internet, it is possible for a coin buyer to make sure they are not paying too much for a coin. Never pay retail! Disregard what a coin dealer tries to tell you as an excuse or justification for a high price. You should never feel any obligation to pay more for a coin than the lowest available price.
Churning: Beware of a coin dealer or salesperson who recommends that you trade too frequently. Coins are a long-term investment best held for 3-7 years. Excessive trading is seldom justified and often runs up commission expenses making a profitable investment experience impossible
"Shipwreck Coins:" Unfortunately some of the worst numismatic investments of the past 20 years have been associated with recoveries from shipwrecks. These coins are overhyped and sold at unjustified premiums. The marketing and sales techniques associated with treasure coins have also implied far greater rarity than is the actual case. If a shipwreck coin is a great deal, you do not have to buy it when it is first released.
Coins Graded by Obscure Grading Services: Unfortunately some of the worst numismatic investments of the past 20 years have been associated with recoveries from shipwrecks. These coins are overhyped and sold at unjustified premiums. The marketing and sales techniques associated with treasure coins have also implied far greater rarity than is the actual case. If a shipwreck coin is a great deal, you do not have to buy it when it is first released.
Huge Advertising Budget: Someone has to pay for national TV and radio ad campaigns. If you buy from a dealer who does those things, that someone is you!
Dealers Who Insist You Pay With Credit Card: You should be able to pay for your coins by any one of several methods: check, money order, bank wire, or credit card. However, if a dealer insists that you pay by credit card, this can be indicative of something sinister.