Educational Consumer Tips
Better Business Bureau
Consumers interested in investing in coins should keep in mind the following tips:
- Research the history of the specific coin - Just because it is advertised as "rare" or "in limited supply" does not indicate how many are currently available on the market.
- Ask for the coin's melt value - The melt value for virtually all bullion coins and collectible coins is widely available.
- Shop around and compare prices - For example most banks offer gold bullion, often at a lower markup than dealers. Also, get an independent appraisal of the specific asset you're considering.
- Ask for a guarantee or certificate of authenticity - Research the company behind the guarantee or certificate because certificates of 'authenticity' can be faked.
- Be wary of buying bullion or bars that won't be delivered to you - Sometimes the bullion or bar will be sent to a secured facility by the seller or a third party. When you buy metals without taking delivery, you face the risk that the metal doesn't exist, isn't of the quality described, or isn't properly insured. Research the company advertising the investment. Make sure they have a long history of dealing in coins, satisfying their customers and are free from any advertising concerns and government actions. Look for consumer reviews online.
- Review the information provided by the company prior to purchase - The Telemarketing Sales Rule prohibits sellers and telemarketers from failing to disclose truthfully, in a clear and conspicuous manner, all material restrictions, limitations, or conditions to purchase goods before a customer pays for those goods. Do not make an immediate decision.
- Refuse to "act now," regardless of the consequences - Do not buy anything until you have had an opportunity to compare their prices with prices offered by reputable coin dealers in your area, or through Internet auctions. Consult with a reputable financial advisor you trust who has specialized investment knowledge. You may want to talk to other investors, too. Also, consider additional costs associated with the investment. You may need to buy insurance or a safe deposit box, or you may need to rent offsite storage to safeguard your bullion. These costs will cut into the investment potential of precious metals.
- Walk away from certain sales pitches - Some pitches minimize risk and sales representatives who claim that written risk disclosures are just formalities required by the government, and therefore not necessary. Reputable sales reps are upfront about the risk of particular investments. Typically gold and silver coins achieve their value through a combination of the following four variables:
1. Rarity - The coin rarity is a combination of the supply of the coin when it was originally minted and the number of those coins that are still known to exist.
2. Grade - The coin grade must be determined by an appraiser and is a number determined by how closely it resembles its original condition when newly struck.
3. Quality - The coin quality is measured by its characteristics. This includes how well it was minted, its survival condition and overall eye appeal that set it apart from other coins of the same design and certified grade. Individual coins that are above average in appearance for strike, luster, evenness, color of toning and eye appeal are considered to be higher in quality and in greater demand and value. Quality is best measured by a trained appraiser.
4. Popularity - Some coins are more popular than others and tend to have higher market values than coins with the same grade.