How Not to Get Robbed Buying Gold Bars or Rare Coins

My first time around with Weiss Research was more than 20 years ago as the editor of the Silver & Gold Report (SGR).

I loved writing that investment newsletter, and it fueled a passion in me to become an advocate for individuals looking to safely buy and sell bullion.

Besides making recommendations in precious metals and mining stocks, SGR price-shopped a dozen national dealers for the best prices and exposed those who were dirty-rotten scoundrels.

Back then, there was a great deal of repugnant dealer-dishonesty. I wrote some of the stories that lead to the arrest and conviction of several men who did great financial harm to investors.

In addition, many of my feature articles in SGR exposed abusive dealer practices that weren’t necessarily criminal, but did cost investors big bucks they never should have paid.

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Those articles did not help my popularity among the dealer community. My research and my word processor ended a long-term friendship or two with some who make (and, in some cases, once made) their living in the rare coin industry.

Since then, things have improved, by not much.

Gold Buyer Beware

These days, scams are essentially the same and yet the recklessness might even be greater. I was recently reminded about the dangers recently when I learned about the devastating losses — estimated at approximately $40 million — suffered by investors who were doing business with a recently closed California company.

My goal today is to help steer you away from making a bad decision when it comes time to choose your dealer.

Many in the industry believed The Tulving Company in Newport Beach, Calif., to be one of the highest-volume precious metals’ dealers in the United States.

That is, until it recently filed for bankruptcy protection.

The Secret Service has launched an investigation into the company for failing to fulfill as much as $14 million in customer orders.

At this point, it is NOT clear if there was any criminality, but as I have advised dealers in the past…

“If you ever find yourself in financial trouble, STOP. Don’t pretend you will be making up losses and will eventually catch up. When you start spending other people’s money, you can’t personally make good on it. STOP doing business.”

However, Hannes Tulving didn’t stop doing business.

Denial kept the doors open months longer than they should have been.

In fact, as long ago as the early 1990s, the Federal Trade Commission accused the company of overpricing its coins and failing to uphold its return policy.

The cacophony of complaints about non-delivery, delays in delivery, and delays in payment for product steadily climbed.

Then, the doors shuttered.

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Now, I’m not trying to blow sunshine up your you-know-what. I personally flew out to speak with some of the top experts about this deposit in person.

I even wrangled one of the executives from this company into a meeting to get the truth and nothing but the truth.

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Tulving reportedly owes up to 50 creditors as much as $10 million, and the owner seems to have gone into hiding.

$40M … Gone *Poof*!

All told, more than $40 million in customer funds is reportedly at stake.

I wouldn’t be surprised if it were revealed that a considerable amount of the $40 million was gold, silver and platinum.

The clients entrusted The Tulving Company for its safety and security. However, regardless of the reason, it amounts to $40 million going … poof!

This precious metals and rare coin dealer should have shut down sooner. Instead, the number of victims wound up being larger and its financial damage greater.

This is an example of what happens when you entrust rare coins or bullion to the custody of a dealer after you have bought them from the dealer.

Fortunately …

There are far more honest dealers than there are incompetents or criminals.

You can find a reputable dealer. Regardless of whom you do business with, the No. 1 rule when buying rare coins and bullion is…

  • NEVER, EVER store your precious metals and rare coins with any dealer, after you have bought from them. Get a safety deposit box and store your possession.

Here are some other rules:

  • ONLY do mail business via the U.S. Post Office. Whether it is sending payment for any rare coin you BUY or if you are SELLING precious metals and rare coins, be sure to use certified U.S. mail only!

Buying insurance can add to your peace of mind, too. An astute subscriber also recommended taking photos of the contents of any box you ship, if you’re the seller.

After all, most law enforcement agencies do not have the staffing or mandate to try to nip potential frauds in the butt. They only come in long after investors are looted.

By that time, they offer little help to investors in recovering their monies.

U.S. Postal Inspectors are the most aggressive, but they are often excluded from helping with a developing fraud because dealers know that using FedEx (or similar private companies) keeps them out of the Postal Inspectors’ jurisdiction.

  • Fancy websites or four-color brochures are no substitutes for looking up a firm’s Better Business Bureau (BBB) rating.
  • If you haven’t received delivery, do not let the dealer get away with telling you that there is a shipping delay. A problem with delivery, especially 30 days after payment, is a huge RED FLAG!
  • I have flown out to surprise a few dealers in their offices or stores when I didn’t get paid or didn’t receive the precious metals or rare coins I paid for because, like a kidnapping — the longer you wait to retrieve the money, the more chances the disappearance is going to be permanent.
  • Be mindful when a dealer doesn’t return your calls or they double-talk to you to explain why a transaction hasn’t been fulfilled.

If they can take your money, then they can promptly answer their phone and deliver your bullion. No exceptions.

  • Avoid precious metals’ brokerage firms that feed you into a bullpen of heat merchants. Try to buy and sell with a dealer who makes markets in the precious metals you like most (e.g., Gold American Eagles, Silver Rounds, Pandas, etc.). Make sure you see their prices.
  • Check eBay (EBAY) to see if the dealer markets rare coins and bullion products there. Look for eBay dealers who have been with the company many years, show large numbers and have virtually no complaints.
  • Always start with a modest purchase. That will introduce you to how the company fulfills orders and how fast they do it, as you gradually get comfortable with doing business with the dealer. In the case of Tulving, some clients spent as much as six figures on coins and are still waiting for something to show for it.
  • Don’t focus on the lowest price; focus on finding the safest dealer. There is no such thing as a free lunch. Take it from me: It’s better to pay an A+ or A-rated dealer — who has been in continuous business for years and charges a few percentage points more to make sure your precious metals and rare coins reach you — than to pay a bargain price and never see delivery.

I’m a big fan of getting a good deal when it comes to buying stocks, options and ETFs. But when it comes to bullion, I believe in getting a fair price. And if that means paying a few cents more to deal with a top-notch professional who can deliver coins/bars in a timely manner (or pay promptly when he or she is the one doing the buying), it’s worthwhile. After all, investing in your investments can yield the greatest return of all, in the form of peace of mind.

Watching Your Chickens,

James DiGeorgia

Your thoughts on “How Not to Get Robbed Buying Gold Bars or Rare Coins”

  1. Great info here, and can I add a few things? First, deal with a couple of local reputable dealers if possible. Sometimes one will give you a better price over the other one when you are selling. Second, each dealer can sometimes get in an unusual stock of something and offer those items at a discount. For example, one dealer here offered some Mexican silver coins last week for a smaller premium than usual. These were from the Mexican mint, still in the original packing! Very unusual to get something that untouched. Last week, I got a great price on 1/4 oz commemorative gold coins, which almost never happens. I like them so in the future if I want to gift them to children or grandchildren, it’s not a huge amount of money. But I’m like you, buddy. Always, if possible, take possession.

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