6 Ways to Not Get Ripped off by Your Bullion Dealer

James DiGeorgia

I literally grew up in the rare-coin and precious-metals industry. I stated collecting at around age 6 and became a professional dealer at 15. Then at the ripe old age of 16, I opened my first precious-metals and rare-coin brokerage firm.

I’ve just turned 54 so, when it comes to buying and selling rare coins and physical precious metals, I have 48 years of seeing every trick and scam in the business.

Throughout the years, I’ve encountered plenty of dishonest, and some outright-criminal, precious-metals brokers. I can share quite a few stories about rare-coin dealers going nuts when I would expose their scams in one of my publications.

A few went away. But as long as there are investors eager to buy bullion, there’s always the danger that someone out there is cooking up ways to take advantage of them.

And so today, I’d like to share with you six rules for buying and selling precious metals like gold, silver and palladium the right way.

Several rare-coin and precious-metals companies run ads promising a 1% markup. Not such a good deal.

In today’s volatile metals market, there are many companies advertising on television, radio and the Internet — boasting that the prices they charge are just 1% over their cost.

This is a serious misrepresentation.

What they are not telling you is that 1% does not actually mean 1%.

Remember, their real cost includes overhead, such as the salaries of their administrative staff and shipping department, rent and utilities. Therefore, when these companies sell metals at 1% over their cost, they are pricing them based on the cost of running their business.

The actual cost of precious metals that a legitimate dealer pays is only the actual cost of the metal itself — without adding any other overhead costs to it.

It’s SHOCKING how few dealers and brokers make actual daily buy-sell price spreads based on the actual spot market prices for the physical gold, silver and platinum bullion bars and coins.

Here’s a short guide to not only getting the best-possible prices, but also how to feel good about the quality of your purchase!

Rule #1: When buying physical bars and coins, really check out the firm.

Never rely on the fancy TV ads or color brochures. If the firm doesn’t have a solid Better Business Bureau rating, don’t walk. RUN!

Amazingly you’ll find many firms in the industry have horrible BBB ratings.

Look online and make sure that the company doesn’t have pending lawsuits. You’d be shocked how many firms in the precious-metals and rare-coin industry have been bilking clients by not delivering or not paying for product when clients have sent it to them.

Rule #2: Make sure you’re not cheated on the fill price.

When you purchase gold, silver and platinum bullion, only pay a price that is based on the up-to-the-minute spread that is calculated from the actual up-to-the-minute spot price of the metal.

Forget 1% over cost. Too many times, it is nonsense. Many brokers and dealers are charging between 5% and 7% over the 1% their advertising leads investors to believe they are being charged.

Rule #3: Make sure the bars and coins you receive when buying are FRESH.

Many dealers sell scratched bars and bullion coins that should be in pristine condition. These coins can trade for as little as 3% under spot.

When buying bullion coins and bars, don’t accept them with even moderate scuffing or nicks. Dealers can refuse to buy them when you try to sell them, or will discount as much as 15%.

Many dealers love to buy impaired-quality bars and coins. They often pay spot or less, dealer-to-dealer, and max out their profit by dumping them on retail buyers who don’t know about this deceptive business practice.

Rule #4: Be prepared to wire or deposit funds with a broker or dealer before they lock in your buy price.

Dealers who take credit cards for bullion purchases mark up their coins and bars as much as 25% to cover the 3% to 4% merchant charges. If you have to use a credit card to buy precious metals, you should NOT be buying.

That isn’t just on the buy side. When you sell rare coins and precious metals, ALWAYS ask for immediate payment when you deliver.

It shouldn’t take more than three days for your check to be mailed. Allow a $15 Federal Express charge, and have the check sent for next-day delivery.

Rule #5: Do not expect a return privilege on bullion coins and bars.

There is no return privilege with bullion coins or bars. The price of gold, silver and platinum fluctuates quickly. In a wildly active precious-metals market, all sales and purchases are final from any dealer.

Rule #6: When paying for, or shipping, rare coins and precious metals, use the U.S. POST OFFICE ONLY.

I repeat …

When paying for, or shipping, rare coins and precious metals, use the U.S. POST OFFICE ONLY.

If there’s a problem and you have paid for or sent your property to a dealer and you used Federal Express, you will discover there is no Postmaster General at Federal Express.

More than a few dealers out there right now are using this loophole to steal from investors. Getting paid via Federal Express is 100% fine, but absolutely not when selling or paying.

But handing your bullion to someone in-person before their check has cleared isn’t a good idea, either.

Never allow the dealer to visit you and leave with the coins. Ship them by U.S. Mail. It is your right to ship them even if you are face-to-face with your buyer.

After all, as Ronald Reagan said, “Trust, but verify.”

Memorize these rules and use them with every future buy and sell transaction, and you’ll be able to protect yourself against getting ripped off from a less-than-trustworthy bullion broker or dealer.

Best wishes,


Your thoughts on “6 Ways to Not Get Ripped off by Your Bullion Dealer”

  1. Your advice is right, dead on. But I would add a couple of ideas. First, establish a good working relationship with local, reputable dealers. More than one is ideal, and it helps if they are in a market of 100,000 people or more. Smaller dealers have to be careful not to lose money on their spread so they are less apt to give good prices. In major cities, dealers have so many people coming in and out of their door that they can give good deals to people who have repeated face time with them.

    Shop around when selling or buying. Sometimes two or more dealers in the same city will give better prices than the other one.

    I did disagree with you a little on scratched coins. Yes, they are the ideal. But if you know there will be a large growth on silver or gold, you can buy coins that are scratched at a discount if you insist that they are inferior. Then you have the actual gold or silver in your possession and it will still appreciate. However, it is better to get the unblemished coins if you can.

    When shipping through the USPS, be sure to insure your shipment. If the postmaster of a little town inquires as to what is in the box, you can always state, “machine parts.” It’s the truth anyway as it’s part of the machine that runs the country! And it won’t tempt a worker there. Always keep receipts of digital photos of what you have inside of the box in case there are quarrels with the post office over paying insurance out over missing items.
    Great topic!

  2. Just a laughable point of note in regards to your reference of only shipping through the USPS:

    The US Mint (www.usmint.gov) will only make shipments through UPS.
    THEY won’t even use the Government regulated USPS!

  3. The US postal service will NOT insure coins. read the fine print. They will gladly take your money, but will not pay a claim on coins.

  4. #I don’t know who’s been screwing this guy over, but I’ve never had the problems he states in this article. Bullion Investors don’t buy Rare Coins, plus who’s ever heard of 1% mark-up on a rare-coin. My guess is that if it’s a Rare Coin with a 1% mark-up, it’s not that rare and you should leave that store.

    #2 Also, any body who buys bullion or rare coins from a firm that advertises on TV, radio or the Newspaper should have their head’s checked for a brain. Only bullion dealers who charge excessive premiums can afford these ads. Which means they are screwing their customer’s to advertise to more people who don’t know a thing about precious metals bullion.

    #3 I’ve never heard of a FRESH bar, newly minted – yes, Fresh – no. Bullion is bought for it’s intrinsic value not necessarily it’s beauty, unless your buying government issued coins. I’ve never heard of being able to get scratched bullion or “Un-Fresh” bars for under 3% of the spot price. Show me where he gets this deal.

    #4 I’ve paid more for bullion using a Credit Card, but I’ve never paid the premiums this individual claims that merchants charged him or others for using Credit Cards. I think he’s calling the Bullion Dealers who advertise on TV, Radio and Newspapers. Most reputable dealers will offer bullion with a slight mark-up above spot. This is to pay for over-head and make a profit (what business is all about). Credit Card fees usually add another 1% to 3% above the total bill.

    5# Returns do exists in the Bullion Dealer Industry, however they do rarely happen, but just remember to keep all the information on the transaction. A good dealer will usually work with their customers.

    6# I’ve never had a problem with Federal Express or UPS. He makes the USPS out to be perfect. I have gone to the post master at my local Post Office more than once and gotten nothing but a blank look from them and told that he would look into my problem, only to never get a response. In contrast, once I had a problem with UPS where they delivered an item to the wrong place. I complained. Within 12hrs, I got the correct item delivered to me, an in person apology from the driver and a call from his supervisor. And I have Never had a problem with Federal Express.

    I’m not trying to question this individual’s personal knowledge of dealing with Bullion Dealers, but maybe he should find better dealers to deal with.

  5. I don’t think that with the way the dollar index is fluxuating that it is unreasonable to think that gold will rise to 1,350 an ounce or even 1,400.

  6. Since there appears no way to respond to special Sunday edition, “Good Times and Gold”, my reply is here:

    Mr. DiGeorgia,
    “The average cost of both small and large precious metals companies is $1,104 per ounce of gold.

    That’s about three times higher than the total cost to produce gold in 2003 … this is much higher than the rate of inflation … and I don’t see any signs that this trend will turn around.”

    First, I have no way of verifying your cost assessment – ‘cherry picking’ the right companies could lead to high end cost numbers. But that’s less an issue than the next.

    Second, you give no explaination as to why gold production costs have exceeded inflation or why that “trend” will continue. Technological advancements in mining techniques should more than offset increased difficulty in accessing mineable ore. Combine that with efficiency gains through corporate consolidations, the cost of producing gold should, AT MOST, be no higher than inflation. Mr. DiGeorgia, further ‘splaining is in order.
    Mark Darby
    Lenexa, KS

  7. You sure about that Post Office recommendation?I’ve read a lot of stories about mail trucks being ripped off.About postal employees stealing mail.I even had a neighbor bring over a package,he saw the mailman drop,on his route.I think our regular mailman is pretty competent,but we get mail from many different mailmen.Some,deliver mail,to us.that should be going to someone else and,I expect,they are getting our mail.My regular UPS guy,who’s been servicing our street,for over a decade, says he knows,just from the address,on any package,who the person is,receiving it.I would trust UPS or FedEx before trusting the Post Office.I have received a few large checks and usually they are sent FedEx.Someone told me,he puts a fictious return business name,like some hardware company,on the package,so when it is shaken the deliverer will think there is some cheap hardware or screws inside.Ever tried to file a damage/loss claim with the Post Office?Good luck with that.

  8. I wish I had been given your advise before I purchased my gold coins at a dealer recommended by a friend. I think I was the victim of many of the warnings you have cited. Where can I go to have my coin appraised to find out how badly I have been scammed?

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