When the value of precious metals rises, investors need to beware. Several individuals claiming to be legitimate gold traders are looking to dupe investors across the United States and beyond.
The Fake Gold Trader Scammers
With the price of gold recently going through a very bullish period, everyone is interested in this precious metal. Trading gold, which can be done on Vaultoro, is gaining popularity once again. It is a bit unclear if the novel coronavirus outbreak is fueling this sudden demand. One thing’s certain” traders are diversifying their portfolio once again.
As demand rises, and the gold price does too, investors need to beware. A growing network of scammers is trying to dupe American traders. These scammers will position themselves as gold traders, yet they are simply looking to steal money from unsuspecting victims.
This particular method of a scam is not new. Over the years, the gold industry has noted ample fraudulent approaches reported by clients. Every time the price of gold rises, these scammers will crawl out of the woodwork. This trend will not necessarily change anytime soon either. Instead, it seems that the opposite is coming true.
Spotting the Scams
So far, several types of fraudulent approaches have been noted. Most of them occur over the internet, which is logical. People appear to be too trusting online, especially when big money is involved.
Any off-market product being offered to investors needs to be scrutinized. The same goes for excessive spreads – both for buying and selling. Last but not least, no one should pay upfront for goods or services without having some confirmation of the item being shipped.
Rising gold prices tend to attract a lot of uneducated traders. The demand for gold bullion coins tends to increase during these periods. A lot of low-value coins will suddenly be overpriced, in an attempt to defraud unknowing investors. Conducting one’s research is crucial when finances are involved, regardless of the asset in question.
Another common scam is known as the “empty vault”. Fake gold dealers claim to provide safe storage for gold owned by the investor. In reality, these vaults do not exist, thus any bullion being transferred will be lost forever.
On a global scale, these scams can prove to be extremely successful. Millions of dollars are lost to scammers every year. With the current gold price, it seems plausible to assume that the number of scam attempts will only increase. For investors and traders, that means being on one’s toes is of the essence.