All that glitters… Beware of gold investing scams

by Natalie MacLellan on October 26, 2010

in Fraud Prevention

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The soaring price of gold has sparked a modern-day gold rush among investors eager to recover stock market losses. But it’s still a Wild West out there, and dangers abound for prospective gold investors.

The idea of gold as a “safe investment” is a myth. An investment in gold is not foolproof. Know your investment objectives and your risk tolerance, and don’t be swayed by trends. Gold may not provide long-term investment returns. Gold is a commodity, and, like other commodities, its price can fluctuate dramatically.

Historically speaking, the value of gold-related investments fluctuates even more than the stock market. Gold often moves in reverse of stocks and bonds, so when stocks are down, gold may seem like a very tempting investment.

Beware of gold investment scams. Where there is an investing trend, there is a con artist trying to take advantage of it. For example, in one typical scheme, a seller offers to sell actual gold bullion and then retain the investor’s gold in a “secure” vault with a promise to sell the gold for the investor as it gains in value. In many instances, the gold does not exist. In another typical scenario, a company encourages investors to cash out of their poor-performing investments to purchase gold, which may be nothing more than “fool’s gold.”

Remember, if you are advised to cash out investments and roll funds into a different type of investment, make sure the person advising this is a registered investment adviser.

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{ 2 comments… read them below or add one }

1 Marg 10.27.10 at 3:54 pm

If it looks too good to be true, if probably is!

2 Melanie MacDonald 10.28.10 at 4:49 pm

I haven’t put much thought into investing in gold, but glad to know a little bit more about it – thanks!

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