Nervous investors have been pouring into the gold and silver markets over the past two months.

Money Metals Exchange is proud to have helped almost 20,000 new customers with a precious metals purchase in recent weeks, many of whom came over from other dealers struggling with inventory shortages and ridiculous delivery delays.

A new wave of investors is getting the message; the Federal Reserve will never stop printing currency units and punishing savers with lower interest rates, Congress will never put deficits under control, and the government-terminated U.S. economy may not recover for years.

For most clear-eyed investors, it is time to batten down the hatches.

Lots of them are diversifying into precious metals.

Unfortunately, shady coin dealers are out in force, trying to capitalize on this situation. We can see it in the proliferation of these dealers advertising on TV and radio with their celebrity spokesmen.

If investors pick up the phone and call one of these outfits, they could get severely punished for making an otherwise good decision.

Deciding to buy some gold and silver as a safe-haven makes a ton of sense. However, plenty of people with sound intentions will call the wrong dealer and let some high-pressure salesperson convince them to buy dubious “rare,” “graded,” or “proof” coins.

Instead of betting on gold and silver bullion as a safe haven, they find themselves gambling in the highly speculative and illiquid numismatic market. The winners are usually just the dealers selling coins for 2-3 times what their precious metal content is really worth.

There is zero reason to buy numismatic coins – unless you are an experienced collector. If you are an investor or someone simply looking to preserve wealth, the price-transparent bullion market is where you want to be. Don’t let yourself get derailed, regardless of how smooth or insistent the sales pitch may be.

Here are some red flags to watch out for:

  • The salesperson gives you some story about why you should avoid bullion and buy collectible coins instead.
     
  • The salesperson claims numismatic coins have tax advantages, asserts that only bullion can be confiscated, or claims numismatic coins will outperform bullion as an investment. These are all nonsense. (You are guaranteed immediate confiscation through the high premiums on "rare" coins.)
     
  • The salesperson calls regularly and uses pressure techniques.
     
  • The dealer claims to have a “super hot buy” and that if you don’t grab it immediately, someone else will.
     
  • You are told the resale value is higher than the current purchase price, as if the salesperson is really going to sell coins for a loss.
     
  • The dealer doesn’t publish bid prices – the price they pay to buy coins from clients. The bid will often be 30% to 50% less, if they'll buy items back at all.

The key to making a good investment in precious metals is to buy highly liquid bullion coins, rounds and bars at low premiums. And also choose a dealer you can count on to deliver quickly and reliably.

Investors who stick to these simple guidelines will be well positioned for the dual threat of inflation and economic turmoil.

They won’t start way underwater because the coins they bought were vastly overpriced. They also won’t be stuck having to find some greater fool to buy their “rare” coins when the time comes to sell – a problem which may be compounded if hard economic times reduce the number of people buying luxuries like collectible coins.

Money Metals Exchange and its staff do not act as personal investment advisors for any specific individual. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. Readers and customers should be aware that, although our track record is excellent, investment markets have inherent risks and there can be no guarantee of future profits. Likewise, our past performance does not assure the same future. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing through Money Metals, you understand our company not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. This Website is provided “as is,” and Money Metals disclaims all warranties (express or implied) and any and all responsibility or liability for the accuracy, legality, reliability, or availability of any content on the Website.

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