Today, I’d like to answer a question I’ve been getting a lot recently.

Many folks have been asking me similar questions along this vein, but I think Robert B. from Michigan said it best.

“You recommend buying Gold for the next recession. But how can NORMAL people buy gold without getting taken for a ride? Why are all the prices I see online different? How do I know I’m not being SCAMMED?”

I understand where you’re coming from Robert.

The internet is a bit of a double-edged sword in that respect.

Yes, it’s created a virtual marketplace where people all over the world can trade with each other. But now, there are so many vendors and shops online, that you don’t know who you can and can’t trust.

This has given rise to whole host of online gold scams — where folks sell fake gold bullion or, in some cases, certificates for bullion that never existed in the first place.

It’s like my mother used to say, “Variety is the spice of life… but add too much spice and you’ll spoil the soup.”

Just last year, a retired British man was left penniless and homeless after he sent £200,000 (about $230,000) to an online gold dealer in Ghana.

The deal seemed legit. In fact, he didn’t suspect anything was wrong until the dealer asked him to pay a further $350,000 for tax.

That said, there are some huge advantages to buying gold online (namely, the price). And — as long as you’re careful and use a reputable dealer — you can bank big savings, safely and securely.

Here’s a quick guide to make sure you don’t get ripped off when buying gold online.

Editor’s note: If you’d like to know EVERYTHING about buying precious metals, click here to grab a FREE copy of Investing in Precious Metals 101: Everything You Need to Know About Buying and Storing Physical Gold and Silver.

Online vs. Local

Doing business with a local coin shop gives you peace of mind, since it allows you to see the gold before you buy it and take it home with you that day.

However, you’ll almost always find better prices online.

The reason is twofold: Online dealers have low overhead costs (no brick-and-mortar store to maintain), and they can get multiple wholesalers to bid for your business so you get the lowest price.

Spot Price vs. Ask Price

The real-time price of an ounce of gold is called the spot price, and it pays to know what it is before you Buy Gold Coins online.

When visiting different dealer websites, you’ll notice their ask prices are higher than gold’s spot price. The difference between the two is called the premium. Dealers charge a premium to recoup the fees they paid to their wholesaler and make a profit.

Coins are more expensive to produce than gold bars, so their premiums are higher. However, it is worth paying a little extra to hold gold in smaller, more liquid amounts.

If you ever wanted to sell a portion of your stash, it’s easier to find buyers for coins than bars. And since coins are legal tender, there’s no need to authenticate the metal before you sell it.

Fractional sizes (1/2, 1/4, 1/10, 1/20, and 1/25 oz.) are available. But while they are highly liquid and fairly affordable, 1 oz. gold coins such as the Gold American Eagle or Gold Maple Leaf are the better buy.

This is because minting costs are fixed regardless of the size of the coin, so you pay a higher premium for fractional coins than you do when buying 1 oz. coins.

Buying from eBay

Some investors have had great experiences buying coins online from eBay or similar marketplaces. It’s a convenient way to buy, shipping is often free, and there’s no state sales tax.

A word of caution however: eBay is not ideal for investors who are new to the precious metals market.

While there are reputable sellers on eBay, it’s not the best place to buy gold coins online if you’re not a knowledgeable investor, especially if you’re not familiar with the vendor.

Thousands of fake gold coins are sold every month on the site, and there’s nothing stopping someone from misrepresenting what they are selling or artificially driving up bid prices.

For me, when dealing with such large amounts of money, it’s not worth the risk.

How to Find a Reputable Dealer

When you buy gold coins online, you assume an inherent risk. You have to trust that the dealer will fulfill your order and is selling you the real thing.

Because of this, it is never a good idea to just pick a dealer without doing your research. Here’s a checklist for vetting dealers before you buy gold coins online:

   Be sure they’re selling bullion, not numismatic coins.

   Check that they’ve been in business at least a year.

   Make sure they have a physical address.

   Google the business name to read customer and industry reviews.

   Check consumer protection agencies for complaints filed against the company.

   Be sure the dealer guarantees delivery within 14 days (30 at the absolute most).

   If you plan to make a sizable investment, place a small test order for delivery first.

   Contact customer service.

Your experience with customer service can tell you a lot about a company.

If you call to ask a few questions before you buy gold coins online and their reps are pushing a sale on the spot — or they’re trying to steer you into buying other products like numismatics or “limited-edition proof sets” — it is probably a company you want to avoid.

A good dealer will answer your questions without pressuring you to buy anything.

If you’d like to know more about investing in precious metals — including why gold zigs when the market zags — grab yourself a FREE copy of Investing In Precious Metals 101: Everything You Need to Know About Buying and Storing Physical Gold and Silver.

All the best,

Owen Sullivan
Editor, Money & Crisis

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