How to Invest in Gold and Avoid Scams

Updated: Wednesday, 10 Nov 2010, 9:31 PM MST
Published : Wednesday, 10 Nov 2010, 9:31 PM MST

PHOENIX - While the valley recovers from the housing bubble, is another one forming? There's a gold rush right now, and some say just like the housing market, it's prime for a collapse.

The commercials are all over TV and radio -- invest in gold! Transfer your retirement accounts!

The gold rush of 2010 is on, and one ounce of gold trades for over $1,400. And it continues to climb. But not all investments are what they touted to be, and a Scottsdale man learned that the hard way.

"You see more people finding out they've been had. Now because the price of gold has doubled or tripled since the time they bought, they go to sell and they find out they haven't made money," says Bill Haynes, a top Phoenix gold and silver dealer."

He's had to break the news to people who have invested in those gold collectible coins. They aren't worth what the buyers expected.

"I've talked with several people that have lost half their money the moment they made the investment. And some of the investments have been as large as a quarter of a million."

A valley businessman, who we're identifying as Craig, was sold dozens of those gold collector coins four years ago. If instead, he had purchased gold bullion American eagle coins, he would've been ahead -- and the difference in value between the two could make anyone sick.

"If it had been put in gold bullion, I would have been up $180,000," he says. But instead, Craig lost money on his investment. He was convinced by a gold coin company that his investment would be good.

"I was taken and I consider myself a savvy investor."

Haynes says the problem is that people are buying overpriced gold collectible coins.

"When investing in gold, buy bullion products that are as easy to sell as they are to buy. In today's market, you cannot go wrong with American gold eagles, krugerands, one ounce gold bars."

Haynes says people should be skeptical of people spinning gold stories. Since gold is soaring, the scam artists are out in full force.

http://www.myfoxphoenix.com/dpp/news/on ... 11-10-2010