Investment Scam #4: Rare Coin Ripoffs
I’m a believer in rare coins — selectively and carefully accumulated for an inflation hedge. If you’ve listened to the radio or watched cable TV lately, however, you’ve probably heard some suspicious coin ads. Often, these “collectible” coins are marketed by companies whose names include the word mint, even though the fine print admits they’re not affiliated with the U.S. Mint.
For example, the New York Mint has advertised “the largest Morgan Silver Dollar hoard we’ve seen in decades,” offering each coin for $89. The ad copy was peppered with words like “rare” and “fortune.” Sounds great, right? Unfortunately, you can buy the same coins for about $42 to $52 from other dealers, and even less on eBay.
If you’re in the market for Morgans, check first with a low-cost dealer like Liberty Coin Service in Lansing, Mich. (800-527-2375 or 517-351-4720), a firm I’ve recommended for more than 25 years.
Four Tried-and-True Principles
While scams and high-pressure sales pitches take many forms, and their constant shape-shifting can make it difficult to tell an opportunity from a trap, here are four principles I put to work in my own research. They’ll help keep you from being eaten alive by the rats:
- Trust no one without verifying their claims. I mean nobody — not only strangers, but also coworkers, family members and friends. A simple way to get started is to search the Web for the proposed investment, accompanied by words like scam, hoax, fraud, ripoff, etc. Searching the Web takes only seconds, but it can quickly lead you to law-enforcement reports, testimonials of scam victims and critical reviews of purported investment opportunities. For a primer on determining who is a legitimate investment adviser, rather than a huckster or a fraud, visit http://www.sec.gov/investor/brokers.htm.
- Beware claims of urgency. Their sole purpose is to get you to act before doing your due diligence. As Warren Buffett likes to say, “If it’s a good idea today, it’s a good idea tomorrow.” Sleep on it to avoid making a hasty decision, and do your homework in the morning — away from the promoters.
- Cast a skeptical eye on “secret” clubs or groups. Nothing makes a scammer more uncomfortable than scrutiny, and an easy way to avoid it is to surround the scam with an aura of exclusivity, which both massages the egos of its victims and prevents them from spilling the beans to someone who will see it for what it is.
- If it sounds too good to be true, it probably is. This is the bedrock principle that underlies all the others. Never forget it! Far better to miss a few legitimate opportunities that sound a little outlandish than to fall for the one bad idea that devastates your portfolio — and sets you back for years, or even decades, on achieving your financial goals.
Billy Currano assisted with the research and writing of this article.