Bullion Dealer Data
... what the bullion dealers do not want you to know

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How to Avoid Problems with Bullion Dealers

You almost certainly do not want to lose all your money, or pay for metal that never gets shipped to you. Take advantage of what I learned from researching bullion companies that collapsed, and avoid the fate yourself.

#1Watch Out for Shipping Delays. One of the main warning signs with Tulving was a change in their shipping patterns. For nearly 20 years they usually shipped within 24 hours of receiving funds. Over the course of a year or so, that grew to several weeks. Why? It appears that a lot of money was lost, and by delaying orders, the customers' money was used to make up for the lost money. If you are a dealer selling $5M of metal a month, and ship orders 2 weeks after you receive the money from customers, you've got over $2M of float. If that money is sitting in the bank, great. But if you start dipping into that money (to pay bills, gamble on COMEX, etc.), you're heading for bankruptcy.
#2Avoid Leverage (Financing, Margin). Some bullion dealers offer to finance part of your purchase, where you might put down 20% to 30% of the value of the metal. That appeals to our greedy side -- buying $10,000 of gold for $2,000! If gold goes up 50%, your $2,000 investment will go up to $7,000! But if gold goes down 50%, you lose your entire $2,000 and owe another $3,000! Not fun. Not to mention you pay interest on the money you borrow, storage fees, and commissions. And many companies have come and gone over the years pretending to buy the metal and pretending to loan the money. If you must invest this way, understand that you very well may lose your entire investment (and then owe money), and you need to trust the company you are working with (preferably one that has been around for many years).
#3Research Every Time You Order. Most people who lost money with Tulving did not do a quick online search before ordering (I used to be guilty of that). Learn from Tulving: no matter how much you trust your dealer, always check out your dealer online before placing any order big enough that you would regret not receiving. Check here, a reviews site, the BBB, or a combination of them. 5 minutes of your time could save you hundreds or thousands of dollars.
#4Trust Who Stores Your Metal. Some people store metal on their property. Others store their metal in a safety deposit box (which is usually fine, but has some minor risks). However, if you choose to store your metal in a depository, choose it carefully. Many dealers have popped up over the years selling gold or silver and offering to store it, but never bought the metal. Is the metal stored at the dealers' location? Is it stored in a third-party vault? Will they let you ship your own metal? It is best to contract directly with a depository and send your metal directly to them.
#5Watch Out for Bogus Claims. If someone says your investment is very safe, your money will double or triple, the price of gold is going up, etc., do not do business with them. Nobody can make guarantees like that, so why should you trust someone who makes such claims?
#6Never Send More Money That You Can Afford To Lose. A number of people have sent dealers a significant portion of their life savings. That is a huge risk. First, you should really think before putting more than perhaps 5%-20% of your money into metal (I'm not saying you shouldn't, just understand why you are). Second, any dealer could in theory go out of business overnight with no warning signs. So if you have a lot of money you want to use to buy bullion, split it up into a number of orders (waiting to receive one order before placing another).
#7Credit cards provide great protection, at a cost. Your bank will almost always refund your money paid via credit card if you do not receive an order from a bullion dealer, even if it has filed for bankruptcy! However, credit cards typically add about 2%-4% to your cost, which is expensive. Sometimes, however, the extra cost can be worthwhile (such as for extremely good deals, or the occasional eBay sponsored deals).

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