Beware; the European Gold Coin Rip-Off – Swiss Franc, French Rooster, British Sovereign

No matter which gold dealer you call today, it seems they are almost always pushing you toward rare or collectible coins, sometimes referred to “numismatic” coins. The reason is, of course, because the premium they can charge on these non-bullion coins can be 30% or more depending on the quantity one buys.

The ploy by the gold dealer is to get people to call to buy the low cost bullion gold coins advertised on their website. Once the person calls in, they are bait and switched to the more expensive coins with such tactics as saying they are exempt from confiscation or are non-reportable.

I’ve dealt with confiscation in depth in a recent article; Gold Confiscation Nonsense; How Some Gold Dealers Rip You Off. Please note the conversation I had with someone who had bought these European coins in the comments section. It amazes me how some people actually come to the defense of these rip-off gold dealers, actually calling them “hero’s.”

Gold Salesmen Selling Ice to Eskimo’s and Their Clients Down the River

Gold salesmen who work for some of these gold dealers have heard every objection in the book and are fully prepared to counter any argument against their recommendations. Whether it be confiscation, non-reportable, privacy issues or what have you, they will push the investor, you, towards the type of gold they want to sell. These salesmen can sell ice to Eskimo’s and they’ll convince you they are the expert. The reason is, most people don’t know anything about buying gold and silver.

The Truth About Gold Dealers

But here’s the truth…

If a gold dealer gets you a return of 90% instead of 200% or more, are they a hero? Well, perhaps to some they are, but in reality, my purpose of writing my book, “Buy Gold and Silver Safely” was to not only help people understand the bait and switch tactics of gold dealers, but to also teach them what type of gold and silver to buy and why. This way, the investor won’t get ripped-off!

Beware; Not All Gold Coins Are the Same

Not all gold coins are the same and you could be getting ripped off by unscrupulous gold dealers who try to pass off European gold coins like the Swiss franc, French rooster and British Sovereign as collectible coins, when in fact they are foreign gold bullion coins.

British Sovereign gold coins, for example, were minted in London from 1817–1917, 1925, 1957 onwards.

The British Sovereign coins sold by some gold dealers will vary in premium over spot that one pays by as much as 60% or more. According to the study on gold dealers done by Rep. Anthony Weiner’s (D, NY) office, “The average Goldline mark-up was 90% above the melt value of the coin.”

Even the lower priced gold dealers, who make most of their profits from selling rare coins, charge a higher premium for these European gold coins than American gold coins.

I did a quick analysis of these gold British Sovereign coins, which contain .2354 troy ounces of actual gold, of one company, Bullion Direct, that sells them on their website.

The price of each British Sovereign was $349.13 as seen in the following screen shot (note price of gold at time of screen shot was $1,315 an ounce).

The price of four of these coins added together would come to $1,398.28 an ounce. But remember, it’s not quite one ounce these coins add up to (this is where most people on the phone they are selling to, don’t quite comprehend as they are thinking four of these coins add up to one ounce of gold). They are .0584 short of gold or about $76 based on the current spot price of gold at $1,315 an ounce.

In other words, if these coins were truly comparable to a one ounce gold bullion American Eagle coin, the kind I recommend investors buy, the cost would come to $1,474.28 for an ounce of gold. The American Eagle gold bullion coins I sell through my company, at 1% above my costs would be $1,376.59, almost $100 less per ounce.

If someone is buying $50,000 worth of gold, that’s an additional $3,600 they are paying for the gold.

Why would anyone want to do that? Why do gold dealers sell these European coins? To make a higher profit of course! How else can these gold dealers buy so much airtime on radio and television?

Here’s An Example of the Swiss 20 Franc Gold Coin Rip-Off

I had taken a screenshot of the pricing of the Swiss 20 Franc Coins priced at a company, the Northwest Territorial Mint (Google them). Their legal department didn’t like the fact I did so and recently sent me a cease and desist order for using their name and images from their site  (5/2/2011).  It showed the Swiss 20 franc, a coin that is smaller than the British Sovereign coin above, containing .1867 ounces of gold each (less than 1/5 of an ounce of gold).

These coins were priced at $287.20 each at the time of writing this original article. Five of them would almost make up an ounce of gold. $287.20 x 5 = $1,436 while the price of gold was $1,315 an ounce at the time. This is an additional $65 an ounce more that one would have to pay over what an American Eagle gold bullion one ounce coin would cost. They also represent a liquidity problem. Try taking a Swiss 20 Franc to your local pawn shop and see what they will give you for it, let alone the place you bought it from. This simple question to ask is, “why pay more?”

On a $50,000 investment, that difference comes to over $2,250 that goes to the pockets of the gold dealer rather than yours.

But it’s worse than that, because you have to make up for that $2,200 loss as well, by having to earn more on the Swiss 20 francs (same with the British Sovereigns example above).

And these are the lower cost sellers of European gold coins. Many other gold dealers charge 30% or more above these prices, meaning the European coins you bought have to earn 54% or more just to break even!

Even the internet ads are expensive as every time someone clicks on one of their ads, it costs them $1.00 to $2.00 or so in fees for every click. So the next time you do a search on Google, Yahoo or Bing to buy gold, you’ll see their ads sprinkled throughout the page.

These various ways of advertising are just a way to get people to call in. Once the unsuspecting gold buyer dials in, they are at the mercy of the gold dealer sales person and pushed along towards the type of gold and silver coins that will make them and the gold dealer the most money. In fact, gold dealers frown on their sales people selling American gold and silver bullion coins.

If they just sold the type of gold and silver that was in the best interest of their clients, they wouldn’t be able to afford all those advertisements. It’s as simple as that.

The Other Problem With European Coins; They Are Not American and Easily Recognizable

These European coins gold dealers push on their clients are not readily recognizable in the United States. They are foreign coins. If push came to shove in a barter economy, they would be difficult to use as money. The gold dealers you bought them from may take them back, as some promise to do, but if we are in a barter economy, what will you get back for them? Will you receive depreciating, semi-worthless U.S. Dollars? After-all, we could possibly be in an economy where gold becomes money. Will you have to have your gold coins assayed as to their true value? Sell them on Ebay or Craigslist and hope to get something good back for them?  This is America, not Europe. Will you have to take your gold coins to Europe to spend? Remember, you can’t take more than $10,000 out of the country, so if you are sitting on a few $100,000 worth of these coins, I hope you have a lot of frequent flier miles!

This Is All You Need When Investing In Gold and Silver

You want coins that are easily recognizable and can be used in barter situation should the U.S. dollar collapse and you want American coins. But more importantly, you want to spend as low a cost to spot as possible.

The only coins I recommend people buy through Buy Gold and Silver Safely are American bullion gold and silver coins. But even then, I vary on my recommendations and for good reason. But at least you’ll know when calling us, you’ll be getting a fair deal as we don’t sell foreign coins, including the European ones discussed in this article. In fact, we don’t sell any rare coins.

Buy American Gold and Silver Coins and Have Peace of Mind

My customers comments after hearing our prices typically center around the word “Wow!” I like helping investors buy the lowest cost bullion gold and silver coins in the industry. It’s a true win/win for everyone involved.

Other gold dealers of course don’t like that I expose their game. But what can they do to refute anything I say? Have they written any books on how great their European coins are? Hardly. They prefer to keep their tactics a secret.

Call Buy Gold and Silver Safely today and speak to a representative about acquiring gold and silver bullion coins for your portfolio. This includes gold and silver that can be put into an IRA.

We can be reached at 888-604-6534. Due to low overhead and virtually no advertising, the minimum investment is $5,000, although I can refer you to those who work with less. I’m all about helping people.

If you are new to investing or don’t know anything about buying gold and silver, or for that matter, why you need to be invested in gold and silver, my book, “Buy Gold and Silver Safely” will help educate you. It is available immediately for pdf download on my site, or available in hard copy on Amazon.com.

To learn more about how gold dealers rip you off, download the free report; “4 Ways Gold Dealers Rip You Off.”

Don’t fall for the tricks of gold dealers. Know what you’re doing and see the profits come to you rather than the gold dealers!