FTC Consumer Alert

Federal Trade Commission Bureau of Consumer Protection Division of Consumer & Business Education

Investing In Bullion and Bullion Coins

If you’re thinking about investing in bullion or bullion coins, the Federal Trade Commission (FTC), 

the nation’s consumer protection agency, says your best bet is to research your options and get smart. 

Being uninformed can have serious consequences. 

Bullion is a bulk quantity of precious metal, usually gold or silver, assessed by weight, typically cast 

as ingots or bars, and sold by major banks and dealers. You also can buy bullion as coins.

Bullion coins are minted from precious metal, usually gold or silver, and bought for investment 

purposes from major banks, coin dealers, brokerage firms, and precious metal dealers. Their value is 

based on their gold or silver bullion content. Prices fluctuate daily, depending on the price of gold and 

silver in the world markets. Perhaps the best-known bullion coins are the American Gold Eagle, the 

Canadian Maple Leaf, the Australian Gold Nugget, and the South African Krugerrand. 

The U.S. Mint has produced gold, silver and platinum bullion coins since 1986, and guarantees their 

precious metal content. The Mint produces two types of bullion coins:

•	 Proof bullion coins, which are specially minted for collectors and usually sold in a protective 

display case directly by the Mint.

•	 Uncirculated bullion coins, which are minted for investment purposes and sold to a select 

number of authorized buyers based on the current market price (the spot price) for the precious 

metal plus a small premium charged by the Mint. 

Foreign governments also mint coins, but they may not be produced to the same standards as U.S. 

coins and they aren’t guaranteed by the U.S. government. The value of foreign bullion coins depends 

primarily upon the coin’s melt value – the basic intrinsic bullion value of a coin if it were melted and 

sold. A bullion coin’s condition – its “grade” – isn’t the most relevant factor in determining its price.

Investigate Before You Invest

Investing in bullion or bullion coins is a big decision. If you’re thinking about it:

•	 Ask for the coin’s melt value. The melt value for virtually all bullion coins and collectible 

coins is widely available.

•	 Consult with a reputable financial advisor you trust who has specialized investment knowledge. 

You may want to talk to other investors, too.

•	 Shop around. Most banks offer gold bullion, often at a lower markup than dealers. You also 

can enter the name of the coin into an online search engine to compare prices from other 

dealers.

•	 Get an independent appraisal of the specific asset you’re considering. The seller’s appraisal 

might be inflated.
•	 Consider additional costs associated with the investment. You may need to buy insurance or a 

safe deposit box, or you may need to rent offsite storage to safeguard your bullion. These costs 

will cut into the investment potential of bullion.

•	 Be wary of buying bullion or bars that won’t be delivered to you, but rather to a “secured 

facility,” by the seller or a third party. When you buy metals without taking delivery, you face 

the risk that the metal doesn’t exist, isn’t of the quality described, or isn’t properly insured.

•	 Walk away from sales pitches that minimize risk and sales representatives who claim that 

written risk disclosures are just formalities required by the government, and therefore not 

necessary. Reputable sales reps are upfront about the risk of particular investments.

•	 Refuse to “act now,” regardless of the consequences. Any sales pitch that urges you to buy 

immediately is a signal to walk away and keep your money in your pocket.

•	 Check out the company by entering its name in a search engine online. Read whether other 

people have something to say about their experiences with the company. Try to communicate 

offline if possible to clarify any details. In addition, contact your state Attorney General 

(www.naag.org) and local consumer protection agency (www.consumeraction.gov). 

Checking with these organizations in the communities where promoters are located is a good 

idea, but realize that it isn’t fool-proof: it just may be too soon for someone to realize they’ve 

been defrauded or to have lodged a complaint with the authorities. 

•	 Ask for a guarantee or certificate of authenticity for the bullion’s precious metal content. 

Research the company behind the guarantee or certificate because certificates of ‘authenticity’ 

can be faked.

Tip-offs to Rip-offs

Bullion scams often involve false claims about content, rarity or value: 

False Claims – Unscrupulous sellers often overprice their coins, lie about the bullion content, or try 

to pass off ordinary bullion coins as rare collectible coins. Some fraudulent dealers may even try to 

sell coins that aren’t bullion coins at all. Others may try to sell bullion pieces with the same design as 

coins from the U.S. Mint, but in different sizes. Indeed, private mints issue coins that look like bullion 

coins minted by foreign governments, but may have little or no gold content. Your best defense is to 

study the market and choose your dealer carefully. 

Leveraged Investment Scams – Leveraged investments are high-risk investments that can result in the 

loss of even more money than you originally invested. Typically, in a leveraged investment scam, 

a telemarketer or website will state that the price of metal is about to skyrocket and that you can 

make significant profits by making a small down payment for the metal, often as low as 20 percent. 

According to the marketer, by paying only 20 percent of the purchase price, you can get more metal 

than if you had to pay 100 percent of the purchase price.

In reality, you have borrowed money – as much as 80 percent of the purchase price of the metal – 

from a financial institution that claims it will hold the metal for you, and charge you monthly storage 

fees and interest charges. Rather than sending you a bill for those fees, the institution will reduce your 

equity in the investment. Once your equity falls below a certain level (for example, 15 percent of the 

purchase price), the financial institution will issue an “equity call,” requiring you to pay additional 

money to bring your equity above the equity call level. If you can’t pay or refuse to pay additional 

money, the lender will sell the metal to pay off your loan and send you a bill if the sale of the metal 

does not cover the amount you owe. 
May 2011

These investments are high-risk because you will receive an equity call if the price of the metal goes 

down, stays flat, or simply doesn’t go up enough to offset the mounting storage and interest charges.

Glossary of Gold

Ask Price – The selling price a dealer offers. 

Bid Price – The price a dealer pays for bullion or coins.

Bullion – Precious metals like platinum, gold or silver in the form of bars or other storage shapes. 

Bullion coins are made of these metals, too.

Collector Coin, Historic Coin, or Numismatic Coin – A coin whose value is based on rarity, demand, 

condition, and mintage; in fact, it may be worth more than its bullion value. 

Melt Value – The basic intrinsic bullion value of a coin if it were melted and sold.

Premium – The amount by which the market value of a gold coin or bar exceeds the actual value of its 

gold content. The seller can recover part of the premium at resale. 

Spot Price – The current price in the physical market for immediate delivery of gold; sometimes called 

the cash price. 

Spread – The difference between the buying price and the selling price. 

Troy Ounce – The unit of weight for precious metals. One troy ounce equals 480 grains, 1.09711 

ounces, or 31.103 grams. 

For More Information

Read these publications from the FTC at ftc.gov for more information and guidance about investing in 

particular gold products: 

•	 Investing in Gold? What's the Rush?

•	 Investing in Collectible Coins

Check these websites for additional information:

•	 Commodity Futures Trading Commission – www.cftc.gov

•	 U.S. Mint – www.usmint.gov

•	 U.S. Securities and Exchange Commission – www.sec.gov and www.investor.gov

•	 American Numismatic Association – www.money.org

•	 National Futures Association – www.nfa.futures.org

•	 World Gold Council – www.gold.org

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and 

to provide information to help consumers spot, stop and avoid them. To file a complaint or get free 

information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); 

TTY: 1-866-65-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The 

FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and 

investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and 

abroad.