Misrepresenting the coin's grade
Gold coins are given a numerical grade based upon their condition. A coin in pristine condition is graded MS-70. Grades of only a few numerical places can be indistinguishable to the untrained or naked eye and can greatly impact the coin's value. The price difference between a coin graded MS-67 and MS-70 can be as much as 40%. Before purchasing a coin, ask for independent verification of its grade.
Be wary of grading certificate slabs and other packaging that prevent you from examining the coin itself. While it common for rare coins to come inside a Lucite container, many unscrupulous dealers will attempt to market an inflated coin in a plaque or other setting which makes it difficult to inspect the coin for its true condition.
Beware of Price Indexes as Evidence of Future Value
The investment bank Salomon Brothers previously published and annual index showing the annual gains in value of certain coins. Many dealers will purposely misrepresent this index in an attempt to show that financial gains that can be made through purchasing going coins. However, the Salomon Index covered only 20 very rare coins, not the entire market or gold coins in general. Using the index to predict the value of a coin not included in the index is similar to using an appraisal of a Ferrarri to predict the future price of a Camaro.
Possibly the worst conduct is to sell gold which never actually existed. Some dealers will attempt to play off of investor's practical fear of holding a large quantity of gold in their homes by offering to hold the coins in "escrow" or "trust". Too often, the buyer is buying only a piece of paper with no gold to back it up. We recommend that if you do purchase gold coins that you take physical possession and store them in a safe deposit box if you do not wish to have them at home.
Executive Order 6102
In the midst of the great depression Franklin Roosevelt issued Executive Order 6102 which forbade the private ownership of gold. The order was based upon the fact that the purchasing power of the dollar was falling faster than the general economy as people were hoarding gold bullion instead of cash. However, the Order contained numerous loop holes including continued ownership of gold coins which had collector value. Unscrupulous dealers will attempt to convince their buyers that they have only a limited window to purchase gold before it is forever outlawed by misrepresenting both the history of the executive order and its plain language.