12 Questions to Ask a Gold Dealer Before You Buy

Most problems with gold and silver dealers come down to things the buyer didn't know until after paying: the real markup, the buyback price, a fee that showed up later, or a coin that was not what it seemed.

The CFTC and FINRA, two US regulators, put out a joint alert called "10 things to ask" before buying physical metal. This checklist is built on it, with two extra questions added. Print it, keep it by the phone, and ask every question before you pay. A good dealer will answer all of them without fuss.

One thing to know first: the CFTC says "retail metal dealers are not regulated at the federal level." So the questions are your main protection.

How to use this checklist

Use it the same way with every dealer, whether online, by phone or at a local coin shop.

• Ask about one item at a time, such as a 1 ounce Gold Eagle or a 1 ounce gold bar, so quotes are easy to compare.
• Write the answers down, with the date and the person's name. There is space at the bottom of this page.
• Get the important answers in writing (email is fine) before you pay.
• Take your time. If anyone pushes you to decide today, that is your answer.

Questions about the price

1. What is the total price, in writing, including shipping, insurance and any sales tax? The regulators say to get "all fees, costs, commissions and agreed retail price in writing" before you sign. A dealer that won't do that is a red flag. Ask whether any fee could be added later.

2. What is spot right now, and how far over spot is your price? Spot is the market price for one troy ounce of pure metal. Multiply the metal content by spot and compare it with the quote. The difference is the premium. Our spot price guide shows the math. Ask the same question at two or three dealers on the same day, because premiums change daily.

3. What would you pay me if I sold this back to you tomorrow? This is the buyback price, and the regulators list it as a key question. The gap between what you pay and what you would get back is the spread, your real cost if you need to sell. Some fraudulent dealers charged spreads of more than 300 percent. Our guide to premiums and spreads shows what is normal.

4. Does the price change if I pay by card, check or wire? Many dealers charge more for card payments. Ask for each price, and ask when the price is locked in.

Questions about what you are buying

5. Is this a plain bullion coin or bar, or a collector coin? Why this one? Bullion is priced mainly on its metal content. Collector coins (called numismatic) carry an extra price for rarity or condition. The regulators call "semi-numismatic" "a made-up industry term," and say such coins are typically not rare and may be harder to sell. If a salesperson steers you away from common coins toward "special" ones, ask for the spot value and the buyback price in writing. See bullion vs. collector coins.

6. If you are offering something free or below market price, how do you make money on it? The regulators suggest asking exactly this when a company appears to be "offering other big freebies." The US Mint adds that a coin offered below the current market price deserves "extra scrutiny." The cost of a freebie is often hidden in the price of what you buy, and a too-cheap coin may be fake. See how to spot fake gold and silver.

Questions about the dealer

7. Where is your business, and where can I check your complaint record? The regulators suggest checking with your state attorney general or securities regulator for a history of complaints. A local dealer you can visit, or a long-established company with a public address, is easier to check than one known only by phone. Our guide to checking an online dealer has more ways to do this.

8. Are you registered, and where can I verify it? A salesperson who tells you what, how much or when to buy may need to be registered. The CFTC says to ask them directly, "then verify it." FINRA's BrokerCheck and the CFTC's registration check are free to use.

9. Did I contact you, or did you contact me? Ask yourself this one. The regulators say never to respond to cold calls, unsolicited emails, junk mail or pop-up dealers, because these are common scam tactics. Watch for a "free gift or limited-time offer" too.

Questions about delivery and storage

10. When will the metal arrive, how is it shipped, and is it insured until I sign for it? Get the shipping date in writing. Ask whether a signature is needed and who pays if a package is lost. If you are paying now but the metal ships much later, ask why.

11. Is any part of this financed, and if you store it for me, where exactly is it kept? Some dealers offer to lend you most of the price. The CFTC says that unless the seller is a registered exchange or actually delivers the metal within 28 days, a financed metal deal like this breaks federal law and may be fraud. The regulators also warn that some fraudulent dealers charged storage and insurance fees "for metal that never existed." If the dealer stores your metal, get the name and address of the vault and regular statements. See private vault storage.

12. What is your return or cancellation policy, in writing? Ask whether you can cancel before the metal ships, whether there is a fee, and what happens if the price moves in the meantime. If the price is locked when you order, cancelling can cost you. Know the rule before you say yes.

Red flags in the answers

Stop and walk away if you hear any of these:

• "This price is only good today."
• "You don't need it in writing."
• "We don't publish a buyback price."
• "These coins are better than bullion" with no written price comparison.
• "We'll store it for you" with no named vault.
• "Just put down part of the price and we'll finance the rest."

Our list of 10 red flags covers more warning signs.

Your printable answer sheet

Fill in one row per dealer, on the same day, for the same item.

What the checklist can't do

Good answers protect you from overpaying, but they don't change what metal is. Gold and silver pay no income. You pay a premium to buy, usually get a little less than spot when you sell, and pay to store and insure the metal in between. Prices can swing hard and can stay flat for years.

When you are ready, our guide to where to buy gold and silver compares dealers, coin shops, banks and the US Mint, and our first-time buyer's guide walks through the whole process.