Gold coins, gold bars
Bullion is a term for gold or silver sold for its value as a precious metal. Bullion can be ingots, bars or coins. Image Credit: Shutterstock

Advertising by the gold coin investment industry regularly appears on right-wing media broadcasts, podcasts and email newsletters, even as some in the industry face lawsuits by consumers and allegations of fraud by federal and state regulators.

But not every company selling gold and silver is the subject of scrutiny. Here's how to protect yourself.

Latest gold prices here

Is gold a safe investment?

Some financial experts say investing in physical gold and silver is generally a bad idea. Others say gold can be part of a balanced portfolio, but you have to understand the fees you're paying and how they relate to the value of the metal.

Maryland Securities Commissioner Melanie Lubin says a good rule of thumb is to figure out what you could make if you had to cash out. Ask a local coin store what they'd pay for the coins you're thinking about buying. The Commodity Futures Trading Commission advises on its website: "Ask about fees up front and get them in writing to avoid disputes later."

Every dealer charges a markup to pay staff and make a profit, said Leslie Van Buskirk, administrator of the division of securities at the Wisconsin Department of Financial Institutions. Markups from reputable dealers vary with demand, but typically amount to as much as 10 percent of the value of the metal in gold coins, and a bit more for silver, experts say. Some gold IRA companies tack on much bigger markups, according to allegations in various in lawsuits - as much as 213 percent.

Such high markups are "dangerous," said Joe Rotunda, enforcement director of the Texas State Securities Board. Even in a rising market, it can take many years before your investment gains value, Rotunda said, adding: "That's a long time for elderly investors to wait."

How can you tell whether a company is reputable?

Be wary of any company whose advertisements are "designed to instill fear about the economy," Van Buskirk said. And be wary of marketers who say you should trust them because of your shared political or religious beliefs, she said.

Ask salespeople how they get paid. Unlike many other financial professionals, gold salespeople "are not obliged to have your best interests in mind," according to the CFTC. If they're paid on commission, that's information you should have.

Be wary, too, of online rankings and reviews, especially if they display a disclosure stating that the author was paid by the gold IRA industry.

Don't buy a coin you can't shop around

"Stick with well-known bullion products rather than obscure collectibles," said Everett Millman, a precious metals specialist at coin dealer Gainesville Coins. "A quick Google search will usually reveal whether or not a bullion product is well-known in the marketplace."

Bullion is a term for gold or silver sold for its value as a precious metal. Bullion can be ingots, bars or coins. Many gold IRA companies sell "exclusive," "semi-numismatic" or "premium" coins, said Dale Whitaker, a gold IRA executive-turned-whistleblower. Because the obscure coins are exclusive, they're impossible to buy elsewhere - which means you can't comparison-shop.

"In reality," Van Buskirk said, "the coins themselves are no more valuable than what they can be melted for."

What to do if you have already lost money

Some customers have successfully demanded refunds from the companies that sold the coins in the first place. You can also contact your state's securities regulator or the CFTC.

But many gold IRA customers have found it difficult to get their money back without resorting to lawsuits. So it's best to be careful what you buy in the first place.