Gold investments: know what you're buying -

Gold investments: know what you're buying

Gold is hot right now, particularly for those looking to invest. You probably have seen the commercial and maybe even purchased a Buffalo Tribute Proof Coin -- but do you know what you really bought?

The Consumer Warning Network says the ad is deceptive. Paul Sims with Yesterday's Change has been in the gold business for 40-years, and agrees that the commercial is misleading. But he wouldn't quite call it a scam.

"That is over-stated. It would be sort of like showing the shampoo where if you use it all the girls will follow you around. It's not deceptive; it's puffed up," he says.

For about $20, you can purchase one of these coins. It is not until the end of the ad, however, that it reveals the coins are gold-clad. Sims says bottom line, don't expect a fake coin to be a real investment.

"Gold is over $1,400 an ounce. You can't buy it for less than that. So if you are paying $10 for something or $20 for something, just be aware it is gold-clad. It doesn't mean it's not a worthwhile item, it just means it is not really gold," Sims explains.

If you are going to invest in gold coins or any type of gold, you should know what you are getting and understand the risks.

"No matter what you do, you should have the appropriate risk management strategy in place as well to protect yourself should it not go the way you are intending it to go," says Chris White, a portfolio manager with Gibson Volatility Management.

He says that gold is a good investment, but warns that the "gold bubble" could burst. But when that might happen, he says is unpredictable.

"The risk is the same for any liquid investment. It is the same for stocks, the same for bonds, the same for gold, the same for silver. It can go up or down," says Sims. 

A real buffalo coin is worth about $1,400. Sims says there is no problem with the advertised price of the replica, but if you do buy it -- don't run to the bank.

"Know what you are buying; that it is a tribute coin. That the price they are selling it for is certainly not a problem, just don't think you are buying pure gold," he explains.

Sims says research and a little common sense is your best investment. For a look at the Consumer Warning Network article and tips on what to look out for if you are investing in gold, click here.

Copyright 2011 America Now. All rights reserved.

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