Gold Buying Red Flags: How to Spot a Bad Deal
The warning signs are consistent across bullion and jewellery, and most of them are about information the seller will not give you.
Almost every gold buying problem shows the same early symptom: the seller will not give you a plain number. Weight, karat, purity and buy-back price are all simple facts, and a straight seller states them without being pushed.
Key takeaways
- Refusing to state weight and karat is the single clearest warning sign.
- Urgency and pressure are sales techniques, not market conditions.
- A collectable premium on a bullion product is money not spent on gold.
- Prices well below the metal value are not bargains, they are warnings.
- No published buy-back price means no accountability for the sell side.
What Vanhess does and does not do
Vanhess is a jewellery shop in Coquitlam, British Columbia. We sell solid gold jewellery. We do not sell bullion, bars, coins or wafers, we do not buy or broker investments, and we are not financial advisors, tax advisors or a bullion dealer. Everything on this page is general information to help you understand how gold is priced and valued. It is not financial, investment or tax advice. Speak to a licensed advisor or an accountant before making a decision about your money.
The warning signs
| Red flag | Why it matters |
|---|---|
| Will not state the gram weight | Weight is half of what determines the metal value |
| Vague about karat or purity | The other half. There is no reason to be vague |
| Pressure to decide today | Gold has been around for millennia. It will be there tomorrow |
| Priced well below metal value | Either it is not what it is claimed to be, or it is not theirs to sell |
| No published buy-back price | Tells you they do not want to be measured on the sell side |
| Heavy emphasis on rarity or collectability | You are being sold a numismatic premium, not metal |
| No physical address or trading history | Nothing to lose from selling you a fake |
| Cash only, no paperwork | No receipt means no recourse and no provenance |
| 'Investment grade' jewellery | Not a recognised category. Jewellery is not bullion |
Be careful
Be especially wary of the phrase investment grade applied to jewellery. It is marketing language with no regulatory meaning. Under the Excise Tax Act, gold jewellery does not meet the definition of a precious metal at any normal karat.
Where fakes actually turn up
Counterfeit bullion is a real problem, and the better fakes use a tungsten core plated in genuine gold, because tungsten's density is close enough to pass a weight check. That is why buying from an established dealer with a trading history matters more than any test you can perform yourself.
With jewellery the more common issue is not outright fakery but misdescription: plated or filled pieces sold in language that implies solid gold. Look for a karat mark with no extra letters, and be alert to GF, GP, GEP and vermeil.
Worth knowing
The simplest protection is a written receipt that states weight, karat or purity, and price. A seller who will put those three things in writing is unlikely to be the one you need to worry about.
Frequently Asked Questions
How do I avoid gold buying scams?
Insist on the weight and the karat or purity in writing, buy from sellers with a physical address and a trading history, ignore any pressure to decide immediately, and be suspicious of prices well below the metal value. For bullion, buy from an established dealer with a published buy-back price.
Is a gold price below spot a good deal?
No, it is a warning. Nobody sells metal below its market value without a reason, and the usual reasons are that the item is not what it is described as, or that it is not the seller's to sell.
What does 'investment grade gold jewellery' mean?
Nothing official. It is marketing language with no regulatory definition. Under subsection 123(1) of the Excise Tax Act, gold must be in bar, ingot, coin or wafer form at 99.5 percent purity or higher to count as a precious metal, and jewellery meets neither condition.