Whether buying gold stocks, funds, coins or bullion, the Federal Trade Commission urges consumers to do some homework first. Here are some tips:

• Remember that because gold prices fluctuate, there is no guarantee that gold will increase – or even maintain – its value.

• Gold stocks and funds should be purchased only from licensed brokers. You can check the registration status and disciplinary history of any broker at FINRA's "BrokerCheck" (www.finra.org) or of futures firms and brokers by contacting the National Futures Association (www.nfa.futures.org).

• Prices charged by coin dealers, banks, brokerage firms and precious metals dealers are almost always higher than the intrinsic value of the gold itself. That's why it's wise to compare prices before making a purchase.

• Bullion (typically sold in bars or ingots) and bullion coins (like the Krugerrand and American Eagle) are typically valued for their precious metals content only. Collectible gold coins, however, have an aesthetic or historic value that exceeds their face value or metal content.

• If you are buying either bullion or collectible coins, ask for the coin's melt value – the basic intrinsic value if it were melted and sold.

• Consult with a reputable dealer or trusted financial adviser with specialized knowledge in the gold product.

• Get an independent appraisal of the gold you're considering buying. The seller's appraisal might be inflated. Always get a receipt for any transactions.

• Consider additional costs that will cut into the investment potential. If you're buying bullion or coins, for instance, you may need to buy insurance or rent a safe deposit box.

• Some sellers deliver bullion or bars to a secured facility rather than directly to consumers. Take extra precautions to ensure that the metal actually exists, is of the quality described and is properly insured.

• With any gold investment, avoid sales brokers who minimize risks or claim that disclosures aren't necessary. Reputable sellers are upfront about the risks of any investment.

• Refuse to "act now." A sales pitch that urges you to buy immediately is a signal to walk away.

• Check a company by searching its name online and reading about other people's experiences. Contact your state attorney general's office (www.naag.org) and consumer protection agency (www.consumeraction.gov) to see if there have been any consumer complaints.

But take note: This kind of research isn't foolproof. There may be no complaints yet if it's too soon for people to realize they've been defrauded.

Source: www.ftc.gov

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