There's an old expression that can make or save you a lot of money when you're buying or selling gold: If you don't know gold, you'd better know your gold dealer. It's that simple.

There are easy-to-do precautions you can and should take before you make a purchase or sell to someone you're not familiar with. Too often I hear horror stories about people who grossly overpaid for what they purchased, never received the merchandise they ordered, or were grossly underpaid -- or never paid -- for what they sold.

In one case I personally helped the news media investigate and uncover, a traveling "hotel buyer" claiming in his big advertisements to "Pay the Highest Prices" offered only $60 for a gold coin actually worth $10,000.

When you sell, sell to a specialist. If you have gold coins, sell them to a gold coin dealer, perhaps in your own community. Specialists usually will pay far more than a pawn broker, jeweler or hotel buyer who is in town for a day or two and then gone.

Before you buy or sell gold or rare coins, follow these simple steps.

Check the dealer's rating with the Better Business Bureau. I know an investor who wired $20,000 to a company to buy gold and didn't receive anything. Had he checked first with the BBB online, he'd have seen the company had an "F" rating.

How long has the dealer been in business? Many "boiler room" operations frequently change names, and sometimes locations. Also check to see if the dealer is a member in good standing of such organizations as the Professional Numismatists Guild (whose members must adhere to a strict Code of Ethics), the Industry Council for Tangible Assets and/or the American Numismatic Association.

If you are buying rare coins, is the seller an Authorized Dealer with either the Numismatic Guaranty Corporation (NGC) or Professional Coin Grading Service (PCGS)?

Know the price of gold when you buy or sell. If you are buying "common" one-ounce bullion coins, such as the American Gold Eagle, typically you should not pay more than 5 to 6 percent over the current spot price of gold.

Even among major, reputable dealers, there are significant differences you may want to consider. For example, has the dealer received industry awards and recognition? (I'm delighted that my writings and consumer protection work have earned awards from the Press Club of Southeast Texas and from the Numismatic Literary Guild.)

Is the dealer involved in community service, or does the dealer assist law enforcement agencies or regulatory agencies with expert advice on issues related to coins or bullion?

Experience combined with leadership and recognition are important when choosing a dealer. To quote the long-time motto of the Better Business Bureau, "Investigate before you invest."

About the Author: Mike Fuljenz

Mike Fuljenz is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report.  Discover more by Clicking Here Now.