There was big news this week, when a Senate committee heard testimony about widespread precious metals fraud since 2001. The activity has picked up significantly since the financial crisis, with conmen targeting people who want to protect their savings from a crumbling US dollar.
According to the news, US regulators have done virtually nothing to effectively stop the criminal activity. Here are some of the highlights being reported:
• 10,000 American (most elderly) victims since 2001
• $300 million in total losses
• $54 million lost in Florida alone
• 21 prosecuted cases by CFTC – Nobody jailed!
Karl Spicer, a convicted Florida scammer, spoke about his experiences and what little effect government regulators had on the crooks he had worked with:
“With all due respect to the civil authorities, the people that I have encountered … don’t really respect the civil authority bans… The gentleman I was with had a CFTC ban, he cooperated; he had a ban and he still went about doing business the very next day.”
According to Spicer, these guys just continue doing business under another name!
So what do these scams look like? They often begin with a telemarketing call, which makes it easier for a fast-talking salesman to confuse his victims. Unfortunately, the victims are usually retirees who are already interested in protecting their remaining savings from inflation. They might even be aware that gold is a great investment, making them even more eager to hear what the crook has to say.
These folks quickly fall for the pitch that the salesman’s company has ways of investing in gold and silver that will deliver extraordinary returns. News reports mention victims being talked into borrowing money at very high interest rates in order to buy the gold or silver being offered. This sounds like the classic leveraged account scheme, which we warned you about last year.
These are some of the worst scams around, because you don’t just lose your upfront investment – you might actually wind up in debt to the people who stole your money! In the end, the victims don’t just have to deal with usurious interest rates. They’re also hit with hidden fees, huge commissions, and unexpected storage costs. And if their so-called investment actually exists, it probably doesn’t perform.
Stay away from buying into any sort of “paper gold” investment or gold derivative. You want to purchase the actual physical gold and silver bullion as close to the spot price as possible.
But watch out – another common scam mentioned by the CFTC is simply selling gold and silver coins that are vastly overpriced compared to their actual metal content. Sometimes the coins are just clad in precious metals and are practically worthless! Telemarketers might pitch these to you on the phone, but also look out for those late-night infomercials. They’re hoping to trick you while you’re half asleep.
It’s nice to see US lawmakers waking up to this epidemic of precious metals fraud, but it doesn’t look like the government is capable of preventing it.
Fortunately, it’s not difficult to educate yourself. You don’t need a government watchdog to avoid these gold scams. You just need a little common sense.
Take a moment and Learn How You Can Avoid Gold Scammers Here.