Skip to comments.Gold Scams Revisited
Posted on 03/07/2014 7:29:58 AM PST by Kaslin
Before Bear Stearns and Lehman collapsed, the market for physical gold was limited to a relatively small group of investors who understood the havoc inflation was wreaking on our savings and the US markets. As the financial crisis took hold, a flood of new and inexperienced buyers entered the market, creating an opportunity for unscrupulous metals dealers to swindle their way to massive profits. This is what drove me to launch my very own gold dealer, Euro Pacific Precious Metals, to provide a safe alternative for those who were taking my advice to diversify into sound money. In our first year of business, I released Classic Gold Scams and How to Avoid Getting Ripped Off, a free report that has saved countless investors from losing their shirts.
Fast forward several years and the markets look like a film on repeat. We are once again building toward a massive financial crisis - one that will make 2008 seem like the good old days. Unfortunately, the majority of investors are once again playing the US markets and shunning gold. I encourage my readers to consider diversifying into precious metals now, while the market is still distracted. To this end, and in preparation for the inevitable mad rush when conventional investors again flock to safety, I have updated and re-released my Classic Gold Scams report to help newcomers learn how to buy gold and silver the right way.
The majority of precious metals scams revolve around a core tactic: the bait-and-switch.
First, the company lures you in with the promise of a good deal on a product you're genuinely interested in buying. Once they have you on the line, a fast-talking broker will try to convince you that a different product is a better match for your needs. This new product into which they've "switched" you is almost always a rip-off.
In the precious metals world, this usually involves an over-priced numismatic or "collectible" coin. The salesman will explain that the unique qualities of this coin make it even more valuable than its metal content. "Why just buy gold, when you could buy a piece of history?" Or so the argument goes.
The entire bait-and-switch technique is designed to confuse you. The dealer preys on your insecurities by making you feel like you don't have enough knowledge to make a choice for yourself.
Keep Gold Simple
Let me share a secret that these scammers don't want you to know: gold is gold is gold.
The majority of savvy investors like you and I are buying gold and silver as a hedge against inflation and the collapse of the US dollar. It doesn't matter what form our gold takes, as long as it is pure, easily recognized, and authentic.
Sure, there may be rare, historic coins for which well-educated collectors will pay good money. But you need a firm understanding of these coins' unique traits to correctly assess their value. Without this understanding, it is virtually impossible to select the proper coins to add to your collection or get a fair price when it is time to sell. For most of us, such coins are way beyond our expertise and carry far too much risk.
All we need to protect our wealth is pure gold bullion. Fortunately, the market for bullion is very simple and easy to understand. A complete list of common gold products is included in the Classic Gold Scams report.
That's the only secret to beating the bait-and-switch scammers: know exactly which product you're interested in buying ahead of time - and stick to your guns.
The Price Protection Racket
When gold started falling from its highs in 2011, an old-time scam re-emerged: the price protection racket. This tactic is extremely popular with some of the largest gold dealers out there.
In this scam, the dealer guarantees that if the price of gold falls within a certain timeframe, the investor can buy at the lower price. Usually the price protection lasts for about a week after placing your order.
On the surface, price protection sounds great. Who wouldn't want to be able to avoid short-term market fluctuations when buying precious metals?
Of course, there's a catch. These price protection programs rarely apply to the common bullion coins that carry the lowest premiums. Invariably, these schemes are only applied to overpriced numismatics or collectors' edition coins. That's the only way dealers can afford to offer such a sweet deal. The margins are already huge on collectors' coins, so allowing buyers to adjust their purchase price has a negligible effect on the dealer's bottom line.
What's more, the price protection program often includes an additional fee on top of the purchase price. This builds in an additional cushion to make sure the dealer always comes out ahead.
At the end of the day, price protection is just a scare tactic aimed at investors too concerned with short-term volatility. This fear actually reveals that they're buying gold for all the wrong reasons.
Buy Gold for Gold
The right reason for most investors to buy gold is as a long-term hedge against inflation and financial instability.
Gold is humanity's oldest form of money and wealth preservation. A hundred years ago, a gold coin could buy you a custom tailored suit. The same is true today. The purchasing power of gold remains relatively constant over the long-term.
On the other hand, fiat money has historically always failed. The US dollar has not been backed by gold since 1971, which means it has lasted more than four decades as a purely fiat currency. The history of great empires suggests that its time is almost up.
Each of the Federal Reserve's announcements of another program of money-printing brings that crash - which I have termed the "Real Crash" - closer to fruition.
Remember, if the US economy were really recovering, the Fed's manipulative policies would not be necessary. Also, gold wouldn't be seeing the dramatic recovery it has thus far enjoyed in 2014. It's up 13% since its December lows!
There's Still Time
If you missed out on the great gold rush of the '00s, don't let the next opportunity pass you by. I believe gold's bull market has a long way to run, and now is a great time to establish holdings or add to existing holdings.
I put $3500 in a gold-based mutual fund last April and it fell off by 20% but now it is back to even. I bought it as a balance to our wobbly U.S. dollar situation not as a “get rich quick” scheme. Essentially, it is a counter-bet to the stock market which I see as artificially pumped up on QE2 and QE3 spending.
So exactly what is the safest least expensive way for John Q Public to purchase gold in modest quantities?
BUY GOLD! Says a gold seller.
I just wonder what the response is going to be in Connecticut soon by whatever number of special operations folks that have left those branches of the armed forces (Navy SEALs, Army Special Forces including Delta operators and Force Recon Marines) by retirement and settled in that state to the impending confiscation of firearms headed their way. Push has apparently come to "shove" in that state. Will their reactions be of the liberal type: "When in trouble or in doubt run in circles scream and shout!" or will the reactions take on a decidedly more Spartan aspect?
1/10th oz American Gold Eagles cost around $150 and when the SHTF will be easier to spend than 1 oz AGE’s. Gold is money and silver is currency. You should also look at American Silver Eagles and 90% silver coins. I recommend buying from Apmex or Provident Metals.
So exactly what is the safest least expensive way for John Q Public to purchase gold in modest quantities?
Pre-1965 scrap US silver coins are a good idea if you’re worried about a collapse of the economy. They hold value, are easily recognizable and trade at known prices. If its an investment, gold eagles, either full oz or fractional are a good choice. I like physical possession so gold instruments don’t interest me at all but you might be interested.
BUY GOLD! Says a gold seller.
Actually, it’s presumably a gold RETAILER you’re talking about. retailers buy just as much as they sell, and profit from the transaction.
There’s no hypocrisy. Schiff isn’t trying to unload his own company’s gold asset holdings at all.
Or do you get upset when car dealers try to encourage people to buy cars, or when Nordstrom suggests ladies buy shoes?
1/10th oz American Gold Eagles cost around $150 and when the SHTF will be easier to spend than 1 oz AGEs. Gold is money and silver is currency. You should also look at American Silver Eagles and 90% silver coins. I recommend buying from Apmex or Provident Metals.
This is what drove me to launch my very own gold dealer, Euro Pacific Precious Metals,
Bubba’s favorite Georgetown Prof http://en.wikipedia.org/wiki/Carroll_Quigley taught that the Great Depression was occasioned by gold’s volatility in the newly unified world market.
Q. taught that money is, analogously, on one side of a teeter-totter, opposed by goods-&-services on the other.
Q. taught that gold is hybrid, sitting at the fulcrum destabilizing the whole system with its volatility, as it were, acting in some ways as money and in some ways as goods-&-services.
Thanks for reminding me to buy some more gold. I just went to Apmex and bought some. It’s not only a hedge against financial meltdown, but it’s fun to jingle too!
When I saw your comment about the "big 1 oz rounds" I overlooked the "1 oz" and instantly thought of the rounds of silver I have purchased weighing a kilo each! i wonder how much moola a kilo of gold would fetch?
I encourage people to look at the gold mining stocks. Some are down 80% from their highs as the price of gold has fallen.
In a market climbing seemingly everyday, this is one sector which still holds value.
Also look at the ETF’s of
In a few years, all will be many fold higher IMO.
I just purchased Ag from JM Bullion. VG experience.
I would suggest you find a trustworthy local retailer of coins, and buy bullion, not collectible, gold coins. These can be purchased in tenths of an ounce for a small premium over the spot price. Austrian Ducats, for example. I like tenths because you can actually use them to buy things, unlike the oz. coins that are worth $1300 or more.
You can carry a few in you wallet. I have found that like minded people are eager to trade for small denomination gold coins.
The problem with 1 oz rounds is that they are too big to trade with. Even at $1000 an oz. How often do you spend a grand at one time? How would you use a double eagle to buy a box of .22 LR, a wool shirt or a sack of beans?
There are slightly more than 32 troy ounces in a kilogram.
blatant manipulation this morning by the fed... as they’ve been doing for years
just before the open, a huge push to drive the price down.
and more recently:
“90% silver coins. I recommend buying from Apmex or Provident Metals”
+1 on ‘junk’ 90% silver and Apmex. I’ll check out Provident.
Why tell us? Go buy 'em your self and become a zillionair. Buy futures. Buy longs...But just go and do it.
Yes, I agree. I hestitated with this article earlier today because it seemed like an advertisement to me....a written infomercial, complete with website that takes you to a "free" item that it requires your name, email, and phone number to get to.
I'm still uncomfortable with this article.
I did not mean to imply any criticism of the poster.
I agree. Of the author. He’s subtle.
I have positions in all of them.....if you do not want to buy, be my guest.
Forgot to add.
Gd may increase from 1350 to 2000 or even 2700. 2700 would be a 100% increase from where we are.
Gold mining stocks would go up about 500% for this scenario, smaller caps going up much more. Unless one needs physical gold in their hands for peace of mind, look at going long the miners.
“BUY GOLD! Says a gold seller.”
Buy food! says the grocer.
Buy both, says I.
Gold is insurance, but you don’t necessarily need a lot of insurance, or gold.
imo, you can go insurance broke, or gold broke.
Ok the world goes completely to hell. You’ve got a pocket full of gold coins. Are you the king or is someone stronger than you gonna take your coins?
The problem with 1 oz rounds is that they are too big to trade with. Even at $1000 an oz. How often do you spend a grand at one time?
1. I spend one grand at a time on rent, or paying off a bill with a major creditor.
2. For smaller purchases, one can prepay with a merchant for future purchases
3. One can run up a tab and pay it off when it reached $1000.
4. (This is a radical one) The merchant can make CHANGE?
Why do you assume that those who have 1 oz. gold coins don’t also have silver for smaller purchases?
Take the 17 trillion in debt we know we have.
Divide it by the 288 million ozs of gold they say we have, but nobody knows fer sure...
and you get:
$59,000 per oz (roughly)
And the paper keeps rolling off the presses. What, 2, 3 trillion per year?
Will your merchant give you change in smaller gold or will it be in worthless collapsed dollars?
You’re trying too hard. Change is in whatever the market is accepting that is worth something.
If you’re that worried that it will be the first time in human history that getting change is unviable, then stock up on silver.
In the next few years,
-we are going to pass the $20T mark in debt.
-China is buying up gold and gold mines with what some say is an attempt to build a gold backed currency (what are our pols doing while they do this?)
-We saw the Asian Contagion in 1998, the collapse of Wall Street in 2007-8.....we are due for another event.
-The stock market has gone virtually straight up for 5 years.....every piece of news seems to be an excuse to drive it higher.
-All of the QEs will eventually lead to inflation.
IMO, the gold miners at these levels are a gift.
I’m not trying at all. I was asking a simple question that I did not know the answer to.