The Precious Metals Scam

With the uncertainty of the economy many have turned to precious metals. The advertisements are very appealing and would have you believe that your money is safe if you invest “now”. Scam artists who use promises of riches if retirees invest in precious metals have defrauded an estimated 10,000 Americans of some $300 million since 2001, according to a report produced for a U.S. Senate Committee. The scam usually begins with a telemarketer phone call, often directed at a retiree, and gives what is purported to be privileged information about a likely rise in the future price of gold, or silver, or other metals.[1]

The end result is often that the retiree may borrow money at a high rate of interest to invest in the metal, pays commissions and storage fees and then loses his or her stake, often thousands of dollars, the report says.

In simpler cases, customers are sold coins that are usually priced at considerably more than their market value. I am sure you have seen these advertisements; they usually come on about the same time late night television begins.

Both the Commodities Futures Trading Commission, which regulates U.S. derivatives trading, and the Federal Trade Commission, which enforces laws against false advertising, have investigated and shut down such companies.

However in one case the company merely changed its name and began scamming again. Many of the fraudulent precious metal companies come from Florida, so do your homework before you become the target of a scam.