The Federal Trade Commission (FTC) in partnership with National Consumer Protection Week, published the following information for consumers and businesses that are considering buying and selling precious metals.
If you want to diversify your investment portfolio, you may think gold is the answer. It can help hedge against inflation and economic uncertainty. But before you buy any investment, it’s best to take some time, ask some questions, and get answers.
Earlier this year, the FTC put a stop to a bogus telemarketing operation that conned senior citizens into buying precious metals without disclosing significant costs and risks associated – a scheme that cashed in over $37 million from consumers! And recently, David Vladeck, our Director of the Bureau of Consumer Protection, spoke to ABC News about investing in gold. See his interview on how to avoid some of the scams prevalent in this market on the ABC website.
Additionally, here are some tips to help you investigate a prospective investment in gold:
• Ask for the coin’s melt value. That’s the basic intrinsic bullion value of a coin if it were melted and sold.
• Talk with a reputable dealer or financial advisor you trust who has specialized knowledge. You may want to talk to other investors, too.
• Shop around. Sellers may charge different premiums over gold’s prevailing market price.
• Get an independent appraisal of the specific asset you’re considering. The seller’s appraisal might be inflated.
• Consider additional costs. You may need to buy insurance or a safe deposit box, or you may need to rent offsite storage to safeguard your bullion.
• Walk away from sales pitches that minimize risk and sales representatives who claim that risk disclosures are mere formalities. Reputable sales reps are up-front about the risk of particular investments. Always get a receipt for your transaction.
• Refuse to “act now.” Any sales pitch that urges you to buy immediately is a signal to say ‘no thanks,’ and keep your money in your pocket.
• Check out the company by entering its name in a search engine. Read what other people have to say about their experiences with the company. Try to communicate offline if possible to clarify any details. Take it a step further and contact your state Attorney General (www.naag.org) and local consumer protection agency (http://consumeraction.gov). Checking with these organizations in the communities where promoters are located is a good idea, but not fool-proof: it may be too soon for someone to realize they’ve been defrauded or to have lodged a complaint with the authorities.
Keep in mind promoters often use celebrities and high-profile personalities to tout their products. So when a bold-faced name says, “Invest in or buy gold with company ABC,” think about what they’re getting out of the deal. The fact is, many endorsers are paid by the company behind the product.
Want to know more? Take advantage of the FTC’s risk-free offer and check out our series of free publications about investing in gold – Investing in Gold? What’s the Rush?, Investing In Bullion and Bullion Coins, and Investing in Collectible Coins.