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Gold Scams Exposed

POSTED ON August 21, 2014  - POSTED IN Gold Scams Exposed

Another gold scam has been exposed this month, but only after customers gave more than $2.6 million to precious metals dealer Robert Escobio who lost $600,000 of the invested funds. The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement claim against Escobio and his company Southern Trust Metals, Inc.

Escobio convinced investors to send him a down payment towards a large purchase of gold, promising to lend them the rest. This sounds exactly like the classic leveraged gold scam, in which the scammer convinces his victims to buy more gold than they can actually afford. He then loans them the remainder at unreasonably high interest rates, promising to deliver all the gold when the debt is paid.

Why would anyone fall for this?

POSTED ON June 19, 2014  - POSTED IN Gold Scams Exposed

There’s a marketing gimmick that is becoming more common in the gold dealer business – the “price guarantee.” It sounds like a great deal on its face, but there’s more to it than meets the eye.

Here’s what these dealers will offer:

You call to place an order for gold coins and lock in a price. Within a specified number of days, the spot price may change. If the price goes down, they will add more coins to your order to make up the difference. If the price of the gold coins goes up, they’ll let you buy more coins at the cheaper price.

This price guarantee is pitched as a way of protecting yourself from short-term fluctuations in the price of gold. Thus, doing business with these companies is supposed to be less risky and more transparent.

But here’s the catch – the price guarantee generally applies to only certain products offered by the gold dealer. You can bet that these are not going to be the common and recognizable gold coins most suitable for serious investors.

POSTED ON May 2, 2014  - POSTED IN Gold Scams Exposed

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.

CFTC-Logo

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!

POSTED ON April 3, 2014  - POSTED IN Gold Scams Exposed

Last week, if you were looking for gold coin news, you were likely to come across two stories about the release of brand new collector’s coins being issued by national mints.

The Royal Canadian Mint has released silver and gold coins commemorating the canonization of Pope John Paul II. The US Mint has released a new gold coin as part of their National Baseball Hall of Fame program, which is being heavily marketed as the “first curved coins ever produced.”


POSTED ON March 12, 2014  - POSTED IN Gold Scams Exposed

There was big news last week in the precious metals industry. Anthony Columbo and his companies (Premier Precious Metals Inc., Rushmore Consulting Group Inc., and PPM Credit Inc.) were banned by the FTC from selling precious metals “investment opportunities.”

The FTC charged Columbo with swindling millions of dollars from investors through hard-sell telemarketing schemes.

The saddest part is that a large number of his victims were senior citizens, who were probably looking for a way to protect their hard-earned savings from inflation and a crumbling US economy. We expect there’s going to be a lot more stories like this in the coming years as gold and silver start to make headline gains once again.

POSTED ON August 15, 2013  - POSTED IN Gold Scams Exposed

The majority of precious metals scams prey on the uninformed, which is one of the reasons we started this blog. Just a little knowledge about best buying practices when shopping for gold and silver can prevent all sorts of nightmares. However, there are a handful of dealers that have started to find ways of tricking more diligent gold buyers out of their cash.

No matter what you’re shopping for nowadays, the first place a smart buyer turns is usually the internet. A quick Google search can reveal the biggest retailers in any market, as well as a huge variety of review sites with feedback from previous customers. A growing number of gold dealer review sites have emerged in the past year and not all of them are operated by helpful, disinterested third parties. In fact, a little digging reveals many that are run by metals dealers trying to steer more traffic to their own business.

POSTED ON July 10, 2013  - POSTED IN Gold Scams Exposed

For investors who follow the fundamentals, the recent plunge in the gold price is an excellent buying opportunity. And indeed, physical metals purchases have continued to be strong around the world. Of course, when opportunities like this arise, so do the people aiming to take advantage of inexperienced buyers.

If you believe that the price of gold has to rise again, you might be susceptible to the leveraged gold account swindle. This particularly aggressive sales tactic thrives off the belief that the price of gold will continue to go up. While there are very good reasons for making this argument, it doesn’t change the fact that gold can be volatile and so leveraged accounts are rarely a good idea.

Here’s how a leveraged account works:

POSTED ON June 26, 2013  - POSTED IN Gold Scams Exposed

As more and more ordinary citizens become concerned about fiat money’s instability (not to mention government overreach with the Snowden and NSA scandals), metals dealers are increasingly able to prey upon these fears to unload suboptimal gold products at steep prices. In particular, you may have heard rumors about government gold confiscation and why you should purchase gold collector coins to dodge such a program. So this week, we’re considering the history of gold confiscation and what it means for your metals investment strategy.

POSTED ON June 6, 2013  - POSTED IN Gold Scams Exposed

Even if you know all the ins-and-outs of buying precious metals and are buying from a trusted dealer, there might come a time when you feel the need to test a gold or silver product for purity.

What follows is a brief synopsis of the most reliable methods for testing gold and silver. We encourage you to do your own research and watch some YouTube videos to become more familiar with each technique.

POSTED ON May 23, 2013  - POSTED IN Gold Scams Exposed

This week, we’re reporting on one of the wackier gold scams that’s arisen amidst the recent gold buying frenzy: scammers in British Columbia have been trying to sell gold that was (allegedly) smuggled into the United States from Iraq, where it was (allegedly) first owned by Osama Bin Laden. These scammers operate in parking lots, using high-pressure sales tactics. They’ve succeeded in selling hundreds of dollars of fake gold to one customer, and outright stole gold off another man by switching his genuine gold chain with a fake one.

There’s so much wrong with this scenario. Right off the bat, you should be highly suspicious of any gold dealer who’s doing business in a parking lot or similarly non-professional environment.

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