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Fun on Friday: Don’t Buy Gold from These Guys

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I’m a pretty cynical person. And I don’t really trust people. To call me skeptical would be an understatement. I’m the guy who wastes time Googling an even slightly sketchy sounding story posted on Facebook to see if it’s really true. So, I don’t think I would be very easy to scam.

Now, I’m not arrogant enough to think it could never happen. I’m sure there are ways I could be fooled. But I still find it really difficult to understand how some of these scammers ever make a dime. I mean, who actually believes that Nigerian prince is going to send them $8 million? Who actually goes to Target to buy gift cards to send to the Indian IRS agent? (Yes. That is a thing.) And who goes to a storage facility to buy cheap gold?

That last one … It just happened. 

According to the story, as told by a Washington D.C. TV station, an acquaintance contacted a gold store owner and asked him if he wanted to buy a large quantity of gold. The gold store owner then contacted a friend who was also in the market to buy gold and they agreed to meet a man named Mike at a hotel in Gaithersburg. Md., on Aug. 20.

OK. My Spidey-senses are already tingling. You want to sell me a bunch of gold and you want to meet me at some cheap hotel? Yeah. No. This is already kind of sketchy.

But apparently, this didn’t send up any red flags. The two men agreed and go meet “Mike.” At that point, Mike takes them to a storage facility and showed them a box that he said contained a large amount of gold.

Wait. Hold the phone. You keep your gold at Bob’s U-Store-It? Nah. I ain’t buying that for one second. Have you seen some of these storage facilities? I wouldn’t keep a mildewed couch in some of those places – much less a box of gold. It just doesn’t add up. And why did we have to go to the hotel first? Why couldn’t we meet Mike at the storage place? This has “I’m about to get ax-murdered,” written all over it. Because, you know, I might just keep a dead body wrapped up in a rug in some of these storage places – if I were apt to store dead bodies, I mean.

But till … no red flags.

Because Mike gave them a sample of gold to test.

This is how this particular scam works. The gold is made out of a cheap metal – in this case, copper. During the initial meeting, the scammer gives the victim a tiny bit of real gold to test. In the legitimate business world, we call this seed money. You know, you have to spend a little to make a little.

In this case, our scammer made off with $300,000. Yes. You read that right. These guys took $300K in cash to a storage place and handed it over to some guy for a box of “gold.”

I wonder if they got a receipt?

On a side note, the way the TV station tells the story is kind of amusing and highlights bad writing typical in the TV news world.

The next day, the men met Mike at the same facility and sealed the deal. They saw the box in the storage unit and gave Mike $300,000. They left with the box and again went to get it tested. But this time it wasn’t gold; it was only copper.”

“This time it wasn’t gold.” They make it sound like a magic trick – like the gold in the box mysteriously metamorphosized into a block of copper. Poof.

It also sounds like the men tested the box – not the contents of the box. They left with the box and went to get it (the box) tested. That’s the only it in this sentence. Hmmmm. Maybe there was gold inside. But probably not.

Anyway, back to the main story. They don’t say so in this news report, but it’s likely that the scammers sold the “gold” for an amount far below the spot price. That’s part of the scam’s allure. You’re getting a bargain. Of course, when you buy your gold at Bob’s U-Store-It, you should probably expect a bargain.

Or, maybe you should go with the old adage – if it sounds too good to be true it probably is.

So, what have we learned from this little story?

Don’t buy your gold at Bob’s U-Store-It. If you have $300,000 and you want to buy some gold, I recommend you don’t call “Mike.” Call 1-888-GOLD-160 and talk to a SchiffGold precious metals specialist. He won’t make you meet him at a hotel. He won’t drag you to a storage facility. And he will guarantee the purity of any gold he sells.

Fun on Friday is a weekly SchiffGold feature. We dig up some of the off-the-wall and off-beat stories relating to precious metals and share them with you – with tongue firmly planted in cheek. Click here to read other posts in this series.

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About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
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