Latest Silver Scam: A 1.5 Ounce Coin for 3X the Price

We recently placed an anonymous call to one of the largest gold dealers in the country for some insight into how other precious metals companies operate. Since this company is very high-profile and has a huge customer base, you might expect them to offer amazing prices. After all, giant retailers like Wal-Mart can usually undercut the prices of their competitors thanks to the sheer scale of their business. Why wouldn’t gold companies do the same?

Unfortunately, our caller – let’s call him Mark – encountered not only ridiculously high mark-ups, but also a series of misleading sales tactics designed to railroad him into buying an illiquid and overpriced product.

This scam ultimately came down to convincing Mark to buy special “non-bullion” coins, instead of common bullion coins. The salesman described these coins as “mass-produced,” as if that were a negative. He made American Eagles and Canadian Maple Leafs sound like cheap, low-end products barely worth considering. In fact, they’re among the best and most popular metals investments in the world.

On the other hand, the salesman insisted that “non-bullion” coins would be worth more in the future, because fewer of them had been minted. Let’s be clear – “non-bullion” is just a fancy way of saying “collectible.”

This salesman tried to sell Mark a 1.5-ounce “Silver Polar Bear,” minted by the Royal Canadian Mint (RCM). Of course, the RCM is one of the finest mints in the world, and its highly-respected Maple Leaf is one of the most popular precious metals investments. However, like most mints, RCM produces a variety of products at various price points – and experienced investors know you should always buy the product with the lowest premium and the highest liquidity (ability to sell when the time comes). Also, just because it is minted by the RCM, does not mean it is legal tender like the common Maple Leaf. The RCM mints coins for private companies too.

At the time of this phone call, the spot price of silver was $16.92 per ounce. This dealer was trying to sell Mark the 1.5-ounce Polar Bear for $45.07. That’s about $30 per ounce, or 77.5% more than the spot price!

Perhaps the most misleading nature of the Polar Bear is that it is 1.5 ounces. This is extremely unusual. It makes it harder for buyers to figure out whether they are getting a good value, because industry standard is to quote in price per ounce.

Clearly the Polar Bear on offer was a bad deal for a bullion investor, so Mark also asked about more common products. The salesman offered to sell him a 10-ounce bar of silver for $201.24. That’s $20.12 per ounce, or almost 19% over the spot price of silver!

10-ounce silver bullion bars are an excellent way to invest in silver, because the price-per-ounce is almost always lower than 1-ounce coins. Most well-known, 1-ounce coins sell for well under 19% over spot, so why on earth would anyone pay that much for a 10-ounce bar? Buying in bulk is supposed to save you money.

A more reasonable premium for silver bars is around 7% over the spot price, though this can vary somewhat depending on the product, the amount, and current market demand. A 19% premium on one of the most common types of bullion – that’s unbelievable. And 77% for a little-known collectible coin is even more shocking.

Here’s the topper. Mark called up the Royal Canadian Mint to learn a little more about this Polar Bear product. At first, the RCM representative didn’t even recognize the 1.5-ounce coin. He insisted that such a coin doesn’t exist. After a couple of minutes of poking around in his database, he said, “Oh wait. Here we go. We minted a small number of these back in 2013.”

Talk about a red flag. If the employees of the mint don’t recognize their own coin, how many average buyers do you think will be interested in this coin when it comes time to sell?

Don’t be swept away by a slick sales pitch. Before you buy precious metals from anyone, download Peter Schiff’s free report, “Classic Gold Scams and How to Avoid Getting Ripped Off.” We hope to earn your business, but even if you choose another dealer, we don’t want you to fall victim to the many scam operations. Allocating 5-10% of your portfolio to gold and silver might be the best financial decision you can make – but you have to buy smart to maximize your return.

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