Empty Vaults Serve as a Warning: Keep Your Gold Close
An apparent gold scam recently uncovered in Austin, Texas, serves as reminder for investors to use caution when dealing with small, unknown companies.
According to the Austin American-Statesman, the vaults belonging to an Austin company claiming to store millions of dollars in precious metals for its customers turned up virtually empty.
By the time auditors and lawyers got access to Bullion Direct’s 14th-floor offices six weeks ago, there were only a handful of gold and silver coins in an office safe. A second vault it had recently rented held only slightly more. An estimated $30 million in cash, metal bullion and valuable coins, meanwhile, had vanished.”
Some investors reportedly lost hundreds of thousands of dollars.
Bullion Direct filed for bankruptcy on July 20. Several days earlier, the company abruptly shut down its operations and terminated all of its employees. Some believe the company’s founder and owner, Charles McAllister, set it up as a scam from the beginning. Ron Barbala said his 437 ounces of gold, silver, palladium and platinum simply vanished from Bullion Direct’s safes.
“He saw all of us coming a mile away, and played his cards very well,” he said. “If you steal bullion, unless you’re caught in the act, it’s impossible to trace.”
But according to the American-Statesman, the company’s new lawyer, Joe Martinec, thinks it was more a matter of bad business practices spiraling out of control.
Martinec’s reading of the company documents he’s seen suggests something closer to ‘a slow-motion Ponzi-like scheme.’ McAllister scrambled to keep Bullion Direct afloat by dipping into investors’ precious metals and cash to support newer transactions. The system appears to have collapsed this summer, Martinec said, when investors got spooked by a sudden rash of complaints over tardy deliveries and demanded the company ship their gold and silver immediately.”
Whether it was intentional fraud or a Ponzi scheme gone-bad makes little difference to investors who lost hundreds of thousands of dollars.
The best way to protect yourself from scams like this is to simply take physical possession of your gold and other precious metals. By doing so, you maintain full control over your investment. For those who do want to store their precious metals, SchiffGold only works with a few major, third party depositories and trust companies with long histories.
Most companies operate above board, but in every industry you will find scammers and other bad apples. To learn more about common gold scams and how to avoid them, get our special report Classic Gold Scams. Download it for free here.
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