Beware of Gold and Silver Scams
Before paper money became the world’s standard method of payment, precious metals were notoriously used as currency. Although paper money has essentially replaced precious metals as currency, metals such as gold, silver, platinum, and others still have tremendous value in the marketplace today.
With the rampant uncertainty going forward throughout the world right now, precious metals continue to rise to new highs. As of November 10, 2020, gold is currently priced at $1,880 per ounce. This represents a one-year price increase of nearly 29%, a five-year increase of 73%, and a twenty-year increase of 609%. Silver is priced at $24.35 per ounce, representing a one-year, five-year, and twenty-year increase of 44%, 70%, and 418%, respectively.
Onlookers are wondering how they could enjoy similar double-digit gains that current investors have seen over the past few years. Spokespeople throughout television and the internet are pushing precious metals like never before. Many of them claim that “now is the time to buy” amid all uncertainty. This is a common tactic that is often used throughout the industry, whether it is legitimate or not.
As a result, people rush to buy for a variety of reasons, from fear of missing out on gains to fear that stems from countries printing money at unprecedented rates, especially the United States.
Gold and Silver Scams
Along with these new highs and excited new investors comes rampant fraud by scam artists looking to take advantage of a crisis. As the saying goes, “Never let a good crisis go to waste.”
Novices that have little to no experience buying gold, silver, and other precious metals from authorized dealers are unsure of how to take the next step to get into the game. This allows scam artists to enter the arena and take advantage of novices that are naïve to this type of fraud.
Many scam artists understand that people are scrambling during times of uncertainty. One way that scammers are successful is by overcharging novice investors with claims that they have “rare” coins in stock. However, this is hardly the case. Scam artists know that they could market coins this way without being questioned by new investors who are unfamiliar with precious metals.
Another method that scammers use involves the opposite scenario: scammers sell counterfeit metals for prices that are lower than the market price. Novices jump at the opportunity to buy metals for a reduced price thinking they receive a great deal. However, this is not the case.
Scam artists may also charge individuals for metals that the company will promise to safeguard, but the metals do not actually exist. This is known as the “empty vault” method. Read a story here about an empty vault scam in Texas worth tens of millions of dollars.
If you are considering an investment in precious metals, it is crucial to ensure that your company of choice is legitimate. Research companies in-depth before purchasing any precious metals. If you are faced with any of the methods above, steer clear and avoid doing business with them at all costs.
If you have been a victim in a scam involving gold, silver, or other precious metals, please give us a call for a free consultation. We are more than happy to help you.
Vernon Litigation Group represents businesses and individuals throughout the United States with financial disputes, including FINRA arbitration, cyber litigation, securities litigation & arbitration, financial advisors & employment disputes, and business & commercial litigation.