Exercising caution when investing in precious metals
By Ken Paxton
Uncertain economic times often lead to interest in investing in precious metals and rare coins, based on the representation that they are a time-tested investment that will only increase in value. Unfortunately, following the recent volatility in the market, some unscrupulous dealers, often employing high-pressure sales tactics, are leading investors into making undesirable purchases of gold, silver and collectible coins. That’s adding up to the loss of considerable amounts of money.
The Office of the Attorney General’s Consumer Protection Division (CPD) has received numerous complaints from people who purchased coins as an investment, only to learn that they are worth just a small percentage of the purchase price. Sadly, it is not uncommon to receive complaints from a senior who has lost virtually an entire life savings from cashing in his or her retirement account to purchase coins.
Consumers have also filed complaints after not receiving the gold and silver coins they’ve paid for. It’s important for consumers to understand that dealing in gold and silver coins is a tricky business, and sellers often promise more than they can deliver. Complicating matters, CPD often doesn’t even hear a complaint until after the consumer has been waiting several months to receive their coins. At that time, in many cases, the business the bought the coins from is on the verge of failure, leaving the consumer with little or no recourse.
The CPD has taken enforcement actions against unscrupulous coin retailers. Back in 2012, the Office froze the assets of AGT American Silver and Gold in Austin for violating the Texas Deceptive Trade Practices – Consumer Protection Act by accepting payment for coins and bullion that the company never delivered. AGT ultimately closed its doors, leaving consumers with nothing and no way to recover their money.
A few years prior, the Office of the Attorney General launched an investigation into U.S. Money Reserve Inc., another large coin seller in Austin. The company claimed that the commemorative coins it sold would both retain and increase their value more effectively than ordinary bullion coins. However, the Office of the Attorney General maintained that the significantly higher prices that the U.S. Money Reserve charged for its commemorative coins rendered the products so expensive that customers would not actually realize an increase in value for many years. The Office resolved its investigation into U.S. Money Reserve Inc. in 2011, with the company agreeing to pay $5 million in restitution to its customers.
The best way to protect your assets is by thoroughly investigating a company before purchasing gold, silver or coins. Here are a few tips to help you make a more-educated purchase:
- Check with the Better Business Bureau (BBB) and/or the Office of the Attorney General prior to purchasing coins.
- Contact the American Numismatic Association (1-800-367-9723) to find non- profit associations of coin dealers who can offer advice on selecting a reputable seller in your area that adheres to the association’s ethics and arbitration guidelines.
- Conduct a simple internet search of the company name and read the reviews.
- Don’t allow anyone to scare you into making a hasty decision relating to your money and your investments, and be especially wary of offers that are only good for one day.
- Compare prices with several dealers before making your selection.
- Before making a purchase or investing, get the seller’s refund policy and all other terms in writing.
- Feel free to refuse calls or terminate conversations with sellers who make you uncomfortable, especially ones you have told to stop calling you.
Ken Paxton is the Texas Attorney General
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