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3 Major Gold & Silver Scams

This page will hopefully illustrate some of the most common gold and silver scams which all people looking to properly invest their hard-earned dollars should always avoid.

  1. Gold Exchange Traded Funds (ETFs)
  2. Gold Individual Retirement Accounts (IRAs)
  3. Mint State Graded Gold Bullion Coins

Gold Exchange Traded Funds (ETFs)

The idea of a gold ETF was first officially conceptualised by Benchmark Asset Management Company in India when they filed a proposal with the SEBI in May 2002. However it did not receive regulatory approval and was only launched later in March 2007.[1] The first gold exchange-traded fund actually launched was in March 2003 on the Australian Stock Exchange under Gold Bullion Securities (ticker symbol “GOLD”). Gold Bullion Securities (GBS) are fully backed by gold which is both deposited and insured. GBS was launched to give financial institutions and private investors the ability to own gold and gain exposure to the price, without the inconvenience of storing physical bars or opening a futures trading account.

(note: see how it calls you taking physical possession of the only real money on earth an ‘inconvenience’…)

The most popular American gold ETF would be the Commodities Exchange, Inc. (COMEX) in New York, as part of the New York Mercantile Exchange. What these exchanges really do is help suppress gold and silver prices through the sale of gold and silver certificates instead of having to sell the physical metal. These certificates are essentially IOUs which state you own ‘x’ amount of gold or silver in ‘x’ vault. Many economists became very skeptic of ETF’s, especially the COMEX, and doubted they hold as much physical gold in their inventory as they claimed.

And they were right. The struggles of the COMEX to provide physical delivery for many clients in the past year has led some prominent non-illuminati economists, such as Max Keiser, to call for the collapse of the COMEX. This collapse, they say, would result in a catapult of gold prices easily doubling from $1,000 to $2,000 overnight. The drying up of these certificated ‘guarantees’ would cause those investors and others to not only acknowledge a truer gold price, but to only buy physical gold, thus sucking up supply.

The COMEX did fail, but it didn’t collapse. People waited weeks and sometimes months for physical delivery on their certificates only to receive bars stamped ‘Royal Canadian Mint’. If you can think like the crooks on Wall St., this shows you the American COMEX was bailed out by the Canadian Mint. For now. To believe the Canadians have an endless supply of gold to satisfy these contracts is a government and central bank fantasy. In fact, the Canadian Mint now has ounces and ounces of ‘missing’ gold. It looks like someday soon there will be thousands of angry investors left holding a simpler paper certificate for their ‘gold’.

This is what world renown economist Bob Chapman recently had to say about the COMEX and other ETFs, in the August 12th issue of his newsletter The International Forecaster: “Speaking of COMEX gold and silver futures, it appears that the Illuminati have solved their physical gold and silver inventory shortage which was causing them great headaches as massive demands for physical delivery were received. At first, they just lied about their inventory. The inventories did not change even as hundreds of requests for physical bullion were settled month after month, often with the help of central banks like the ECB and other outsiders like the Canadian mint. Now, instead of using physical bullion, they can hand you an ETF contract instead. So they are trading paper for, well, more paper! Pretty slick, eh? They want to give investors the convenience of having an interest in a publicly traded security so they will just hang onto it and not demand physical delivery. But therein lies the trap. These ETF’s have leased large portions of their bullion out to the bullion banks for purposes of gold and silver suppression. They do not have what they say they have any more than the COMEX does, and if you hold on to your ETF contract, you may well become the next victim of a Madoff-like Ponzi scheme.

What this means, oh precious members of the hard money community, is that you should demand delivery of your metals from the ETF’s assuming that this is possible pursuant to your contract. Otherwise, here is what the system looks like: You buy a COMEX gold or silver contract with cash. You demand physical delivery of your gold or silver. Instead, they hand you an ETF contract. Unless you can demand the metal from the ETF, the ETF will simply hand you back cash instead when you liquidate your position, and you will be left hanging right where you started, with a pile of depreciating cash and no physical metals. If you try to hold on to your ETF position to at least get the appreciation in value of precious metals, you may never be able to cash it in, because the ETF’s may well turn out to be nothing more than Ponzi schemes. If the sponsors do not have the metals, they will not be in a position to cash out all the shares. And the COMEX can just hand out as many ETF shares as they please, because no one will be checking the legitimacy of these contracts, especially the ETF sponsors, who will be in cahoots with the COMEX.”


Gold IRAs (Individual Retirement Accounts)
Note: The worst thing about an IRA is that you are forced to entrust your wealth in the hands of another person, the custodian of your IRA. There are Americans with IRAs who have had their positions in numismatics repositioned to bullion by their custodians, at the behest of a certain coin company, within hours after their direct verbal requests for the custodian not to do so.

The second worst thing about an IRA is the same reason why an ETF is not the way to go. You put your money into papers representing your gold instead of taking physical possession of your gold. If you trust these papers to be redeemable and available to convert into physical delivery at all times, especially during ‘emergencies’, you are far too trusting. Not to mention having to pay all the taxes, fines and penalties incurred when you want to close or withdraw. This is why your precious metals should be kept private. Only physical gold and silver held in your possession offer complete privacy protection. By contrast, if you buy gold stocks or Exchange Traded Funds you give up your right to privacy completely.

Update, 01/17/10: The United States Congress has been discussing ways of assuming control of American citizens’ IRAs and retirement accounts and rolling them over into US Treasuries. This would be the end of your money, as US Treasuries are not only worth much less than gold, they are soon to be worthless when the dollar is officially devalued 3 to 1, which is set to happen either in 2010 or 2011, according to Bob Chapman of the International Forecaster. While there is currently no pending legislation to authorize such a robbery, the fact that some in the District of Criminals have been mumbling about it should be reason enough to avoid keeping too much of your wealth in gold IRAs as opposed to taking physical possession.

A gold IRA is like any other paper investment. It is a piece of paper stating that you have some gold stored somewhere. Most of the time they try to get you to convert your IRA into American Eagle numismatic proof coins that they claim are non-confiscatible. The truth is that they receive huge premiums for American Eagle numismatic proof coins, and that is why they want you to convert your traditional IRA into a gold one. They make a lot of money on the conversion.

In the first place, the only gold you can legally hold in your gold IRA is gold bullion, and American Eagle proofs are considered bullion. Look at the face value of any American Eagle. What is it? It is $50. Why? That is the confiscatible value of that coin regardless of what you paid for it.

Therefore, if you convert your regular IRA into a gold one, you end up being a three-time loser. First, you lost the flexibility of your regular IRA. Secondly, you converted your money into bullion gold coins, which are confiscatible. Third, your gold is stored in a bank somewhere in the country so you cannot access it quickly.

And fourth, depending on how devious the company representing your IRA turns out to be, you could end up just holding another paper certificate. Here’s an example of the many questionable IRA’s out there, Rosland Capital, with Gordon Liddy -of Watergate scandal fame- as their spokesman.


Grading Gold Bullion Coins

Bullion coins like the gold American Eagle or the platinum American Eagle are not collector coins. The rule is that only old United States numismatic or collector coins can be graded. Grading gold bullion coins is another scam technique that some gold bullion dealers use. Gold bullion coins do not have any collector value, and are, therefore, not worth a penny more than bullion value (ie: the amount of pure physical gold the coin contains). It is a scam to grade them because it does not increase their value or make them a numismatic coin.

A few years ago a lady sent me a list of the coins she had bought from a gold bullion dealer in Texas. She had bought two 1999 gold American Eagle sets, a $5 coin, a $10 coin, a $25 coin and a $50 coin. These coin sets were graded by one of the two independent grading firms. And each of these coins was in a plastic case. There were no grades on these coins, but they were in official plastic cases.

The amount of bullion gold among the four coin sets was 1.85 ounces, worth approximately $520 at that time. She paid $2,400 for the four coins, or $1,880 in premium for coins that had no numismatic value. She also bought a one ounce, 1998 Platinum American Eagle from the same company, and it was graded MS69 and certified and encapsulated by one of these two firms. She paid twice what she needed to for the bullion platinum coin. The coin company had convinced her that it was a rare coin because it had been certified by one of these two firms. One of my suppliers explained to me how this scam, grading gold bullion coins, works:

Coin companies will send 10 or 20 coins of these bullion coins to these firms and tell them to pick the best four or five coins and put them in plastic cases and grade them at MS65 to MS69. These firms get about $20 a coin to do the dirty work, so it is a good money maker for everyone involved, except, of course, for the buyer.

I’ve seen these coins for sale on eBay, especially. With British Sovereigns, French Francs, American Gold Eagles all graded as MS64 and so on. None of these coins should ever be graded by an honest gold trader. The fact that they show up in coin dealers’ and traders’ offices as ‘officially graded’ to begin with suggests that both the PCGS and NGC are corrupt, as they are the supposed independent authority on the art of grading numismatic coins.

Sources: Bob Chapman, The International Forecaster, Max Keiser, and Kal Gronvall, Gold and Silver Exchange, as well as http://www.wikipedia.org.

Discussion

4 thoughts on “3 Major Gold & Silver Scams

  1. I purchased gold one year ago and paid $8,000.. now I am told I’m worth $7,000. When I purchased it it was $940 an ounce. It has gone up since then. Why am I $1,000 poorer? Please give me an answer as I am considering selling it now, before I lose all my money completely.

    Posted by Jennie Maroney | January 7, 2011, 5:54 pm
    • sorry this took me almost a year to reply. if you’ve sold your gold, you probably just got back more federal reserve notes, which are more and more worthless everyday. the dollar will probably be phased out eventually or devalued overnight when the debts to China, et al. are just defaulted on by the US government. the Fed is buying most of our treasury notes now. not foreign investors. gold will continue to climb. so will silver.

      Posted by pacificcoins | November 14, 2011, 5:38 pm
  2. While I agree with your critique of both Gold ETFs and Gold IRAs, I strongly disagree with many of the sweeping generalizations made under the topic “Grading Gold Bullion Coins”.

    Your statement that “Gold bullion coins do not have any collector value, and are, therefore, not worth a penny more than bullion value” is simply not accurate. Gold bullion coins of any kind all have some collector value, or else people would not collect them. While this may seem like an obvious and perhaps juvenile statement, consider this: how many precious metal investors out like to collect coin blanks? The answer, of course, is none- as there is no reason too. Coin blanks are absolutely featureless, and an investor who is interested in pure bullion would be better served by purchasing generic gold bars, the larger the better.

    All coins take a lot of time and energy to produce, and each one is unique in it’s own special way. It is true that many coins (even some Gold coins) are so common that the “collector” value is minimal. It is also true that coin collectors should be wary of paying too much for their bullion. However, no Gold coin of any sort will ever be sold by any professional dealer for pure melt value- there is always a premium. The only people in the business who get to buy Gold for spot price are traders at COMEX on Wall Street who are buying contracts for 400 oz. or more of Gold at a time. Even then, these traders are paid a small commission over the spot price, by the investors who pay them to execute the trade.

    Yes, coin investors should be wary of paying too much for their Gold. The example you cited, of the woman paying a 300%+ premium for gold bullion coins, is outrageous. However, your statement that “It is a scam to grade them [bullion coins] because it does not increase their value or make them a numismatic coin” is simply not true either.

    Just as one man’s trash is another man’s treasure, what would appear to be a ‘bullion’ coin to one collector (or investor) at a particular point in time, might be considered a ‘numismatic’ coin to another collector later on. Indeed, in this Nation’s past, many bullion coins which were once common are now in fact very rare, and in some cases, worth millions of dollars.

    Regardless of how ‘common’ and easy-to-find a particular bullion coin might be in today’s marketplace, the fact is that Gold coins of any sort are never truly ‘common’ in the greater scheme of things. If a collector wishes to preserve a beautiful Gold coin for enjoyment by future generations, there is simply no better way to do so then to have it certified and slabbed by PCGS or NGC. This does not suggest that PCGA and NGS are “corrupt”, as you postulate, but rather that these companies are providing a valuable service to the collecting community.

    Posted by Christopher Neal Wyatt | March 15, 2011, 3:04 am

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