Reports of gold and silver scams fell significantly in 20, when metal prices sank. "Because there's so much subjectivity in the value of coins, it's always ripe for deception," says Dama Brown, regional director of the Federal Trade Commission's (FTC) southwest division.įraud activity tends to follow market prices. Collectible coins have an additional aesthetic or historical value and are usually sold by dealers. But many buyers prefer physical bullion - the bulk metal, valued by weight, and cast as bars, ingots or coins. Investors who want to get into gold and silver have many options, including purchasing mining shares or buying into a fund that tracks the metal's price.
But in 2016, gold has climbed 25 percent so far, fueled partly by economic fears following Britain's vote to leave the European Union. Prices plunged as the economy continued to recover. That image was burnished during the Great Recession, when the price of gold skyrocketed, peaking in 2011. In a world of complex and exotic investment options, gold, silver and other "hard assets" are seen as something solid and real, with inherent value that no market crash or federal mismanagement can erase. The rare metal prized by the ancients has long enticed certain investors, especially those who view the current financial system, and the governments that oversee it, with mistrust. Not only had she been duped, but she'd walked right into one of the oldest cons in the world. Later, she learned that the Santa Monica, Calif., City Attorney's Office had launched a consumer protection lawsuit against the firm, alleging it engaged in an "aggressive, nationwide fraud scheme that has bilked consumers out of tens of millions of dollars." Online, she found that several customers were suing Merit for deceptive marketing. And as the price of gold plummeted, the value of her investment kept melting away. Her fears were confirmed when she had the coins appraised at a local shop: Instead of 1 percent over cost, she'd been charged $600 more per coin, and more than $8,000 in total - a 35 percent markup. Although Clark called Merit repeatedly to ask about this, she kept getting sent to voice mail. And when she opened up her safe-deposit box and inspected her hoard, she saw that all the coins had different dates, and they looked dull and worn. She had never received condition reports from Merit, just an invoice. How much were hers worth now? She didn't know. The salesman had assured her that these coins would help protect her from short-term fluctuations. The price of gold had dropped more than $300. And he said Merit could buy them back anytime, charging only that 1 percent fee. When she called, the salesman told her that collectible coins were a better investment, outperforming bullion by more than 2 to 1. If something terrible happened to the economy, she wanted to be able to physically get her hands on her stuff.Ī company called Merit Gold & Silver ran ads offering bullion for 1 percent over dealer cost. A few years ago, she purchased shares of gold through a broker, but all she got was a certificate the gold was in a vault in Australia. A 50-year-old Denver-area small-business owner who considers herself a small-government-minded libertarian, she bought gold for its value, not its beauty: She was uneasy about the state of the U.S.