Congressional hearings last week highlighted the problem of scam artists fraudulently selling gold and other precious metals to people, many of them elderly. Often these scams start with a telemarketing call to the victim in which he or she is told “inside” information about an upcoming rise in the prices for gold, silver or other precious metals. The victims are then goaded into buying the metals at an inflated price and then must often pay additional commission and storage fees that result in the victims losing thousands of dollars. Since 2001, it is estimated that precious metals fraud has cost consumers 300 million dollars. Although the Commodity Futures Trading Commission and the Federal Trade Commission both have jurisdiction in the advertising and sale of precious metals and have shut down some scammers, their record in protecting consumers from precious metal scams is lacking.
No one should ever purchase an investment unless they fully understand the investment and no one should ever make an investment decision based solely on a telemarketing call. Precious metals can be a part of a legitimate investment portfolio, however, this is a sophisticated investment that should only be done by people who are fully educated and informed not just about the investment itself, but also the brokers and others selling the particular investment.