Following an announcement this week by the Commodities Futures Trading Commission that it was filing charges against 12 firms for allegedly selling phantom gold to investors, The Mines reached out to veteran coin dealer Bob Walter of Westport-based Sam Sloat to get some tips on avoiding these scams.
“The most important thing, if you’re buying gold, is to take physical delivery of it,” Walter said. “So many times, people are selling gold they just dong’ have. It’s very easy to make it appear they have the gold.”
Walter, whose been in the business for 41 years, says the phantom gold investment scheme is an old one and he remembers a Florida firm int he 1980s that went so far as to spray paint blocks of wood and photograph them stacked in a vault to help it attract investors.
He said another thing to consider when buying gold from an out of state vendor is ask why you need to do business with that firm when there are local dealers who can provide you the actual gold.
Often the investor is lured into the scam by a low price, he said, noting he’s heard customers say they saw an internet ad offering to sell gold coins at price below what dealers would pay for them.
The alleged scam the CFTC is pursuing took investors for more than $46 million and customers were told they only had to provide part of the purchase price while the company would finance the rest of it.
Right now interest in gold is strong as people look for a safe investment that will hold its value in a low interest environment and fears inflation will finally spread beyond food, energy, healthcare and education. We know prices have risen in other areas, but remember, the flatscreens are still still cheap.
Walter said another thing gold buyers should do is their research. They should make sure the company they’re dealing with is legitimate and check the references.
As we say in the Mines, don’t be the fool that rushes into a deal.