Oh, Gold. It’s been all over the headlines again, fueled partially by its dizzying ascent and partially by the call in the recently ratified GOP platform for a commission to investigate the ramification of a “metallic basis for U.S. currency” (read: gold standard). But before you go piling into all that glitters, Yahoo! Finance makes an excellent point–
According to the FTC, complaints in the area of investment frauds, including precious metals, have increased sharply over the past three years. In 2011, the FTC fielded 7,657 complaints related to investment fraud, compared to 6,490 complaints in 2009.
“Consumers are vulnerable, because other investments are not panning out for them. They’re looking for something different and precious metals are presented to them as a winning situation,” FTC attorney Dama Brown said.
After the financial crisis in 2008, as gold prices continued to rise, con artists began capitalizing on the economic climate and taking advantage of people’s fears, Brown said.
Sad facts, folks. Now, we’ve heard people encourage those looking for a gold investment to be careful – look for people who are licensed and reputable. However, as the article explains, not even that is really worth much faith.
Potential investors should know that people who sell “physical” precious metals, like gold or silver bullion, are not required to obtain licensing or training from the National Futures Association (NFA). Yet, some companies advertised their brokers as being licensed, Brown said.
“They are referring to a telemarketing license. If they were licensed in commodities, we’d call them brokers. But instead we consider them telemarketers,” Brown said.
The FTC has found that many fraudulent companies were operated by brokers who had lost their license to sell stocks or futures because of deceptive sales practices.
Pretty licenses, pretty words – all pretty much hollow. This doesn’t mean we have a whole lot of faith in the NFA, either, but it’s especially frustrating when the people peddling the fraud are hiding behind a piece of paper without any kind of real teeth in an effort to dodge their past indiscretions.
Just a friendly reminder – all that glitters…