Editor Note: One of the reasons I don’t disclose the name and address of my precious metal business on this site is that it’s a totally separate business, and I don’t want to appear to be steering you to my shop, ala, “My store is better, come and buy from me.” BoomerPreps, however, does sell, “The Beginners Guide To Precious Metals” which is a guide for novice buyers of gold and silver to help them avoid incidents such as those that follow below.
I was working in my store on Friday and Saturday, and saw two very similar instances of people not using their heads before making fairly significant purchases.
There is a saying in the precious metals business: Buy the book, then buy the coin. The meaning is hopefully self-evident: Understand what you’re buying before you buy it – authenticate that your items are legitimate and properly priced. This philosophy can apply to virtually any significant purchase you may make, from automobiles, to ammunition and guns, to prepping supplies.
On Friday, a guy called the store in a panic. I was back in our security room, and the employee who answered the phone was our newest guy. The caller was freaking out, exclaiming “I think I just got ripped off!”, so my guy handed the phone to my most seasoned employee.
He had the guy settle down, and tell his story.
The caller was thinking of buying a large amount of gold bullion – in the $50,000 range. He heard an ad on the radio from some company promising “rock bottom prices”, called the outfit up, and fell for their scam – hook, line and sinker.
He was intending on buying bullion gold. He ended up buying collectible coins, and didn’t realize this until it was too late. This is one of the first things we discuss in our guide. DON’T buy this type of coin until you are a very seasoned buyer.
Somehow, the salesman got this guy to give the company his wiring instructions without seeing an invoice (seriously?!). The money was wired, the receipt of the money into the seller’s account was verified, and the victim was then congratulated on his purchase of $50,000 worth of collectible St. Gaudens $20 gold pieces.
He told the salesman on the line that he meant to buy bullion, not collectibles. The salesman basically said, “Tough s#!t” and hung up. That’s when our hero called us in a panic.
He gave us the price he paid for each coin (26 coins at $1927 each). We told him that a quick check of multiple online sources showed that he could have gotten those exact same coins AT FULL RETAIL PRICING for $1497 each – or $430 lower per coin. He gave away $11,180 because he bought the coins without reading the book.
The buyer wanted to know if he had any recourse. Probably not. As long as the company actually delivers the coins as promised, it’s unlikely any laws were broken.
And no, you can’t stop a wire once it’s been sent. That’s the idea behind them. They’re used in lieu of stacking $100 bills in front of the seller. Once it’s sent, it’s gone.
Aside from posting a bad Yelp review, there is little this guy can do.
As a side note: If he had actually purchased what he thought he was buying – bullion – and had bought the Top Of The List coins (American Gold Eagles) his $50,000 would have gotten him the coins at $1285 each for 39 coins!
On Saturday, a little old lady (I swear!) came in to sell some gold and silver coins. She had been sick, and a friend who was managing her accounts had made a mistake and sent some money incorrectly. It was going to take 3 weeks or so to get the money back, and she needed money in the mean time.
She had a wide variety of coins, that were all common bullion – only a few semi-collectible coins in the bunch. I went through the coins, and made her a very strong offer (we typically buy coins for a bit below spot prices, and sell them for a bit over spot). The total for the coins was $2,750.
She had a funny look on her face. When I asked her what that meant, she pushed a tube of 20, $1 Peace Silver dollars and 5, $5 half-eagle gold pieces, and said that 5 years ago, she had bought those coins alone for $4,000.
My heart sunk.
I told her that her gold coins were “cleaned” coins – they had likely been in jewelry and had been polished, killing their collectible value. She said that the seller had told her that.
I also told her that her Peace Dollars were the most common ones made – 1922 (Philadelphia mint). Over 50 million of them were produced. They were the least valuable Peace Dollar produced.
The gold coins each contain $298 in gold, and the Peace Dollars each contain $13.25 in silver. Because they were semi-collectible coins, I was offering her a little bit over the precious metal content, for an offer of $1800.
I brought her over to our sales computer, showed her our price list, and explained how I would be selling those coins for $2150. Essentially half of what she had paid for them, back when spot prices were lower than they are now.
I asked her where she had bought them, and sure enough, it was from one of the big outfits that advertise on TV. She made a comment along the lines of, “Well, I guess I’m the one who paid for that fancy commercial.”
The precious metals market has lately been a roller coaster ride. Up one day, down the next. Mostly down over the past few years because of manipulations in the commodities markets (there is lots of information on this throughout the Internet).
I tell my customers that I personally buy gold and silver every single month. I firmly believe that economics will eventually take hold of the market and the true values will come about.
What I also tell them is that I have no idea when this correction will happen. It may be tomorrow, it may be in 6 months or 6 years. I truly don’t know. I just know that history has shown that markets eventually correct themselves, regardless of outside manipulations.
For this reason, I counsel people to only buy precious metals once they are out of debt, have a cash emergency fund, and have no plans to make a large purchase in the near future – a car, home or something similar.
Think of gold and silver as the bottom of your retirement/savings stack. It’s the asset you want to liquidate last. It’s the bedrock.
Everyone has to make their own decision on how to proceed. Just be educated before you do so.