Peter Schiff Exposes Classic Gold Scams and How to Avoid Getting Ripped Off

Peter Schiff Exposes classic gold scams and how to avoid getting ripped off

If you are thinking of buying gold or silver coins, you MUST read this before you buy. The market is filled with tricks and traps ...

Don’t be caught off guard!

• The Bait and Switch • The Confiscation Con • The Numismatic Hype • The Proof Set Rip Off • The Leverage Trap . . . and much more!

PeterChairman Schiff 1 classic gold scams

About This Report

ur Chairman, Peter Schiff, has spent decades on accurate economic analysis and fair dealing, so it’s no Wall Street striving to deliver the best value to surprise that SchiffGold has gained a reputation for low his clients. He has long recommended investors prices and ethical business practices. Okeep 5-10% of their portfolios in physical precious SchiffGold has issued this Special Report detailing metals, but heard countless stories of clients falling all the tricks, traps, and scams that can befall gold and in with the ‘wrong crowd’ of bullion dealers. Four silver buyers. Our hope is that this report saves you a lot years ago, partnering with industry-veteran Michael of costly trial-and-error, and proves why no asset class Freedman, Peter decided to open his own precious in history has ever out-classed plain old gold and silver metals firm. Peter is known worldwide for his record of bullion. Welcome to Gold-Buying 101 As more investors add gold and buyers from their hard-earned most common scams so you can silver to their portfolios to protect money. Using tactics such as bait- buy like an experienced investor. themselves from a collapsing and-switch and high-pressure You’ll learn how, like magicians, dollar and looming inflation, many salesmanship, these companies take unscrupulous gold dealers use companies have sprung up offering unfair advantage of the growing sleight of hand and fantastic claims dubious and often even dishonest enthusiasm for gold and silver to confuse you and make your programs for investing in precious by selling products that are poor savings disappear. Armed with metals. investments, often containing very this knowledge, you’ll be able to These firms confront investors little gold or silver or sold at prices successfully – and profitably – crash with a bewildering array of that are many times the value of the proof your portfolio by buying the questionable products, designed coins’ precious metal content. right kind of gold and silver at a fair mainly to separate inexperienced In this report, we’ll expose all the price.

glossary Bullion: Precious metals officially valuable but not liquid (few available Numismatic: In the metals recognized by international markets buyers), while a 2010 Toyota Camry industry, numismatics refers to coins in the form of bars or coins. The is less valuable but much more that are valued based upon their London Bullion Market Association liquid. rarity, condition, or mint date, rather requires gold bullion bars to be at Markup: The difference between than just their metal content. least 99.5% pure and gold bullion a dealer’s wholesale cost and retail Obverse: The front of a coin. coins to be 99.9% pure. price. If a dealer pays 3% over the Historic Coin: This term is spot price of the metal for a coin Reverse: The back of a coin. generally used in the metals industry and sells the coin for a 5% premium Spot Price: The price at which to refer to pre-1933 gold coins. over the spot price, the markup is 2 an ounce of precious metal can be Karat: The purity measure of percentage points. bought or sold for physical delivery a precious metal. Pure gold is Premium: The cost of a product by a large institution on a major 24-karat. Commonly available gold is over and above the spot price of its bullion exchange. This is used as a often 22-karat to make it stronger. metal content. If the spot price of basis for wholesale and retail prices. Liquidity: How easily an asset gold is $1,000/ounce, and a 1-ounce Troy Ounce: The standard can be bought and sold in the coin is selling for $1,050, the marketplace. Higher liquidity means premium is $50 or 5%. imperial (English) measurement of the seller doesn’t have to wait Mint State (MS): A measure of precious metals. Bullion products for the right buyer or take large the condition of numismatic coins, are almost always measured in troy discounts on the selling price. For ranging in quality from MS-61 to ounces. A troy ounce weighs about example, a ’69 Corvette is very MS-70. 31.1 metric grams. classic gold scams 2

The Bait-and-Switch Let’s get one thing straight: very few gold dealers around today Rare vs. Bullion Gold Coins make their living selling bullion coins. They often advertise coins 550.00% like American Eagles and Canadian 500.00% Maple Leafs at low prices to attract 450.00% buyers, and sometimes they may 400.00% actually sell them to you at the 350.00% advertised prices. 300.00% But the reality is that these coins 250.00% are just used as bait. Most dealers’ 200.00% goal is to get you on the phone, 150.00% where their ‘boiler room’ brokers 100.00% will try to get you to switch from 50.00% bullion to numismatic coins, which 0.00% they might call “rare,” “historic,” or “limited edition.” 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (proj.) Unless you are a very serious PCGS 3000 Rare Coin Index 1oz Gold Bullion collector who has substantial knowledge of the numismatic The Professional Coin Grading Service releases an index of the price of world, here are four reasons you 3000 rare coins. Comparing the PCGS index since 2001 to the spot price of should avoid numismatic coins: gold shows that while rare coins have appreciated, they’ve largely missed on the major bull run up. Since 2001, rare coins appreciated some 36% 1. The Commissions while gold appreciated more than 350%. are Extreme If you’re buying a numismatic coin, you will not be paying a fair price for the bullion contained in as you probably don’t have the Coin Grading Service (PCGS) the coin. Dealers sell numismatics persuasive power of the fast-talking against the spot price of gold at prices of 30-50% or more over broker who sold the coins to you. bullion shows that numismatics the coins’ bullion value, and a large have in fact missed most of the 3. The Charts are Cooked chunk of that will simply go into gains of the last decade. the dealer’s pocket. Numismatics salesmen might show you a chart comparing the 4. Confiscation is a Con 2. They’re Hard to Liquidate performance of numismatic coins Many unscrupulous dealers tell Even if your numismatic coins against regular/bullion coins. customers that only numismatic do rise in value, good luck trying to Of course, the chart shows the coins will be exempt from a coming sell them. While bullion coins are numismatics performing much “gold confiscation.” This is based on accepted at near spot price around better. But these graphs almost a little piece of history taken way the world, there is no ready market always track particular rare coins for numismatics. that are cherry-picked with the out of context. You could try selling the coins benefit of hindsight. For every In 1933, President Roosevelt back to your dealer or at coin one rare coin that outperforms, issued Executive Order 6102, shows, but chances are they’ll offer there could be ten that severely prohibiting the private holding much less than what you paid. eBay underperform. Only afterwards of gold and requiring US citizens doesn’t work because the buyer would you know which coin you to turn over their gold bullion or can’t verify that the coin is actually should have bought. face a $10,000 fine ($167,700 in rare. And it’s nearly impossible Comparing the wide index of rare today’s dollars) and/or 10 years’ to sell them to the general public, coins issued by the Professional imprisonment. 3 classic gold scams

For private citizens, the order numismatic coins would be exempt Buy Gold for Gold listed the following exemption: from a Roosevelt-style confiscation. Gold is a commodity. Bullion “Gold coin and gold certificates However, even in the heat of coins are pre-measured units of this in an amount not exceeding in Roosevelt’s confiscation scheme, commodity, stamped with a design the aggregate $100 [about 5 troy government troops did not break as a quick signal of authenticity. ounces at that time] belonging to into people’s homes. The singular Gold is also history’s most reliable prosecution under the order took any one person; and gold coins form of money, which makes it a place when a New York lawyer having a recognized special value good commodity to own when the tried to withdraw 5,000 troy ounces to collectors of rare and unusual world’s paper money system is in coins.” of gold from Chase Bank, and he wasn’t even convicted! Ironically, upheaval. The only people who Seizing on this “rare and unusual” all the gold actually collected by the should be buying numismatics language, many coin dealers try to Treasury was willfully surrendered are serious and knowledgeable convince unsuspecting customers in a wave of misguided patriotism, collectors – those who appreciate that regular bullion coins are while many “law-breakers” simply the coins for their aesthetic value not safe, but that their “unique” kept their gold. and take pleasure in owning them. What’s the Story With Collectible Coins?

If there’s anything worse than The advertising for this "9/11 commemorative coin" buying overpriced numismatic talks about it being made from silver recovered coins, it’s buying a collectible from the vaults underneath Ground Zero – but the coin that no one wants to collect. coins are only clad or covered in gold and silver. The Numismatic coins usually carry inside is a base metal, like steel or tungsten. Also, at least some value above their the ads claim the coins are "legal tender dollars," bullion content, but coins marketed but fail to mention that the "dollar" in question is the as “collectible” range from being currency of the small African state of Liberia, not major ripoffs to virtually worthless. the currency of the United States! Proof Sets — They’re All in the Packaging generally worth only their weight in handling? Because it is only clad in A common collectible product gold or silver. They might glimmer, gold – most of the coin is actually sold to novice coin buyers is the feature an eagle in flight, or come composed of a base metal. “proof set.” Many of these sets in a thick plastic case, but they are While these companies are legally contain only legal tender coinage, only worth as much as the metal obligated to mention that the coins which doesn’t contain any precious they contain. metal content at all! Buying a are clad, they will do whatever they package of uncirculated US coins Playing on Your Heartstrings can to distract you from that fact. from 1986 will leave you with assets with Commemoratives The most common and successful worth about 91¢. Commemorative coins are the way to do this is to try to give the If a dealer does happen to sell worst of the collectible bunch. They coin great sentimental value. Thus, proof sets of genuine bullion are constantly being pitched on we see commemoratives made from coins, they will surely charge a TV commercials and infomercials. gold or silver “recovered from the huge mark-up for packaging. The How do they manage to sell a gold vaults beneath the Twin Towers point again is that these coins are coin for $19.99, plus shipping and after 9/11.”

As a matter of business policy, SchiffGold click For more information about our prices and products, call encourages investment in only well-known, NOW! liquid, high-quality gold and silver coins and bars at competitive prices. Live Chat Request a Callback classic gold scams 4

They might bear the image of the you will be suckered into thinking Actual commemorative coin towers or the USS New York, the that these coins have the same collectors know when the United warship built from Ground Zero value as their surface metal. After States Mint is releasing a coin and steel. This is all part of a strategy to all, a zinc coin doesn’t look that what it’s worth; they don’t jump for distract you from the fact that the much different than a silver one. the shiny coin on TV – even if it coins are essentially worthless. In Why bother cladding it at all if not shows the bombing of Pearl Harbor fact, one such company lost a court to associate the coin with the real or the first man on the moon. case brought by New York State for value of precious metals? $2 million in damages for fraud and Official mints seldom issue Those moments will still be false advertising. commemorative coins made of significant even if you don’t waste While a few customers may pure gold or silver. When they do, your money “commemorating” simply wish to commemorate a the coins carry large mark-ups that them with high-priced historic event with a pretty trinket, make them risky investments. And paperweights posing as precious these companies are betting that you will never see them advertised. metal coins.

the most common bullion coins (what you want to buy) American Gold Eagle Canadian Gold Maple Leaf Mint: United States Mint Mint: Royal Canadian Mint Composition: 91.67% Gold, 3% Silver, Composition: 99.99% Gold 5.33% Copper Years of Minting: 1979 - Present Years of Minting: 1986 - Present Denominations: 1 oz, 1/2 oz, 1/4 oz, Denominations: 1 oz, 1/2 oz, 1/4 oz, 1/10 oz, 1/20 oz 1/10 oz

American Silver Eagle Canadian Silver Maple Leaf Mint: United States Mint Mint: Royal Canadian Mint Composition: 99.9% Silver, 0.1% Composition: 99.99% Silver Copper Years of Minting: 1988 - Present Years of Minting: 1986 - Present Denominations: 1 oz only Denominations: 1 oz only

What Else Should I Watch Out For?

We’ve covered the big scams uncirculated 1800 US Silver Dollar Many coin dealers are selling already, but those unscrupulous is going to be worth more than the brand-new, 2014 bullion coins with gold dealers have other tricks up same coin showing lots of wear- an MS-70 rating at multiple times their sleeves. Watch out for these and-tear. Certification is an expert’s the price of the same 2014, brand- new ungraded coin. Our research other ways they’ll try to separate judgment on how well the coin has uncovered one company selling you from your hard-earned dough. been kept. The highest grade is MS- 70, or Mint State 70, which means 2014 American Silver Eagles with an Investment-Grade” the coin is flawless. MS-70 grade for $99.95. SchiffGold Doesn’t Pass sold the exact same coin, ungraded, Grading becomes very important for less than $24! By definition, a Coin collectors rely on services when collectors want to appraise new coin is almost always brilliant like the American Coin Club the exact value of a rare, old coin and uncirculated. It comes straight Grading Service or Professional worth tens of thousands of dollars. from the mint – untouched by Coin Grading Service to certify the It’s not at all important when you’re human hands! So how can anyone condition of their coins along the buying brand new bullion coins – justify charging an extra $75 for 70-point Sheldon Scale. A brilliant and here’s where the scam comes in. certification? 5 classic gold scams

schiffgold bullion premiums for rare coins

At SchiffGold, our mission is The key is to understand what premium”), but our completely opposite from bait- you’re buying and pay the lowest proportion stays and-switch gold dealers: we want premiums possible. the same. to educate our customers so SchiffGold now offers un-graded For clients they don’t get swindled by our selections of the most popular interested in such competitors. Generally, that means pre-1933 gold coins at premiums coins, we can offer explaining the merits of bullion far below our competitors. We beautiful historic coins coins over numismatics. apply the exact same markup like the $20 Saint- structure to historic coins as we Gaudens (pictured at However, some customers prefer do to our bullion products. These right) and the $5 Indian to have beautiful historic coins coins carry higher markups from Head for premiums 60% below our among their holdings. the wholesalers (the “historic competitors!

They may claim that only these buy a piece of history without any get your precious metals. Just find certified coins are “investment- unnecessary costs or fees. a reputable dealer and cut out the grade.” That’s malarkey. All new middleman. coins are shiny and clean, just like The Financial new cars. It’s only when you have Advisor Double Dip The Price Protection Racket a 1969 Corvette in mint condition One company we found in that the collectible value goes up. our research was using financial Another ruse we’ve seen is an Most new bullion coins will never advisors to sell their silver bullion offer to “protect” or “guarantee” have rarity value because they are at prices up to 17% above spot! your purchase price in case gold so common. That is a good thing, These advisors would recommend and silver drop right after you buy. because you want to own coins that the purchase to their clients, then are easily recognized and accepted Those of us who have been they would get a huge commission around awhile know there are by a large market of potential on the sale, which is in addition buyers. no free lunches in this world to the markup on the coin. Even – certainly not in the world of What makes the whole scam even though the products sold were investing – and this case is no more ridiculous is that coin grading bullion coins, the deal was not different. The way these companies by a reputable service like the competitive because of the high are able to offer rebates and price ACCGS costs $9 per coin, no matter markups plus the commission guarantees is that they’re charging the coin’s value. Why pay some paid to the advisor. This practice huge commissions on the initial dealer an extra $75 or more for a might actually be illegal because sale. You’ll notice that price coin that you could have graded financial advisors have a fiduciary protection is not offered on low- yourself for $9? Of course, you responsibility to their clients to get margin bullion coins, only on high- don’t need to have the coin graded them the best deal on purchases. margin numismatics. at all because the certification We don’t think overpaying for Honest bullion dealers are in a serves no purpose and will eat into bullion coins fits the definition of very low-margin business. We don’t your investment return. a “good deal.” Aside from perhaps offer a lot of perks and guarantees This is why the pre-1933 coins a referral, you should not have to because we’re focused on delivering we sell come ungraded. We want to go through a stockbroker, financial what you should want: the most give our clients the opportunity to advisor, or other intermediary to gold and silver at the lowest price.

If Gold is Going Up, Shouldn’t I Multiply My Return With Leverage? A new craze among dealers is to the dealer will sell your gold at you have to pay 3% commission on push gold buyers into “leveraged wholesale prices to cover the debt. the whole $25K, that’s actually 15% accounts.” In one of these accounts, of the $5K you invested, or $750! Here’s an easy example of the the dealer lends you money to buy risks of leverage: You have $5,000 to Then there is interest on the gold on the assumption that gold invest, but the company convinces $20K loan, which may run you will go up faster than the rate of you to borrow another $20,000. 8% per year, adding an additional interest on the loan. In other words, The total value of the gold you $1,600 cost in the first year of if you have $5K, they’ll loan you control now equals $25,000. The holding. With the commissions, another $20K in credit to make a gold price drops by 15%. Your gold this amounts to a staggering 47% of $25K total purchase of gold bullion. portfolio is now worth $21,250. your original $5K investment! Tack The sales pitch is that since we all The gold company will probably on leasing fees, transaction fees, know gold is going up, you might require you to send in another administration fees, storage fees, as well maximize your returns by $2,000, since their $20,000 loan is delivery fees... with many of these leveraging up. But the fine print in some jeopardy. If you can’t come accounts, it is nearly impossible to could leave your wallet empty and up with the money, they will sell come out ahead. your head spinning. out your gold, take back their loan, The House Always Wins and send you the balance of $1,250. Short-Term vs. So, instead of taking a paper loss Even if it weren’t for the shady Long-Term Trends of $750 on your original $5,000 practices of firms offering these accounts or the disadvantages of The first danger that is often investment, you have taken a real loss of $3,750. not holding your own gold, leverage glossed over is what happens if still adds a huge element of market gold goes through a short-term Leveraged Accounts Will risk that is inappropriate for most correction. We all know that gold Nickel-and-Dime You gold buyers. That’s probably why can be volatile in the short term. the Commodities Futures Trading If gold drops in price, you’ll likely Unfortunately, the leverage ripoff Commission issued a fraud alert on be asked to send in more cash for a doesn’t end with margin calls. these dealers. There is no quicker “margin call.” If you do, you could Expect to pay a commission on the route to bankruptcy than getting end up putting up a lot of extra entire value of the purchase. If your involved in leverage. You risk losing funds to maintain your existing original goal was to invest $5K, and many times the amount of your investment (rather than using assuming the company charges a original investment — and could the dip to purchase additional 3% commission, you would have be roped into a truly desperate bullion at a discount). If you don’t, paid $150. Quite fair. But instead, if situation.

But These Companies Advertise Everywhere and are Endorsed by Major Celebrities!

The real tragedy of the physical to fund sweeping TV, radio, and views tells you the company is precious metals industry right print advertising campaigns – and trustworthy. Well, it’s time for a now is that the less scrupulous a to pay well-respected celebrities to reality check. dealer is, the more likely you are endorse their products. to do business with them. That’s Trusted Advice or because these firms are raking in That way, you become familiar Paid Endorsement? record profits at the expense of you, with their brand name, and You’re watching some radio or their customers, and using them then someone who shares your TV host you truly admire when 7 classic gold scams the show cuts to commercial. Then, have the experience and financial you hear that same reassuring voice know-how. urging you to call a “leading” gold company to put away some savings. Conflict of Interest Once you’re on the phone, the For many celebrity hosts, salesman uses that endorsement as accepting advertising dollars from evidence that the murky products these questionable gold dealers they’re pushing are legitimate. presents a real conflict of interest. Unfortunately, just because a If these dishonest companies company is endorsed by a well- weren’t raking in big profits on respected figure does not mean that unsuspecting customers, then they it is trustworthy. Radio and TV wouldn’t have enough money to hosts who “endorse” gold dealers bankroll their shows. are often just paid spokesmen. If you were in that position, Most of the time, these celebrities As most come from a journalistic could you imagine the pressure aren’t checking out the companies or political background, they aren’t to ‘look the other way’ when you they endorse to make sure their well qualified to judge a good deal realize customers are being grossly listeners are getting a good deal. from a bad one – they just don’t overcharged? How Do I Buy the Right Way?

Buying gold and silver the right physical delivery. pays a premium of 3.5% above spot way is actually very simple. Most of Next in line are the huge, for a gold coin and sells for 5.5% the challenge is not being pressured multibillion-dollar physical bullion above spot, the dealer markup is 2 into products you don’t understand. wholesalers who can buy directly percentage points. In current market Armed with the knowledge of how from the various national mints conditions, buyers should pay less a purchase is supposed to happen, worldwide at prices a little above than 7% above spot for gold bullion you’ll be able to avoid the common spot. There are only a handful of coins. Expect to pay more for well- pitfalls. It’s like driving a car: once these wholesalers in the US, and known coin types (an American Gold you learn how it’s done, it becomes none of them sell to individual Eagle vs. a gold coin struck by an second nature. investors. unknown private mint) or less liquid products (a 1/10 troy oz coin vs. the A Typical Transaction These dealers add on a small typical 1 troy oz coin). profit and overhead margin, The three key facets of a gold or which is called the premium, and Test your dealer silver transaction are the spot price, sell to large gold retailers, such There are a few tests you can use the premium, and the mark-up. as SchiffGold. Premiums vary when on the phone with a coin The spot price is what major according to market conditions, salesman to find out if his firm is institutional buyers and bullion supply and demand, product type, honest: banks are paying at commodities and the outlook for gold. 1. Are you clear about the product exchanges in places like New York, Once purchased, gold retailers being offered? London, and Hong Kong. These sell the coins to gold investors trades are mostly futures contracts, at a markup, which covers their It’s important, before any purchase, where the buyer doesn’t take overhead and profit. If the dealer to take some time to familiarize

yourself with the most common gold you the current price above spot This means that they will either and silver coins. This list isn’t long: and any associated fees or taxes. not want to buy the product back American Eagles, Canadian Maple They should be able to give you a at all or they’ll only buy it back for Leafs, South African Krugerrands, total dollar amount for your order substantially less than the sale price. Austrian Philharmonics, Australian before the order is processed. Kangaroos, and a few others. These A reputable dealer makes a few As with any business transaction, percentage points on a transaction, are widely produced, 1-ounce gold you should only deal with a firm and will happily buy any coins back coins that are not rare, collectible, you trust. If you can’t get a straight commemorative, or “special” in answer on the price of the product from you at about the price he pays any way. If the guy on the phone you want, hang up and look for the same coin from wholesalers. is leading you to a product you’ve elsewhere. If you buy a coin and want to sell never heard of, or claims that his it back the next day, you should coin is somehow “better” than the 3. Is the dealer willing to buy back take a loss of only a few percentage usual suspects, hang up and look what they’re trying to sell you, elsewhere. and at what price? points. If the spread, or difference between what the dealer sells 2. Do you understand the price This is a really key test of a scammer versus a legitimate dealer. for and what they buy for, seems offered and all associated fees? Scammers sell products that either large – or especially if they won’t Before you make a purchase, any have no value or have a value much buy back at all – hang up and look reputable dealer will be able to tell lower than what they’re asking. elsewhere. Buying With Confidence

espite the recent correction, Volume-to-Value Ratio gold still has a long bull Gold has been prized throughout histo- market ahead of it. It’s still ry for its high value-to-weight, making Dnot too late for Americans to dump it easy to conceal and trade under their dollars for a real store of tough political conditions. Consider: value. Every day, the news brings you could store enough gold to care for more stories of busted budgets, a small family for six months (approx. 9 rising inflation, and increasing ounces) on the inside of a belt buckle. taxes and regulation. When the world’s creditor nations turn their Liquor Silver backs on the greenback, all those Copper Gold trillions of dollars printed over the 9mm Ammo Smaller=Better last couple of decades will come flooding home. Precious metals are the ark that will carry you through the flood. In this day and age, there hope this report is a shortcut in When it’s based on honesty is no excuse for not holding some that process, so that you don’t have and fair dealing, the relationship percentage of your portfolio in to learn the hard way what not to between a gold investor and his physical gold and silver. do. Armed with this knowledge, dealer can last a lifetime. Of course, As with any young market, it will you should be confident in telling we at SchiffGoldhope to become take time for gold and silver buyers the reputable dealers from the your gold and silver dealer of to learn how to get a good deal. We dishonest ones. choice for many years to come. If you’d like more information about our products and prices: click click CALL 1-888- NOW! NOW! Request a GOLD-160 LIVE CHAT callback