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.