Another precious metals scam has been uncovered in America. Sterling Precious Metals of Boca Raton, Florida, is being investigated by the feds and stands accused of bilking clients out of approximately $10 million.
According to a lawsuit filed by the Federal Trade Commission (FTC), the company placed special emphasis on targeting senior citizens, who had to pay disproportionate commissions and storage fees. In an effort to recover part of customers’ investments, next week the FTC will request a federal judge freezes Sterling Precious Metals’ bank accounts and have an escrow holder take care of the company. This is not an isolated case. There are unfortunately an increasing number of unscrupulous gold dealers in Florida, taking advantage of the fact that the state is home to many wealthy retirees – some of whom can be easily bamboozled by smooth-talking telephone marketers. Some also cite a lack of federal government regulation of this sector as a problem, with critics paying particular attention to what they see as inadequate company reporting requirements.
In the last five years 60 new gold investment companies have opened in Palm Beach and Broward counties alone. According to the FTC at least 23 of these companies are currently under investigation. In many cases these companies claim to be buying and storing gold for you, but are not actually buying or storing gold – and are simply using customer cash to line their own pockets. Some are dealing in low-quality bullion products masquerading as high-end goods, while others encourage people to buy metal with borrowed money (on margin), meaning that customers’ losses are magnified in the event of falling prices. Official reports state that in recent years people have lost over $100 million to such scams.
This should serve as a warning to those who are interested in purchasing gold. People should make sure that they are buying from a trustworthy bullion dealer.