Boiler-room hustlers are in the midst of a golden age — spinning their legendary sales scams by selling fool’s gold instead of their worthless penny stocks.
A flurry of deceptive and downright fraudulent scams are cheat gold aficionados out of their cash as well as any promise of paper gains they’d expect while the precious metal makes headlines by skyrocketing to last week’s $1,801-an-ounce milestone.
Instead of joining the party, however, many of the unsuspecting investors even get talked out of buying the ordinary gold bars or pure gold coins they covet — under false warnings that Uncle Sam can “confiscate and melt” them.
Instead, they’re often suckered into purchasing decommissioned foreign coins laced with tiny portions of gold worth barely a third of what they pay for the coin.
A report due tomorrow from securities firm Euro Pacific Capital Partners, and available on http://www.goldripoffs.com, detailed a host of woes.
One of most treacherous risks involves borrowing money from a “gold dealer” to buy the precious metal, the report said.
For example, if you put up $5,000 cash and borrow another $20,000 from the dealer to buy $25,000 worth of gold, you stand to lose most of your investment almost overnight. the report said.
If gold drops, say, 15 percent, your gold portfolio would then be worth $21,250. The dealer will then ask you to put up an another $2,000 to protect the loan. But if you can’t pay quickly, the dealer can foreclose and return what’s left –$1,250, if you’re lucky.