The American Precious Metals Rip-Off

Janell Ross | Huffpost Business | May 18, 2011

We have repeatedly warned Austin Report readers over the past decade to always, always, always take immediate possession of your Gold and Silver. Anyone who wants to hold your precious metals, leverage your Gold, or make you sign papers before they will sell you precious metals may be setting you up to rip you off.

The Editor | The Austin Report

NEW YORK — Last year, Brian Gurl spent some time reading about the state of the U.S. economy.

He kept hearing about the gargantuan size of the federal debt and the threat of inflation on TV. Gurl is approaching retirement age, so he and his wife needed safe investments. The couple decided on gold.

“We approached several companies. But it was American Precious Metals who were the most aggressive,” said Gurl, who invested about $100,000 with the company last Fall. “They just sounded very expert.”

In the span of a few months, the couple lost about $60,000, Gurl said.

Last week, a Florida U.S. District Court issued a temporary injunction barring American Precious Metals from doing business, freezing its assets and putting the company in the hands of a court-appointed receiver.

The case against American Precious Metals marks the third gold-related case brought by the U.S. Commodities Futures Trading Commission since March. The agency has also issued a fraud advisory for investors interested in precious metals.

2011, it seems, is the year of commodities and companies prepared to capitalize on investor anxiety.

The soaring prices of all sorts of commodities, uncertainty about the broader economy and the low interest rates banks are paying on savings has drawn both companies and investors to precious metals, said Brad Barber, a professor of finance at the University of California Davis.

“It’s always easy to sell an investment — real or fraudulent — when it’s earned really high returns recently,” Barber said. “People tend to think they are getting in on the ground floor, but in fact the elevator may have already gone up and may be on its way down.”

Institutional and individual investors hungry to make up losses suffered during the recession, people looking for a safe investment with potentially large returns and those concerned about the economy’s stability have all scrambled to join the gold profit party. Together they have created what many analysts insist is a bubble sure to burst. Gold prices — which reached about $1,495 an ounce on Wednesday — have hit and nearly returned to record highs this year.

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