If a dealer ever attempts to influence your investment choices by mentioning President Roosevelt’s 1933 Executive Order (about gold confiscation)…
Run, don’t walk, but RUN away. Fast!
The industry terms for these coins are typically “proofs” or “numismatics”. And they are the only thing keeping bottom-feeding gold dealers in business.
President Roosevelt’s 1933 Executive Order prohibited the private ownership of gold in America. It required US citizens to hand over their gold bullion to a Federal Reserve bank or face a $10,000 fine and/or 10 years imprisonment.
The President’s order listed the following exemption: …”gold coins having a recognized special value to collectors of rare and unusual coins.”
Rare and “Unusual” Coins
The “rare and unusual coins” clause is what many dodgy coin dealers use to convince investors that regular bullion coins are not safe and could be confiscated by the government.
Then they convince you that they themselves are offering “rare and unusual” coins which would be exempt from a potential future Roosevelt-style confiscation.
And that is how they justify up-selling you a 30% to 50% markup over the actual value of the gold content in the coin.
So if gold is currently at $1100 an ounce, they will try their hardest to convince you that your safest bet is to buy “rare” 1-ounce coins for $2,000 each, or more.
No Selling Back
And here’s the kicker… If you turned around the VERY NEXT DAY, and tried to sell the coins back to them, they would only offer you the ACTUAL value of $1100 per coin.
It is truly remarkable and disgusting. But it gets worse…
Research has shown that roughly 25% of privately held gold in 1933 was turned into various Federal Reserve banks (this gold was melted down into 22k bar form and moved into Fort Knox, helping to ensure the dollar’s viability as an internationally convertible gold standard currency).
The roughly remaining 75% of privately held gold was hoarded and not turned in.
And not a single US citizen was convicted of hoarding their gold. Not one!
Since 75% of these coins were kept by private citizens, and not melted down, there are still MILLIONS of them in circulation.
Yet these very common pre-1933 gold coins are still being acquired by gold dealers every day, and then re-sold as “rare and unusual” by extremely aggressive phone salesmen.
Your great-grandfather’s pre-1933 gold piece is neither “rare” nor “unusual” according to the official definition, and it is no more safe from the government than anything else you own.
Yet, this doesn’t stop large gold dealers from hounding your Internet browser, television, and radio, offering you rock-bottom prices, only to then call your phone non-stop, pushing coins that are neither exceptional nor fairly priced.
On the Phone With Them
Once you’re on the phone with them, that’s when the real fun begins…
Because rare coin sales pitches will many times come complete with official-looking “figures” that track “numismatic” or “proof” coin values versus real bullion, over select periods of time.
The carefully selected rare coin indexes displayed will of course show that “collector” coins outperform bullion, all thanks to beneficially hindsight-selected spans of time and products.
The financial term for this is called “cherry picking” — and it’s one of the shadiest sales tactics around.
What Happens Years Later?
It’s only years later, when you go to sell or double check the price on your coins, that you realized you were fleeced — and your coins are worth significantly less than your original money, which could have been spent on real gold or silver bullion.
Worse, your coins are no more safe from confiscation than money in a bank. Because they are still being stored in the USA, and last we checked Roosevelt hasn’t been in office for over 80 years.
But the WORST part is, this scam is only just the beginning!
Because, the shady dealers have upped their game, using an even slicker form of deception to swindle honest investors like you.
Tomorrow I will share with you Scam #3.
Just a Side Note:
A publishing company approached me to author a book on Gold IRAs. I’m considering the idea but I haven’t agreed to it yet. Part of the reason why
I started my website is to help others avoid the trouble and traps that come with this industry. Even though I consider myself very knowledgeable on the subject, I’m always learning more by sharing more.
If you find the time, I’d love to hear your thoughts on whether this information I’ve been sending you goes in line with what you were looking for.
What are the things that worry you the most about Gold IRAs?