Nick Hodge,
Publisher
Aug. 20, 2024
One of the most-trafficked articles I ever wrote was about a gold coin scam.
There was a commercial being aired at the time selling Gold Buffalo tribute coins. The ad gave you all the details about the original coins, which were first made in 2006, contained a full troy ounce of pure gold, and had legal tender value of US$50.
Except it wasn’t selling the original coins. It was selling a “tribute” of the coin that was clad in 14 milligrams of gold worth roughly 75-cents at the time.
That was back in 2011, when gold was hitting record prices north of $1,600 per ounce.
Manias bring out both the con artists as well as the worst of our irrational behavior.
It’s important that you be able to spot both.
Here we are, thirteen years later, and gold prices are hitting records anew.
This week they climbed above $2,500 per ounce for the first time ever.
And right on cue, word of a new gold scam hit the wire.
First reported by KABC, the ABC affiliate out of Los Angeles, it centers around the Oxford Gold Group and its supposed Gold IRA program.
Local resident Greg Olsen says he took $200,000 out of his principal 401K and gave it to Oxford, which was supposed to buy gold and deposit it at a third party on his behalf.
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But he soon started receiving worrisome notices from the depository company. First saying that the physical gold never arrived. And then saying that the depository was no longer doing business with Oxford Gold Group at all.
So Mr. Olsen marched down to Oxford's brick-and-mortar office in Beverly Hills. It appears to have been abandoned.
Oxford’s website, once brimming with positive reviews, is now defunct.
Olsen is worried his money is gone forever and says he may never be able to retire as a result.
Avoiding Gold Investment Scams
You always think it can never happen to you.
I’m sure Greg thought the same.
But fear and greed are underappreciated motivators that affect us all.
The Better Business Bureau says it has received nearly 100 complaints about the Oxford Gold Group scam and has revoked its accreditation. The story has been picked up nationally and bad reviews are popping up all over.
Many government bodies and regulatory agencies will give you pages upon pages of information about how to avoid investment and financial scams. A quick search delivered results from Investor.gov, FINRA, the Federal Trade Commission, the Securities Exchange Commission, and more. Their basic advice boils down to:
- Ask questions
- Research before you invest
- Know the salesperson
- Be wary of unsolicited offers
- Protect yourself online
- Know what to look for
And you can of course contact any of those agencies to ask questions about an individual, entity, or type of investment.
Concerning precious metals and retirement specifically, the Commodity Futures Trading Commission has up an entire page on the topic with a pretty explicit warning:
The Commodity Futures Trading Commission advises the public not to take cash from their retirement plans under relaxed distribution rules provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to speculate or invest in gold, silver, or other precious metals without first consulting licensed or registered financial, tax, or legal advisors. Investing in precious metals as part of a diversified portfolio—along with stocks and bonds—may be a wise decision. However, even if they call themselves “IRA experts,” precious metals dealers often times are not licensed or registered to provide investment or trading advice to retail customers.
That’s all great advice.
But no government agency is going to give you the two things you really need to simultaneously avoid scams and have success when investing in gold, especially bullion.
Education & Access
I’ve been writing about and investing in the precious metals market for over a decade.
And, as noted above, I’ve been calling out scams within it for just as long.
My education about the sector was a result of my curiosity about markets and how money really worked.
And it led me to some of the most knowledgeable people in the space, who I eventually had the pleasure of calling mentors.
The first is James Dines.
As far back as the 1960s, he was warning the world about "The Coming Gold Crisis" by publishing The Dines Letter (TDL) independently. He gradually convinced several other newsletters to join what he baptized "The Honest Money Movement," later to become "The Hard Money Movement." He was the first, and perhaps the only, US authority to have protested the removal of silver from US coinage and the sale of over half the United States' gold at $35, warning that such sales would be followed by ruinous waves of inflation, skyrocketing interest rates, an eventual market crash, an economic depression and possibly political upheaval – even if it took decades.
In 1975, Mr. Dines published a book called “The Invisible Crash”, identifying 2008 as the year those things would culminate and a new era would begin. A prediction that proved disastrously true. He also organized, financed and led The Hard Money Movement's "Gold Tea Party" in front of the US Treasury building on 23 May 1978.
In 2009, after his multi-decade prediction came true, he updated that book in a hardcover edition called “Goldbug!”. That book noted that:
Economists desperately threw trillions of dollars at 2008’s economy, bailing out this company, or that institution, without grasping that the cause of the problem was having previously printed too much paper money and that more printing risks a destructive and blood-curdling hyperinflation. What might it look like?
If indeed fate is to deal the world hyperinflations, and we hope not, our guess is that they would emerge stealthily at first. There might be a period where markets stabilize, or even rise, duplicitously teetering between a deflation and a hyperinflation, an eye of a storm meretriciously posing as a “recovery from a deflation” scare. There will also be scarcely-noticed, and maybe even surreptitiously gentle, price increases, at which high-fiving economists would erupt into congratulating each other for the mad scientists having successfully applied a soupçon of inflation to cure the deflation. This phase might begin around 2022.
That book is now out of print. Amazon says it has one left in stock. Over the years, I got to know Mr. Dines, and when he passed away in 2022 he not only entrusted me with his newsletter readership, but he gave me the remaining copies of “Goldbug!” as well to get into the hands of those who wanted to educate themselves about precious metals and monetary policy.
We’ll be selling those remaining copies until they are gone. You can get one here.
The second is Van Simmons.
I have been friends with Van for a decade. He is one of the world’s foremost experts on precious metal coins and collectibles.
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In fact, he co-created the standard by which they are graded. If you’ve ever seen a coin graded MS60 through MS70… Van literally helped create the standards for those grades.
And his company, Professional Coin Grading Service (PCGS), used it to grade millions of coins around the world, making it the global standard. PCGS ultimately became part of Collector’s Universe, which was acquired in 2021 by billionaire hedge fund manager and New York Mets owner Steve Cohen.
Van has been a rare coin dealer since 1979, and has served as President of David Hall Rare Coins since 1991.
For me, the easiest way to avoid fake gold coins and bullion scams is simply to deal with Van for those things. I can call him up and he’ll answer the phone. And you can get that same direct access. It’s one of the benefits of being in our network. You can see how to do that here.
Their teachings, among others, gave me a base of knowledge about hard money and real value that I apply in my everyday investing life.
And I haven’t fallen victim to any gold scams yet.
Maybe they can do the same for you.
Call it like you see it,
Nick Hodge
Publisher, Daily Profit Cycle