Friday, December 9th, 2016 MST

Horror Stories

I bought what I discovered to be overpriced silver from the NRA coin dealer from Texas. Now they keep calling me wanting me to “secure” money by investing in their overpriced graded older coins that I now can find for over $ 1,000.00 less anyplace else.

I have an MBA in economics, so I have figured out that fiat currency was not where my hard won assets needed to be. I called XXXXX (in Santa Monica, CA), and was talked into numismatic coins to put away in a safety deposit box. It took two months of continuing investments and information from CMI for me to figure out that the numismatic coins were in fact, European bullion coins. I had paid a 30% premium for $100K in coins. I raised hell, and threatened everything I could think of. They settled with me by sending me more coins that brought my spread to 8% and made me sign a gag order to not talk about it. That order has lapsed and I wish I could warn everyone about the scam.

In 1980, the coin dealer I was selling my silver coins to, offered me two key coins. the 1916-d dime, and the 1932 quarter. I paid $1000 for the two. I tried to sell them back to him a few years later, and was told the market was down then. When I tried to sell them to a different dealer, I was informed they both were counterfeit.

My first gold coin was/is a generic Saint. Here we go: A Reno telemarketer did dirty talk in 1986, during a run-up on gold. I paid $1,450 for a coin worth $800. It is a beautiful presentation and finally exceeded cost a few years ago. Not exactly the best return on investment. My little portfolio was inspired through shame, initially, now there is some knowledge accompanying. A real Nevada gold bug.

In the mid-1980s, telemarketers began touting at huge markups certain gold coins as “non-confiscatable.” Since then, we have run across many sad situations, which we choose to call Horror Stories because they tell the horrible losses some investors have suffered when dealing with telemarketers. Below, are only a few on which we took notes.

In July 2011, I bought coins out of the NRA from a coin dealer in Texas. They told me that the silver I was buying was just a starting block and that I should really think about investing a lot more in the market. When I asked to buy more bullion silver they said no and to buy graded older coins. Well guess what when I said no they said yes and soon after i took some coins they said were no brainers!!!!! Now my 20K is worth around 13k sick and confused on the market

In September 2009, with gold well below $1000/oz. I wanted to buy a special gift for my 2 sons. Since I had never bought gold, I got the phone number of a well advertised Santa Monica, CA gold seller from a very well respected TV program.

I bravely called and was told there was a special on French Angels. I bought 15 at a unit price of $345.11 each, and 3 days later (when I could find another credit card) 15 more at a unit price of $341.63, for a total of $10,301.10. As you can imagine, I was appalled to learn that I could have bought the Angels for much, much less.

It was my first gold purchase and I thought I could trust the TV program to only advertise for reputable companies. I was not ready for the high pressure salesman that I encountered. I have since asked them if I could buy a gold dragon (when my personal account executive called me), only to be told there was a $1100 premium on it. When I said, ‘no thanks’ I was sent to no less than 3 “experts”. They asked me, “Why did you call then if you don’t want this coin?” to which I answered, “I didn’t call him, he called me.” Only then did they let me off the phone.

I have since done a lot of research, and should have beforehand. I never thought they would take me to the cleaners like they did.

In the mid-2000s, Kurt made some big money in the Phoenix, Arizona real estate market and decided to diversify. After reading some websites and watching coin programs on TV, he thought he knew what he was doing when he hooked up with a dealer in Texas.

Over a few months in early 2006, he put approximately $250,000 into collectible coins sold by the Texas-based firm. In early 2007, he decided to go back to real estate and asked for bids on the coins he had been sold. It was then he learned that his $250,000 investment had been turned in to about $110,000 to $125,000.

In the fall of 2006, Henry, a senior citizen, decided he wanted to own some gold and came across the same firm that Kurt had found in Texas. Over three months, Henry made six purchases for 22 coins. Most of the coins were US Mint proof coins, which had been graded PR69 and PR70. His “investment” totaled a little more than $28,000 for an average price of $1,300 a coin.

In May 2007, Henry learned that the coins he had purchased were nothing special, that he could sell them at only a few dollars above bullion coin prices. When Henry bought, gold at the time was trading in the $570 – $580 range. Henry had paid more than double the real market price of the coins.

In March 2004, Sally heard a discussion on a Christian radio program about reasons for investing in gold. She had about a year and a half before needing her funds for her two daughters’ college education and decided to call the program’s sponsor.

Unfortunately, Sally was sold ten MS67 1908 NM $20 St. Gaudens, which were from the “Wells Fargo Hoard” at a cost of $100,000. In August 2005, when she needed the money for her daughters, she learned the coins could be sold for about $65,000.

In 1990, Vern bought six MS63-MS64 Double Eagles from a Phoenix-based telemarketer for $6,800. Fifteen years later, in mid-2005, the coins were worth $4,550, a $2,250 loss.

If Vern had bought Krugerrands, which he wanted when he had the misfortune of running across the telemarketer, he would have seen a small profit of about $600 instead of the $2,250 loss. (The 1990s was not a good time for gold. Still, bullion coins would have given Vern a profit instead of the loss he suffered on the overpriced Double Eagles.)

Hello,

I just finished reading your article Myths, Misunderstandings, and Outright Lies and would like to ask you an opinion. Question, if you have time to answer it. I was one of those guys who went for the whole deal, hook, line, and sinker–just as the article talked about. So of course I paid too much–giving the guy high premiums.

The ironic thing is that I went in with the sole purpose of purchasing American Gold Eagles, and he talked me, the ignorant, out of it–of course. That purchase was made 3 years ago. I’m a bit wiser now. I have ten MS64 1908 “no-motto” Saint-Gaudens Double Eagles. I talked to the original company the other day, and they told me that they were buying back the coins at a certain price, at that time. I forget the exact figure, but that isn’t the issue.

I sent in the coins for the buyback since it was actually a good price–better than I could get on e-Bay or other places. I called him today to ask him the status of the coins and to ask him to cut me the check

He informed me that the market had moved considerably since I talked to him. It came to a drop in price of nearly $100 per coin, which would of course be $1,000 less for me. We argued about it. I told him that gold had held steady, and he said that collectibles don’t necessarily go with the price of the precious metal it is made of. (Funny that when he originally sold them to me, he talked about how the coins rode on the back of gold at a much higher rate than bullion–but now the connection is a bit tenuous for some reason.)

My question is this: Would a reputable company lie to you, get you to send your coins in for the buy-back on a high value, and then low-ball you when the coins arrive so that you will probably just sell them anyway since they already have the coins–and it would be a hassle to have them shipped back to you? I’m simply asking your opinion. The company in question you may not have heard of, but they are in Santa Monica, and they are considered to be a reputable company. Does this kind of practice happen?

[Answer: No, a reputable dealer would not do that; yes, it does happen.]

I realize I am not a customer, and you may be too busy to answer my question, but if you do, that would be appreciated and if you don’t that would be understood.

Sincerely,

Chris

(Email received 2/1/05 and replied to.)

In January 2004, Mary, acting on the advice of her father, moved to invest in gold. She called only one firm, which had been recommended on a bulletin board on a website she visited. Looking back, Mary suspects the recommendation was a “plant” by the firm she called.

On calling the firm, located in New Mexico, she told the man who answered the phone that she would like to buy American Gold Eagles. The broker said he could sell her Gold Eagles–if that was really what she wanted. That statement put doubts in Mary’s mind. After all, she was a first time buyer, and the man on the phone was an “expert.”

During a lengthy discussion, during which Mary was told about the possibility of “government confiscation” of gold bullion coins, the broker suggested she buy “non-confiscateable investment grade coins.” This resulted in Mary writing a $69,000 check for 80 MS-62 St. Gaudens, for coins she could have bought from any reputable dealer for $48,000.00.

Adding insult to injury, before the dealer would deliver the coins, he insisted that Mary sign and fax to him an account agreement that required her agree to, in case of dispute, binding arbitration in New Mexico. Mary lived in the East.

In October 2003, Cheryl tuned in a radio financial program, the sponsor of which recommended that listeners invest in “non-confiscateable” gold coins. The sponsor’s argument was so compelling that Cheryl called the sponsor’s 800 number. She was sold two old U.S. gold coins, an MS65 1928 St. Gaudens for $1,550 and an MS63 1899-S $20 Liberty for $1,700.

At the time, the 1928 St. Gaudens could have been purchased for $1,125 and the 1899-S $20 Lib for $1,225. Cheryl paid $900, or 38%, too much for the coins. Sadly, the story gets worse.

The sponsor’s rep convinced Cheryl to pay for the order by sending in fifty-five 1/10-oz Gold Eagles and a check for $1,100. In effect, Mary surrendered 5.5 oz of gold (and $1100) for less than two ounces of gold.

In the early 2000s, Wilma, a senior citizen, heard a radio program about “how bad things are.” She had about $80,000 she wanted to protect and thought that owning gold, like her father had, made sense. She called the program’s sponsor, a coin dealer.

Wilma was told she should buy some MS66 St. Gaudens or $20 Libs at $2,600 each, which meant she would have received 30 to 31coins for her money. Wilma was new to investing in gold, but still 30 to 31 coins for $80,000 did not sound like enough, and she called a friend, who suggested that she talk with CMI before making a decision.

When Wilma didn’t move quickly, the broker called her and suggested that she start with a smaller investment of $10,000 for ten MS64 St. Gaudens at $1,040 each. At the time, a fair price for MS64 St. Gaudens was $640. Luckily for Wilma, one of her friends told her about CMI, and she called us. After a lengthy discussion, Wilma did not buy the coins.

In September 2003, Bob B. called a dealer in Minnesota and asked for prices of $10 Libs and $5 Libs, He was told $285 for $10 Libs and $137 for $5 Libs. He ordered 200 of the $5 Libs, for a total of $27,400, plus S&H of about $40. At the time, $285 was a high price for low-end (VF/XF) $10 Libs, but $137 was a fair price for VF/XF grade $5 Libs. As agreed, Bob mailed a check to the dealer for the full amount.

When Bob received a written confirmation for the purchase, however, he saw that the confirmation was for $5 Modern Commemorative gold coins. He called the broker about the mistake, but despite Bob having taken notes about what coins he wanted prices on, the broker was adamant that Bob had ordered Modern Commemoratives, not $5 Libs. ($5 Libs were minted 1839-1908 and were widely used as money. $5 Modern Commemoratives have been minted by the US Mint since 1986 and rarely have ever held significant premiums.)

The 1986, 1987, and 1988 $5 Commemoratives, which the dealer mailed to Bob, could have been bought at $100 to $105 just about anywhere, which means Bob paid 30% – 37% too much for coins he didn’t even order. Bob was ninety years old.

In late 1998, Gary went shopping for Y2K protection and responded to ads by a company located in Santa Monica, California. Gary ended up with a collection of coins that included MS64 Peace Dollars, MS65 pre-21 Morgan Silver Dollars, a few 1908 NM St. Gaudens (from the supposed Wells Fargo Hoard), and a bunch of common European coins. His cost: $24,000. When Gary sold in August 2002, he received less than $15,000 for his Y2K protection, despite gold being higher when he sold than when he bought.

In April 1998, Christina, an elderly lady from Florida, bought 200 XF $20 Libs at $575 from a dealer in Minnesota. Total investment: $115,000. Christina bought only a month before or Monetary Digest’s May issue, which exposed the lie of “non-confiscatable” gold in our now famous Myths, Misunderstandings and Outright Lies. The May issue also laid out solid reasons why old U.S. gold coins are bad investments when they carry big premiums.

Anyway, Christina could have bought the same coins from CMI in April for $448 each, meaning she was overcharged $127 for each coin-a whopping 28% premium. Buying 200 coins she paid $115,000 instead of $89,600, which she should have paid. Christina was ripped off for over $25,000.

This is one of sickest and saddest horror stories I know.

In the late 1990s, I received a phone call from a man named Gene asking the price at which I would sell him some MS62 St. Gaudens. I gave him the price, and he thanked me. The next day, he called back again asked for prices on MS62 St. Gaudens. I gave him the same prices, and he asked if I was sure I could sell him MS62 St. Gaudens at those prices. I assured him I could.

The next day he called still again, this time with his wife, Shirley, on an extension so both could talk with me. We started the same conversation when I interjected, “You’re not interested in buying these coins. You’ve already bought them from another dealer and now you want to know if you paid a fair price. Is that right?”

They confirmed that I had guessed right, and we discussed their situation. They had paid $74,000 for some MS62 St. Gaudens that I could have sold them for $48,000. They took an immediate 35% loss. But, here’s where the story gets really sick.

Gene and Shirley called back several times asking if I thought that the dealer would refund their purchase, after all it had been only six weeks and “prices couldn’t have changed that much.”

I told them that telemarketers are better at keeping your money than at getting it and that it was unlikely that the company would willingly make any refunds. Then Gene told me, “It really wasn’t all my money that I invested. Most of it was my brother’s, who is an invalid. I wanted to make an investment for him that would sustain him in his final years.”

I said, “Well, why not give the firm a call and tell them what you just told me. Maybe it will have an impact.” Gene said he would make a call and hope for the best. I asked him to call me back and tell me how it went. He said he would.

I didn’t hear from Gene and Shirley for almost a week after speaking with them almost daily for more than a week. So, I called and asked them how it went.

“Oh, it went great,” Gene said.

“They’re going to give you a refund?” I asked, somewhat astounded.

“No, they’re not, but let me tell you what they did,” Gene said. “After I told them it was my invalid brother’s money, they put me on hold and came back a few minutes later with several other brokers on the line, and they held a prayer circle for my brother.”

The telemarketers would not give the invalid brother’s money back, but they prayed for him.

In the mid-1980s, Marty, a senior citizen, began dealing with a telemarketer based in Minneapolis. Over a period of less than a year, Marty paid $153,000 for coins that he was told graded MS62 to MS63. When he was about to sell some Krugerrands to CMI to buy still more coins, we suggested he submit the coins to one of the grading services to see if the coins really were MS62-MS63 grade. That was at a time when coin grading services were coming into existence and acceptance.

Some of Marty’s coins graded as low as AU58. His total collection, for which he had paid $153,000, was worth about $50,000. This was one of the worst beatings we have seen.

In August 1998, Denis bought two MS63 $20 Libertys from a Phoenix, AZ telemarketer, an 1897S for $1,480 and an 1894 for $1,970. The Grey Sheets for September 1998 said the 1897S could have been bought at $1,050 and the 1894 at $1,150. Totally, Dennis was charged $1,250 over the going prices for the two coins. He paid a premium of 56%.

In 1998, John P. bought from a firm in Minneapolis an 1875 AU55 $20 Lib for which he paid $1,350 and an 1883S MS62 $20 Lib for which he paid $996. In March 1999, less than one year later, the 1875 coin was worth $480 and the 1883 coin $615. John suffered a loss more than 50% on the two coins.

In early 1998, Donna, who lives in Fountain Hills, AZ, started receiving phone calls from a representative of a dealer in Texas who advertises himself as one of the most knowledgeable coin dealers in the world. Subsequently, Donna purchased some $10,500 in numismatic coins from that dealer. Regularly, Donna received FAXs showing her purchases and how much they had risen in price. She felt good about her numismatic coin investments.

In June 1999, Donna was offered an MS65 1904S $20 Liberty for $5,300. However, before she sent off the money, she confided in a friend who had read CMI’s Myths, Misunderstandings and Outright Lies about the perils of buying numismatic coins from telemarketers. Donna then called CMI, and learned the real market on the coin was closer to $3,000. Donna was about to take a $2,300 loss on a $5,300 investment.

As it turns out, the coins Donna had purchased for $10,500 had not risen in price but were worth about $7,000. The FAXs were part of the telemarketer’s ploy to keep Donna thinking she was profiting from her investments, which would keep her buying.

In 1999, over several months, J.C. of Midland, TX, bought three MS65 and one MS66 common-date silver dollars from a Phoenix, AZ, telemarketer, paying $145-$150 for the MS65s and $355 for the MS66. In June, 1999, J.C. learned the MS65s were worth about $85-$90 and the MS66 about $200.

In June 1994, Joe W. bought two nice U.S. gold coins from a California telemarketer, a 1910-D St. Gaudens and a 1910-D $10 Indian Head; he paid $1,070 for the St. Gaudens and $1,900 for the $10 coin. In October 1996, Joe paid $570 for four XF $20 Libertys from a Minneapolis telemarketer. In all, Joe invested $5,250.00. In September 1999, his investment was worth $2,600-$2,800, a 50% loss.

In January 1999, CC from Tampa, FL, bought three PCGS-graded MS-62 St. Gaudens at $540 each for an investment of $1,620. In September 1999, the coins were bid at $380, meaning C.C. had suffered a $160 loss on each coin. Although gold dropped $40 between January 1999 and September 1999, CC’s loss increased to $160 a coin because of premium shrinkage.

If CC had invested his $1,620 in Gold Eagles, he would have received 5.2 oz in Gold Eagles (five 1-oz and two 1/10-oz coins) and would have lost approximately $44 per ounce, or nearly $230, during gold’s $40 drop. Instead, he lost $480. Furthermore, he got only 2.9 oz of gold when he could have received 5.2.

In April 1998, R.S. bought five common date MS63 Liberty gold coins: $20, $10, $5, and $2.50, for which he paid $3,386. In May 2000, the coins were worth $1,670, for a 50% loss. R.S’s story is too common. Not only did the coins he bought suffer a premium decline, but he paid more than the going market when he bought.

In July 1998, Susan paid $10,000 for what she was told was an MS63 1907 High Relief St Gaudens. When a 25-year veteran of the coin industry looked at the coin as to the merits of submitting to one of the grading services, he said it would be lucky to come back XF, a $3,000 coin.

In 1997, Jim C from North Carolina purchased ten 1908 “No Motto” St Gaudens from a telemarketer at $650 each; by January 2000, those coins had dropped to $420 each. Jim suffered a 35% drop while the price of gold fell approximately 14%. On his $6,500 investment, Jim lost $2,300.

Wanting to buy bullion gold coins, in May 2001 Mick from Arizona chose to call a firm in California because they used a well-known actor to advertise. Mick was sold, however, a numismatic coin, specifically a PGCS graded MS65 1908 No Motto St. Gaudens for $1,600. One year later, Mick learned the coin could be sold for only $680.