Horror Stories

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.

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 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.

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.

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.)

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.)

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.

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.

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.

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.

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.

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.

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 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.

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.