With the price of gold bullion at record levels, there has been a proliferation of blogs, websites, YouTube videos and Tweets centered on investing in gold. And while there are legitimate gold investments discussed online, Financial Industry Regulatory Authority (FINRA) is concerned that some investors may fall prey to gold-related investment scams.
These gold scams may center on inflated claims regarding the stocks of gold mining companies whose stock value is often based on gold reserves that are difficult to estimate, much less verify. For example, the Securities and Exchange Commission (SEC) took legal action against a mining company based in Florida for false press releases claiming that a mining project in Ecuador contained gold reserves worth more than $1 billion.
Gold investments may also be touted in free lunch seminars and pushed by boiler room operations. The SEC charged six individuals for running a recent Ponzi scheme that used investment seminars to bilk 3,000 investors across the United States and Canada out of $300 million. Separately, the Commodity Futures Trading Commission (CFTC) took three actionsagainst precious metals firms, including charging a boiler room telemarketing firm that purportedly purchased more than $23 million of precious metals for their customers.
“Con artists are using the run-up in the price of gold as a hook to part investors from their money. Investors should think twice before investing in any gold investment promising exponential returns, or any company that claims it is a buyout target for other mining companies,” said Gerri Walsh, FINRA’s Vice President for Investor Education.
If you have invested in gold and are concerned about the safety of your investment, please call Jeffrey Wittenberg at (877) 352-2010 for a complimentary and confidential consultation.