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Entries in Gold (33)

Friday
Nov162012

Gold May Pass $2,000, but Consumers Warned Against Scams

Ablestock.com/Thinkstock(NEW YORK) -- As more business leaders express concern over the possibility of a year-end fiscal cliff, safe haven investments like gold appear more enticing.  But experts also warn against jumping into the gold rush.

Raymond Key, head of metals trading at Deutsche Bank, told Bloomberg News this week he expects gold to surpass $2,000 an ounce next year.

The price of gold is currently around $1,700 an ounce in futures trading, down from previous highs of $1,900, not adjusted for inflation.

Peter Schiff, CEO of Euro Pacific Precious Metals in New York, said gold could rise even more.

"I think the price of gold is going to go a lot higher than $2,000," Schiff said.

Schiff said the reason why the price isn't higher than $2,000 now is that many people don't have a full grasp of the country's current economic challenges.

"People don't understand the real situation the U.S. is in or the global economy," he said.

Schiff, author of Crash Proof 2.0: How to Profit from the Economic Collapse, was referring to worries about inflation and the so-called fiscal cliff, a package of tax increases and spending cuts that are expected to take place in January unless Congress agrees on a budget before then.

Many reports show that most taxpayers will have higher tax rates next year, including payroll taxes and taxes for high earners, if the federal government fails to reach an agreement that would avoid the fiscal cliff.

However, even if it is avoided, there are other concerns.  Schiff fears inflation is devaluing the U.S. dollar because the Federal Reserve is preserving near-zero interest rates through mid-2015 in the hope of stimulating the economy, especially the country's struggling labor market.

"You can own dollars and watch your savings evaporate," he said.  "The alternative is to own gold."

Known as a safe haven investment, bullion, or gold bars, is expected to reach its 12th annual gain, as investors are concerned about further economic fallout in the European Union and a volatile post-election economy.

"The only way to avoid hyperinflation is to go over a much bigger fiscal cliff," Schiff said.

"Unfortunately, inflation is going to get much worse.  If the Fed doesn't do anything about it, gold is going to go ballistic," he said.

Experts warn consumers against gold-related scams, such as customers who were charged 55 percent more for gold coins than their actual worth.  Goldline International agreed to pay $4.5 million to people who had bought gold coins in one scam.

The Federal Trade Commission lists tips for consumers considering buying or selling gold, including noting that the price of gold fluctuates over time and that there is no guarantee that gold will increase or maintain its value.

The FTC also states that if you are buying bullion coins or collectible coins, ask for the coin's melt value, which is the basic intrinsic bullion value of a coin if melted and sold.

Copyright 2012 ABC News Radio

Tuesday
Sep182012

$7 Million in Gold Discovered in Dead Man’s Home

iStockphoto/Thinkstock(CARSON CITY, Nev.) -- A California woman may have a multi-million-dollar fortune headed her way after authorities found an estimated $7 million worth of gold coins in her recluse cousin’s home.

Walter Samasko Jr., 69, died in May due to heart problems and was not discovered until June, when neighbors complained of a bad smell coming from his house.

Samasko lived in Carson City, Nev., a city about 30 miles south of Reno.

When authorities went to clean out his home, they found boxes of gold coins in his home and garage.

“He was quite a hoarder. He had boxes and boxes and boxes of things,” Carson City Clerk Alan Grover told ABC News. Grover said there were many containers of food and cans.

Grover said the coins were in boxes marked “books.” There were also coins wrapped in aluminum foil and stored in ammunition boxes. There were Mexican, British and Austrian coins dating as far back as the 1870s.

There was so much gold that Grover used a wheelbarrow to carry the fortune to his truck. The coins were first moved to a bank vault and now they have been moved to armored vehicles.

Grover’s office estimated the worth of the coins at $7 million based on the amount of gold.

“We have to get it all appraised and come out with a real true figure,” he said. He added that the final figure could potentially be even larger because some of the coins might be worth more than their face value.

Samasko had no will and no immediate relatives.  He was cremated and the remains were flown to Chicago to join his mother, who died in 1992.

Using the funeral attendance list from Samasko’s mother’s funeral, Grover tracked down Arlene Magdanz, Samasko’s first cousin in San Rafael, Calif., who will most likely inherit the fortune.

Magdanz’s daughter Leslie Magdanz declined to comment.

“I don’t have any comment on this matter,” she told ABC News. When asked if her mother had any comment, Leslie Magdanz said, “She does not.”

Grover said it could take several months for the fortune to be turned over to Magdanz.

Samasko had only $200 in the bank at the time of his death, according to the Las Vegas Sun, but had stock accounts totaling in $165,000 and had been living off of his investments.

Grover said one of his first thoughts upon seeing the thousands of coins was, “What was a guy like this doing with his kind of money in just a regular house?”

He described the house as a small, 1970′s three-bedroom home of about 1,200 square feet with orange shag carpeting.

“There were no antiques, no crystal or family jewelry or anything like that,” Grover said. “You would never have suspected the guy would have that much … he certainly didn’t live that way.”

Copyright 2012 ABC News Radio

Thursday
Sep062012

Judge Says 10 Rare Gold Coins Worth $80M Belong to Uncle Sam

Stockbyte/Thinkstock(NEW YORK) -- A judge ruled that 10 rare gold coins worth $80 million belonged to the U.S. government, not a family that had sued the U.S. Treasury, saying it had illegally seized them.

The 1933 Saint-Gaudens double eagle coin was originally valued at $20, but sold for as much as $7.5 million at a Sotheby's auction in 2002, according to Courthouse News.

After President Theodore Roosevelt had the U.S. abandon the gold standard, most of the 445,500 double eagles that the Philadelphia Mint had struck were melted into gold bars.  However, a Philadelphia Mint cashier had managed to give or sell some of them to a local coin dealer, Israel Switt.

In 2003, Switt's family, Joan Langbord and her two grandsons, drilled opened a safety deposit box that had belonged to him and found the 10 coins.

When the Langbords gave the coins to the Philadelphia Mint for authentication, the government seized them without compensating the family.  The Langbords sued, saying the coins belonged to them.

In 2011, a jury decided that the coins belonged to the government, but the family appealed.

Last week, Judge Legrome Davis of the Eastern District Court of Pennsylvania, affirmed that decision, saying "the coins in question were not lawfully removed from the United States Mint."

Barry Berke, an attorney for the Langbords, told ABC News, "This is a case that raises many novel legal questions, including the limits on the government's power to confiscate property.  The Langbord family will be filing an appeal and looks forward to addressing these important issues before the 3rd Circuit."

Copyright 2012 ABC News Radio

Thursday
Aug162012

Billionaires John Paulson, George Soros Bet Big on Gold

Ablestock.com/Thinkstock(NEW YORK) -- Once again, John Paulson is choosing to heavily invest in gold and fellow billionaire George Soros is making a similar bet.

According to Bloomberg News, Paulson & Co. and Soros Fund Management bumped up exposure to SPDR Gold Trust to 21.8 million shares and 884,000 shares, respectively.  Paulson & Co. now has 44 percent of its $24 billion fund exposed to bullion.

Known for making big bets, between 2007 and early 2009, Paulson invested heavily in the housing market, garnering $20 billion in profits, according to the Wall Street Journal.

A spokesperson for Paulson & Co. did not return ABC News' request for comment, neither did Soros Fund Management.

Some portfolio managers aren’t so sure gold is a smart bet in 2012.

“I’m not sure gold as an outsized bet is the place to be right now unless you believe in hedging against greater unrest or a deepening credit crisis in Europe, ” said Kevin Starkey, a partner at Capstone Investment Financial Group.

”We currently believe that 3 to 5 percent of gold exposure is the right exposure for most of our clients.  We are big believers in gold as defensive play.  To make it an offensive play, or make a big bet on gold, means [Paulson] sees something we do not see,” Starkey added.

Peter Sorrentino, a senior portfolio manager at Huntington Funds, which manages more than $13 billion in assets, said consumers should not rush out and buy gold.

“Historically these moves span roughly a decade and while the last phase is typically the most explosive, the risk is getting out before it rolls over.  For individual investors buying physical gold involves paying sales tax both in and out as well as considerations for storage, insurance, transportation and assay fees.  These can be considerable expenses,”  Sorrentino said in statement to ABC News.

Sorrentino said gold has been in a “consolidation phase since the end of February and has traditionally moved higher after such periods.”

He continued, “the fundamentals behind gold such as available supply coming to market and end demand have not changed in any material way.  In fact, gold purchase by central banks in the pacific rim, India and Russia have reached new highs.  So from an investor psychology and supply/demand perspective, this looks like every cycle before it during the last decade.”

“The big question is whether or not this time it’s different.  Every commodity-driven cycle ultimately comes to an end, and 10 years is generally the average duration for these market moves,” said Sorrentino.

But, despite big bets by two of the nation’s billionaires, he continued, “…There is an old saying among Wall Street traders: ’It’s said with a whisper and not with a shout, when the widows and orphans get in, it’s time to get out.’”

Copyright 2012 ABC News Radio

Thursday
Jul052012

New Beer Includes Bits of Gold

Zoonar/Thinkstock(OSTRAVA, Czech Republic) -- This isn’t your average tailgating beer.  A brewery in the Czech Republic has released a gold-flecked lager that’s fit for a king.

The beer, packaged in a champagne bottle, contains 0.018 grams of gold leaf.  It is called “Re” after the Egyptian sun god and took 18 months to develop.

“Gold is an inert metallic element so it doesn’t taste like anything,” said Marek Pieton, Chief Brewer, in a video by Diagonal View. “But it has a very impressive effect and it also may have a good effect on health later.”

Thirsting for the taste of gold?  The brewery has only produced 500 bottles of the gold-flecked drink. The price of the product was not disclosed.

“This product is not designed for a wider market.  It is produced for special clients upon request.  These beers go through a highly rigorous process before distribution and we produce them only if customers order them,” said Pieton.

Copyright 2012 ABC News Radio

Friday
Jun222012

The Truth About Buying Gold

Ablestock.com/Thinkstock(NEW YORK) -- In May 2011, the Federal Trade Commission issued a consumer alert about the dangers of gold fraud. It was a prescient warning. 

Five months later, in October 2011, con artist Jamie Campany told ABC News how he cheated nearly 1,400 people of nearly $30 million with a fake gold scam.  And in February of this year, Goldline International, one of the country's largest dealers of gold and precious metals, agreed to pay $4.5 million to customers who had bought gold coins through them. The company was accused of charging customers more than 55 percent more for their coins than their actual worth in gold.

As part of the settlement, all criminal charges were dropped against the company.  But the question remains: How can consumers protect themselves from gold fraud?  And should they even buy gold in the first place?

Peter Schiff, the CEO of Europe Pacific Precious Metals, thinks so.

"Some investors might be getting discouraged by gold's recent failure to rally off the crisis unfolding in Europe," said Schiff, author of The Real Crash: America's Coming Bankruptcy -- How to Save Yourself and Your Country.  "However, if they sell, they are making a mistake.  Investors need to be patient and put short-term performance in its proper context.  The long-term performance over the past 12 years has been stellar, and all the fundamentals that drove that performance are not only still intact but stronger than ever."

Janet Briaud, a certified financial planner and a partner at Briaud Financial Advisors, in College Station, Texas, suggested putting 10 percent of a person's portfolio in gold bullion.

"In the short run, gold can be a safe haven in a time of crisis," she said.  "The markets worldwide are very volatile, with many different crises, including Europe and China declining to name a few.  Owning some portion in gold makes sense in this type of environment as a hedge against storms that cannot be predicted."

That said, buying gold only makes sense if you have money you don't need right away.  Gold is currently selling for $1578 an ounce, down significantly from its high of over $1900.

"Those who have very limited resources, especially senior citizens, are often manipulated to move all of their assets into gold with very high fees," Briaud said.

If you don't have a lot of money, you're better off keeping your money and putting it in a bank with FDIC insurance, she added.

To avoid scams, Rick Rule, the chairman of Sprott US Holdings, a global resource investment manager, suggested consumers buy physical gold: bullion that was either issued by a sovereign bank or with a bar stamped by a reputable refinery like Engelhard.  You can also purchase gold certificates from a trust like Sprott (PHYS) or SPDR Gold Trust (GLD).

Certificates might not give you the complete security in case of a complete financial meltdown, "but they're certainly a convenient proxy," said Rule.

If you're in the market to sell of some of your baubles, make sure to go to a reputable jeweler.  Also, go to a website like Kitco.com to find out the going rates.

You might not get as much as you'd like for a bracelet, necklace or earrings, but, "if you go to someone reputable, you'll get some money for something that was just sitting in your drawer," said Briaud.  "That's not the worst thing in the world, particularly for people with cash-flow issues."

Copyright 2012 ABC News Radio

Thursday
Feb232012

Goldline Agrees to Refund Millions to Customers

Facebook(SANTA MONICA, Calif.) -- The precious metals dealer Goldline will have to operate under a strict new set of rules as part of a California court settlement late Wednesday of a 19-count criminal fraud complaint brought against the company last year.

"No one should have to suffer from predatory and deceitful sales practices," said Adam Radinsky, who heads the consumer protection division for the Santa Monica City Attorney.  "Whether they are buying gold or anything else, consumers expect a fair deal.  We insisted that Goldline give them just that."

As part of the settlement, all criminal charges were dropped.

One of the nation's largest dealers of gold and precious metals, Goldline had amassed hundreds of millions in sales in part by relying on endorsements from Glenn Beck and other conservative icons, and had boasted of an A-plus rating from the Better Business Bureau in a barrage of ads that aired during television and radio talk shows.

But an ABC News investigation found numerous unsatisfied customers who said the company had persuaded them to buy expensive collectable coins instead of gold bullion, a switch that enabled Goldline to add a sales mark-up but made the investment less lucrative.  Customers said they were tricked by Goldline's insinuation that the government could confiscate their gold unless they purchased collectable items that carried a larger mark-up.

In late 2011, the Santa Monica City Attorney's office filed a criminal complaint alleging that Goldline was running "a bait and switch operation," according to a statement released by the City Attorney's consumer protection unit.  The City Attorney alleged that Goldline misled customers by falsely telling them the government could confiscate gold bullion, but not the costlier coins.  And the city alleged that Goldline customers were paying more than 55 percent over the actual value of the coins, mark-ups that were concealed by Goldline's salespeople.

The company was charged with misdemeanors that included theft by false pretenses, false advertising and conspiracy.  In addition to the charges against the company, the complaint accused former CEO Mark Albarian, executives Robert Fazio and Luis Beeli, and salespeople Charles Boratgis and Stephanie Howard of defrauding customers.  Current CEO Scott Carter was accused of making false or misleading statements.  Each of the charged offenses carried a maximum penalty of one year in jail and maximum fines of between $1,000 and $10,000 per offense.

In Wednesday's settlement, approved by California Superior Court Judge Lisa Hart Cole, Goldline agreed to refund up to $4.5 million to former customers and to pay $800,000 into a fund for future claims.  The settlement also sets up a series of new requirements for the company moving forward -- including provisions that the company clearly disclose its mark-up, stop telling customers that the government wants to confiscate its gold, and stop trying to persuade customers to buy collectable coins if they have called Goldline asking to buy bullion.

To ensure the company's compliance, the settlement requires Goldline to hire a monitor -- a former federal prosecutor -- to oversee its business practices for the next five years.

"We hope this case is a wake-up call to other large coin dealers and to other businesses," Radinsky said.  "They need to know that it's against the law to mislead consumers with false fears and misinformation."

In exchange for signing the agreement, city officials agreed to drop the 19 criminal charges against the company and top executives.  In the settlement order, Goldline denied all wrongdoing.

Goldline officials heralded the deal as a victory for the firm -- issuing a press release announcing that all charges against the company had been dropped.

"This is a great outcome for our customers and for the company," Goldline CEO Scott Carter said in the press release.

Carter said the company "is proud to raise the bar once again by enhancing disclosures and procedures that are unprecedented in the precious metals industry."

In reports that first aired on ABC News in July 2010, 63-year old Joe Kismartin of suburban Detroit described how he lost almost half of the $5,000 he spent when he sold the coins, because, he says, the Goldline salesman pressured him to buy gold coins, not the gold bullion he had seen in the commercials.

"You know, I'm living month to month, that's a big loss," Kismartin said. 

Copyright 2012 ABC News Radio

Tuesday
Nov222011

Move Over Platinum, Now There’s Rhodium

Hemera/Thinkstock(NEW YORK) -- Forget platinum and gold, a silvery white metal called rhodium is gaining notoriety after a cameo appearance in this week's episode of Two and a Half Men.

More than 15 million viewers of the CBS sitcom may have taken notice when Ashton Kutcher's character proclaimed that his rhodium wedding band (not Kutcher's actual Demi Moore-related wedding band) was made of “the most expensive metal in the world.”  Soon after the episode aired, “rhodium” was trending online.

While it might have sounded like an exciting statement, it’s not entirely true.  According Steven Chillud, a research professor in the geochemistry division of Lamont-Doherty Earth Observatory at Columbia University, the supply and demand of rhodium creates fluctuations in pricing compared with gold. “There’s a hundred times more gold mined per year than rhodium,” says Chillud.

According to Deutche Bank, for every ounce of rhodium mined, there are actually 114 ounces of gold mined. However, gold can also cost more than rhodium since the demand is more consistent.

The reason, Chillud says, is that rhodium is mainly mined along with other metals, “which makes it expensive and [its] price varies dramatically.”

Element number 45 on the periodic table, rhodium was discovered by William Hyde Wollaston in 1804.

Part of the platinum family, it’s often used to plate white gold jewelry. In the modern era, rhodium has been used as a key component in the catalytic converter, which converts toxic exhaust emissions into less toxic substances, in automobile engines.

While rhodium remains in demand by jewelers, the recent economic downturn in the auto sector lead to a drop in rhodium prices, says Chillud. Rhodium plummeted from a high of $10,000 in 2008 to approximately $2,000 today.

With a price drop of nearly 80 percent, a rhodium wedding band might be a bargain after all.

Copyright 2011 ABC News Radio

Tuesday
Nov082011

What the Gold Price Increase Really Means

Stockbyte/Thinkstock(NEW YORK) -- As the safe haven of choice for investors during shaky times, will gold reach record prices again before the end of the year?

On Monday, gold futures for December delivery rose to $1,799.90, the highest since Sept. 21.

Barclays Capital’s forecast for the fourth quarter is $1,875 an ounce and the annual average forecast for 2012 is $2,000.

“We are bullish for gold and expect near-term buying interest near the daily cloud to underpin a move higher. A break above resistance at $1,775 would confirm our bullish view toward our target near $1,840,” the firm said in a research note Monday.

Jonathan D. Corpina, senior managing partner with Meridian Equity Partners in New York City, said the driver to the rising price of gold is “fear,” because it is global commodity that has always been considered a “safe haven” when the market gets choppy.

Much of the market’s turmoil is related to division among European Union leaders over how to deal with a debt crisis and Greece’s move to form a new government.

Lending between European banks has slowed in recent weeks amid concerns about the weakness of lenders and how a Greek default could affect the global financial system. Finance ministers met in Brussels on Tuesday but failed to come to any agreement over the 27 country-bloc, according to reports.

On Sept. 6, gold traded at record high of over $1,923 an ounce in part related to uneasiness over the European debt crisis and the downgrade of U.S. debt in August.

After a recent pullback, gold has settled in the $1,650 to $1,800 range, and is recently at the higher end of that range, Corpina said.

He said investors should own gold as part of their portfolio diversification.

Copyright 2011 ABC News Radio

Tuesday
Nov012011

Execs at Precious Metals Firm Charged with Fraud

Ablestock.com/Thinkstock(SANTA MONICA, Calif.) -- Goldline, a company that used endorsements from Glenn Beck and other conservative icons to sell hundreds of millions of dollars in gold to consumers, has been charged with theft and fraud in a 19-count criminal complaint filed Tuesday by local officials in California.

The criminal complaint filed Tuesday by the Santa Monica City Attorney's consumer protection unit marks the latest in a series of allegations it has leveled against the gold dealer, which pioneered the practice of weaving its sales pitches into broadcasts by popular conservative political personalities -- including two former presidential candidates -- to sell hundreds of millions of dollars' worth of gold every year.

The complaint alleges that Goldline "runs a bait and switch operation in which customers, seeking to invest in gold bullion, are switched to highly overpriced coins by using false and misleading claims," according to a statement released by the consumer affairs division of the Santa Monica City Attorney's office.

The company has been charged in the court filing with misdemeanors that include theft by false pretenses, false advertising and conspiracy, the city attorney's office said. In addition to the charges against the company, the complaint accuses former CEO Mark Albarian, executives Robert Fazio and Luis Beeli, and salespeople Charles Boratgis and Stephanie Howard of defrauding customers. Current CEO Scott Carter is accused of making false or misleading statements. Each of the charged offenses carries a maximum penalty of one year in jail and maximum fines of between $1,000 and $10,000 per offense.

Carter, who is frequently featured in Goldline commercials, told ABC News Tuesday that he was withholding comment until he has had time to review the court filing.

The launch of an investigation into Goldline was first reported by ABC News more than a year ago, when Santa Monica officials first said they were looking into allegations they said were leveled against the company by unhappy customers.

"There are two main types of complaints we're seeing," Adam Radinsky of the Santa Monica City Attorney's office said at the time. "One is that customers say that they were lied to and misled in entering into their purchases of gold coins. And the other group is saying that they received something different from what they had ordered."

Goldline officials said at the time that customer complaints were infrequent and that it responded immediately to address them. The proof of the company's commitment to customer satisfaction, they said, is Goldline's top rating from the Better Business Bureau. "When we learn that customers have not received the experience they deserve, we investigate and take action," said Carter, then Goldline's executive vice president, in a letter to ABC News sent last year.

The criminal complaint lays out a series of allegations that it contends add up to a conspiracy to trick customers into overpaying for an investment in gold.

For instance, the complaint alleges that the company trains salespeople to "get the money in" from customers on the promise of delivering gold bullion, with the intent to later switch the sale to far more overpriced collectable gold coins. It alleges that the company trains its employees "to disguise the more than 50 percent markup on the overpriced coins," and alleges that Goldline reprimands its salespeople if they fail to convince the customer to buy the overpriced coins.

At the heart of the complaint is the suggestion that Goldline profits not so much by selling pure gold bullion, but by persuading customers who want to capitalize on the rising value of gold to purchase collectable coins. The coins are subject to a significant mark-up in price, and several Goldline customers told ABC News that they found it difficult or impossible to resell those coins without taking a loss.

One of the customers was 63-year-old Joe Kismartin of suburban Detroit. He says what he heard on TV about gold and the Goldline company made a lot of sense.

"They got the commercials on TV and the way the economy's going I was figuring well, maybe I'll just do it for a little bit, save it for inflation, you know, in case something happens to the economy, it bottoms out and I've got something to fall back on, gold, rather than money," he said.

But Kismartin says he ended up losing almost half of the $5,000 he spent, because, he says, the Goldline salesman pressured him to buy overpriced gold coins, not the gold bullion he had seen in the commercials.

"I wanted to go bullion, I didn't want coins," he said. "I told the gentleman I don't want coins. He said I got the deal here, the special deal, I got Swiss coins. He more or less talked me into buying the coins."

When Kismartin took the coins to a local coin shop, he was told the $5,000 worth of gold coins he bought from Goldline five months earlier was worth just over $2,900, a loss of $2,100. "You know, I'm living month to month, that's a big loss."

Goldline disputes Kismartin's allegations against the company, saying it sells "a variety of products ranging from the most common bullion coins to exceptionally rare certified coins." Goldline said it looked into each case ABC News reported on last year and found that while both customers had initially complained, the company believed they wound up satisfied. And one of them -- Goldline did not identify which one -- was provided "a number of written disclosures at the time of purchase that went even further than Goldline's ordinary written disclosures," and yet went ahead with the purchase anyway.

In filing the complaint, officials have opened a new front in a long-running and very public dispute over the way Goldline has turned the sale of gold into a massive retail operation that capitalizes on popular conservative figures -- most notably Glenn Beck. The marriage of conservative talk and gold sales appears to make sense -- both have traditionally targeted an audience that is skeptical of the government, concerned about the nation's economic future, and uneasy about inflation and the stability of American currency. Neither Beck nor any of the other celebrity endorsers are accused of any wrongdoing.

The promotional strategy appears to have been beneficial both to Goldline, which boasts $500 million in sales, and to such conservative figures as Beck and former presidential hopefuls Fred Thompson and Mike Huckabee, all of whom have, at various times, coupled their television or radio appearances with Goldline advertisements.

When contacted last year, a spokesman for Beck noted that Goldline has an A plus rating from the Better Business Bureau.

Copyright 2011 ABC News Radio







ABC News Radio