How to Protect Yourself: Investing in Precious Metals
Source: Florida Attorney General's Office
Have you ever received a telephone call from someone offering you the opportunity to invest in a gold mining operation? Every year consumers lose billions of dollars to perpetrators of telephone investment fraud, including one known as the "dirt-pile scam." Generally, high-pressure sales tactics are used to persuade you to invest in precious metals such as gold, silver and platinum. You purchase a quantity of unprocessed dirt from a mine "guaranteed" to contain enough precious metal to make a profit on your investment. In reality, the mine contains little, if any, precious metal and your investment is nearly worthless.
Be wary of unsolicited phone calls about investment opportunities
If this is such a great investment, why isn't the company getting its own financing and reaping the profits themselves? Your name may be on a list of individuals who have previously responded to questionable or speculative telephone solicitations.
Don't let telephone salespeople convince you to invest on the spot
A company selling a legitimate investment opportunity will allow you to take some time to review its literature and to verify the credibility of its claims with someone whose financial advice you trust.
Be suspicious of guaranteed, high-return, risk-free investments
in precious metals
Because the market for gold and other precious metals is unstable, investing in these commodities is speculative and risky at best. If you borrow money to make the investment, the degree of risk is magnified even more. In addition to losing your money, you could also be held responsible for the amount of money you borrowed.
If a claim sounds too good to be true, it probably is!
Don't be fooled by slick brochures, reports by so-called experts, or claims of "secret formulas" for extracting otherwise unrecoverable precious metals from dirt.
Check out any claims made by the salesperson and in the written
Call the Bureau of Mines in the state where the mine is located to get general information about the mineral content in the area to be mined. Call Florida's Department of Banking and Finance or the Securities Office in the state where the mine is located to determine if the promoter has violated state securities laws.
When in doubt, say no! Once a scam-artist has your money, it can be very difficult to recover it.
If you are a victim of a Dirt-Pile Scam, report your complaint to Florida's Attorney General and to Florida's Department of Banking and Finance at its toll-free hotline: 1-800-848-3792.