How to Protect Yourself: Gemstone Investment Schemes
How to Protect Yourself: Gemstone Investment Schemes
Source: The Florida Attorney General's Office
Thousands of consumers fall victim each year to gemstone investment schemes. It is not uncommon for individual victims of gemstone investment scams to lose more than $100,000.00 to a single telemarketing scam. Slick telemarketers try to convince you that the dollar is weak and that gemstones, rare coins, or precious metals are a solid investment that will quickly increase in value. Don't be fooled. Few consumers ever profit from investing in gemstones or other commodities, simply because consumers typically do not know enough information to make wise investment decisions.
Before investing in gemstones, do your homework. Independently research the gemstone market.
Instinctively disbelieve everything the telemarketer tells you on the
phone. Go to your local library. Read the Wall Street Journal. Talk to
a respected jeweler in your area. Ask questions. Make sure you understand
gemstone quality and grading. Learn the realistic market values. Research
profit history in gemstone investing. An uninformed investor will likely
lose money investing in gemstones.
Deal with a reputable company.
Call the consumer protection agency or the Attorney General's Office
in the company's home state. Find out when the company first became incorporated.
Find out the company's history of consumer complaints. Ask the company
for written information before making any purchases. Be very wary of companies
that contact you offering to sell gemstones.
Be skeptical of the seller's certificate guaranteeing the value
of the gemstones.
Because value and grading are subjective, different people may have
very different opinions about the value of a particular gemstone. Value
can also be based on many different things (retail price, wholesale price,
replacement cost, cash liquidation value, etc.). Independently hire someone
you trust to perform an appraisal of any gemstones you intend to purchase.
Make sure that you know the cash liquidation value, as this is the price
you will probably receive if you sell the gemstones. This price might be
much less than you anticipated.
Do not be pressured into making a bad decision.
If the telemarketing salesperson uses high pressure tactics to encourage
you to buy now ( we only have a few good items left or the offer expires
tomorrow ), do not do business with this company. Ask the seller to put
all the terms of the sale in writing before you buy the gemstones, including
return and resale policies.
Reselling your gemstones.
Remember, gemstones are not a liquid investment. This means that they
usually cannot be resold quickly at a profit. If you need to sell your
gemstones quickly, you could lose money on your investment. Also, although
you will buy your gemstones at retail prices, you will probably sell them
at wholesale prices. For that reason, most investors plan to own their
gemstones for at least ten years. Even then, it may be very difficult to
find a buyer. Beware: telemarketing scammers (using a new name) often target
previous gemstone buyers for revictimization using claims that they can
help sell your gemstones.
If you become defrauded.
File a complaint with the Attorney General's Office in the state where
the company is located. That office may be able to help you and other victims
of the scheme.