BUYER BEWARE! If you see anything resembling “1% over dealer cost”, be very, very cautious! For the past several years, clients and prospects had confronted us with pricing from one of the largest internet and TV advertisers touting unbelievably low prices. Truly unbeatable prices! Come to find out, this same firm was first hit with an injunction, then stopped selling bullion, and have since announced they are going out of business.
Excerpts from Courthouse News Service earlier this year:
The Santa Monica City Attorney sued … M____ Financial and M____ Gold and Silver. City Attorney … claims that since at least Sept. 26, 2009, M____ has run a bait and switch scam by enticing customers … to order gold and silver bullion at “1% over cost,” then bullying and deceiving them into buying overpriced collector’s coins.
M____’s advertisements promote gold and silver bullion – bars and coins worth their melt value – as an excellent investment. The defendants claim they sell the bullion at “1% Over Cost,” … but M____ has “no intention to sell gold and silver bullion at 1 percent over cost, or at all”… Instead, their business model depends on, and they have intended, selling the overpriced numismatic coins instead of bullion, at a much higher markup. In fact, selling gold and silver bullion at 1 percent over cost is not a viable business model for defendants in light of their substantial overhead including advertising, labor costs, and other expenses.”
Reputable dealers in the industry know you cannot sell bullion at 1% over cost! In addition, the big firms such as this one were spending millions per year on TV ads, pay-per-click campaigns, expensive 4-color literature and paying a large commissioned sales force. The math simply does not work.
FYI…Many of the online bullion prices are posted at very low prices to secure an initial transaction from a buyer, capture their contact information and then launch a telemarketing campaign to sell higher margin coins. Also know, that the list that your name and contact information goes on can be sold as many as five times to other precious metals firms.
Click here to read our article on “How the Smart Investors Buy Gold and Silver”. You know the old saying, “If it’s too good to be true, it probably is!”
All Things Considered – John’s Commentary:
You should expect the following with a reputable dealer:
- Expect to pay 3.5% on very small transactions to 1.5% on the largest transactions.
- Expect excellent communication and service, from start to finish.
- Expect to be quoted an accurate spot price.
Finally, determine for yourself whether it is the lowest price you’re after, or if you seek a mix of competitive price and a long term relationship with a trusted supplier.
