Maine’s Office of Securities Urges Investors to Be Cautious About Gold-Related Investments

Administrator Shaw Announces New Consumer Publication

“Gold: What Every Investor Needs to Know”

GARDINER, MAINE  —  Maine Securities Administrator Judith M. Shaw is urging investors who are considering gold-related investments to learn about the risks of investing in gold, as well as the potential rewards.  The Office of Securities has received several inquiries from investors who purchased gold bullion over the internet from companies offering to hold the bullion on their behalf for safekeeping.  In other cases, investors are simply unaware of the volatility that can occur in the precious metals market.

“With the price of gold hitting historic highs, some investors may feel a modern-day gold rush is happening, and that they need to be part of it,” Administrator Shaw commented.  “It is a myth, however, that gold is a fail-safe investment, and with so much talk and advertising in the media about this metal, it may be easy for investors to overlook the prevalence of gold-related scams.”

Regarding online gold scams, Shaw noted that the ‘secure vault’ in which the gold is supposedly held often does not exist, and investors have great difficulty recovering their investment.  Another common scam is for a company or promoter to offer an investor the opportunity to cash out other poor-performing investments to purchase gold.  Too often the investor will end up with a bag of gold-colored coins having no monetary value.

“Consumers should be extra cautious when someone advises them to cash out investments and roll those funds into gold or another kind of precious metal,” Shaw warned.  “Unfortunately, the marketplace for the sale of actual gold coins or gold bullion is not regulated to the same extent as other investments such as more traditional securities.”

Consumers being encouraged to cash out other investments should always make sure the person they’re dealing with is properly licensed.  Confirm their identity and find out if disciplinary action has ever been taken against the individual making the sales pitch.

“Anyone considering the purchase of gold or another precious metal should make sure they’re dealing with a reputable firm or dealer,” Shaw advised.  “Although the Office of Securities does not license precious metal dealers, we can quickly check the license and background of any adviser offering to roll other investments into gold or gold-related securities.”

Gold and gold-related securities can be even more volatile than the stock market, so they should never be viewed as short-term investments.  There are many options when considering an investment in gold, and the Office of Securities has listed the most common options and issues in a new consumer protection brochure, Gold: What Every Investor Needs to Know.’

Consumers can obtain the new publication and much more information about investing by visiting the Office of Securities online at www.investors.maine.gov or by calling 1-877-624-8551 (TTY 1-888-577-6690).  Consumers may also write to Maine Office of Securities, 121 SHS, Augusta, ME 04333-0121.

The new brochure is based on an investor alert issued by the North American Securities Administrators Association (NASAA), of which the Office of Securities is an active member.  Organized in 1919, NASAA is the oldest international organization devoted to investor protection (www.nasaa.org).

The Office of Securities is part of Maine’s Department of Professional and Financial Regulation, which encourages sound ethical business practices through the regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can learn more about the Department online at www.maine.gov/pfr.

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