Yes, we know, the price of gold is kept artificially low by ponzi-scheming central bankers, who conspired with the CME to cost Hugo Chavez $1.2 billion today. And yes, we know that Finra is a fairly industry-friendly regulator of Wall Street banks that have a vested interest in keeping up the paper-asset bubble. Still, you may want to hear them out when they tell you that not everyone on the other side of the trade has your best interests at heart:
A rash of blogs, websites, YouTube videos and Twitter posts are pushing gold-related investment opportunities that could prove fraudulent, Finra said in a new report. Scammers are also using free lunch seminars to lure victims into giving money to so-called boiler-room operations.
Finra helpfully provides a list of the scam tactics. For more sophisticated investors, boiler-room operators point out correlations between macroeconomic data and gold prices, and scare their targets into thinking that they need to buy gold now as the only possible hedge to coming doom. (Investigators refer to this tactic as “the internet.”)
Scare tactics such as the threat of inflation or an economic meltdown. While some investors might hold gold as a hedge against inflation or economic uncertainty, owning a gold stock does not automatically serve that same function. Scare tactics are often used to push an investor to make a quick decision.
For the less sophisticated investors, on the other hand, pretty much having the word “gold” somewhere in your company’s name seems to do the trick:
A change in the company’s name or trading symbol to align it more closely with gold. One company that currently purports to engage in gold mining and exploration was originally incorporated with a business strategy to provide golfing opportunities on private courses to nonmembers. Another’s original focus was to establish health spas in urban areas. Yet another cited its original business plan was to develop, manufacture and sell commercial feed to nurture the Chinese mitten-handed crab.
Watchdog Warns of Gold Scams [WSJ]
“Gold” Stocks—Some Investments Mine Your Pocketbook [Finra]