Gold scams and investor complaints are on the rise as the demand for online gold investing has surged in light of the impending economic downfall.
During any economic crisis, gold, silver and other precious metals have historically been the go-to safe-haven assets that investors flock towards during times of uncertainty. Many reasons make gold and other precious metals so attractive in a time of crisis. In this article, we shall explore why the demand for gold (and silver) has erupted recently, how the COVID-19 pandemic affected supply, the risk of investing in precious metals and how these conditions made the perfect circumstances for gold scams to explode.
Why Invest in Gold
Anyone familiar with trading or investing will know there is an abundance of asset classes you can invest in. Individual investors, investment banks and funds actively invest in many markets; stock markets, energy products, government bonds, currencies, energy products and more. During any time of crisis, there is an abundance of uncertainty, especially when it’s a medical crisis that is beyond the control of governments. Because of the scepticism, investors take their money out of the market and typically don’t put it back until they are confident order is restored.
The first response governments always take towards addressing economic situations is slashing interest rates. The purpose of this is to encourage spending, not saving.
Meanwhile, governments are issuing trillions of dollars to stimulate the economy, support business and the unemployed. As central banks issue new currency and inject it into the economy, they dilute the currency supply that’s already in circulation. Because of this, no one wants to hold cash in their account.
The value of gold is on a persistent uptrend at a higher rate than that of inflation. Because of this, individuals and corporations purchase gold to shield their assets from economic uncertainty.
Gold Supply Chain Issues
The law of supply and demand dictates the price of anything. Or at least it should. In March, there was a massive run on physical gold which left suppliers with little to no inventory as physical gold brokers saw demand spike five-fold in March.
While demand surged, three of the largest refiners; Valcambi, Argor-Heraeus and PAMP ceased operations. These refiners are based in Ticino, Switzerland, which borders Northern Italian regions which were struck by a SARS-CoV-2 outbreak. A Swiss government order required non-essential businesses, such as gold refineries to terminate operations as part of an effort to reduce the spread of the virus.
Now refiners are back up and running; it’s the miners facing obstacles. In the Americas, miners are shutting down because of the ferocious spread of Coronavirus throughout the two continents. For the miners who are still operational, the grounded airline industry is blocking them from being able to move their product. Pretty much everything that could go wrong for gold production did go wrong. Supply is profoundly affected, and it’s no secret.
Digital Gold Investment Schemes
The most cost-effective and standardized format of buying gold is in ounces. The price of an ounce of physical is approximately $1,700. For some personal investors, this is quite an expensive asset to invest in. There is also storage to take care of. Do you have a safe place to keep your gold, or do you have such a high volume of precious metals that it isn’t realistic to store it in your house.
Online gold investing platforms address both of these issues. Large gold buyers can buy their gold in bulk without having to deal with the risk or responsibility of storing it. Smaller gold buyers can deposit to their gold account to make smaller purchases of gold each month. Once enough gold has accumulated in the account, physical bullion can be withdrawn.
While many reputable companies offer this type of gold investment, there are many more companies which aren’t legitimate. Gold is an expensive commodity, and the business model is fragile. Also, this business is not regulated or scrutinized in the same way as other investment firms. If a company runs into hardships or becomes insolvent, you may find you are not protected the way you expected.
If your lost gold investments are worth thousands or even hundreds of thousands, Spectra Finance Security offers a range of asset recovery services, with an approach tailored to the specific circumstances of your loss.
Gold Scams: How to Recover Losses
In 2020, there has been a massive demand for investing in gold, silver and other precious metals despite there being a significant lack of physical gold on the market. Legitimate companies and scammers alike have responded by creating incremental investment schemes.
Due to the lack of regulation or mainstream attention, this type of investing gets, it’s incredibly easy for con artists to set up a website, do some marketing and start embezzling your money. The unfortunate thing is, you will never notice until you ask to withdraw your gold, or they disappear after pocketing your cash.
If you have been the victim of a gold scam or a failed gold investment scheme, we are confident that we can recover your financial losses. Contact us to get a free consultation today.