Do buyers of popular precious metal investment coins need added protection from the federal government when they make purchases?
This in essence was the topic of a hearing yesterday held by the Commerce, Trade and Consumer Protection subcommittee of the House of Representatives’ Energy and Commerce committee.
Specifically, the hearing topic was proposed legislation known as H.R. 6149, which is called the “Coin and Precious Metal Disclosure Act.” It was introduced Sept. 16 by Rep. Anthony Weiner of New York.
Weiner used the hearing as theater and in his best prosecutorial voice would demand answers. Though there were other witnesses present, he zeroed in on Scott Carter, vice president of Goldline International.
Some of Weiner’s remarks might provide raw material for next year’s Numismatic Literary Guild Bash satire.
Weiner asked Carter if a copy of President Roosevelt’s executive order recalling gold in 1933 was part of his company’s sales materials.
Carter said it was.
Inclusion of this in the materials engenders fear among potential clients, Weiner said and then he demanded, “Did you know it was overturned the following year?”
You could see in his manner and tone of voice that this was some sort of “Gotcha” line.
Collectors watching in person or the webcast probably just went, “Huh?”
Whatever Weiner’s point might have been, perhaps that Americans might mistakenly line up tomorrow to turn in their gold under the mistaken notion that the recall was still in effect, the facts remain that the Americans who were forced to give up their gold coins for face value in 1933 did not get them back and it was illegal for Americans to own gold bullion from the effective date of that order until the end of 1974.
Weiner asked Carter if it was reasonable to fear another recall.
Carter said it was.
Weiner wanted to know why certain gold coins wouldn’t also be seized in a new recall and Carter responded that it was based on the historical record.
All in all, the proceedings seemed to boil down to Weiner’s contention that selling coins for more than they can be purchased for elsewhere is fraud perpetrated on the buyers despite the fact that the price spread was fully disclosed in materials given to all Goldline clients and the account agreement that they must sign before any purchases can be made.
Weiner’s legislation, says a summary provided to the committee, would require those who sell bullion or certain coins as investments to disclose prior to sale all fees associated with purchasing the items, the items’ purchase price, the value of the metal in them and the value for which they could be sold to other dealers. The bill would not apply to rare and collectible coins.
Naturally, the Federal Trade Commission witness thought the collector coin exclusion should be dropped, thereby expanding its scope.
And perhaps the funniest moment for collectors watching was when Rep. Ed Whitfield of Kentucky revealed that his staff purchased a roll of Native American dollar coins from the U.S. Mint. They paid $35 for $25 face value. The price is 2,393 percent over melt value, he said.
The congressman, who seemed skeptical about the legislation, did not seem to know that the gold-colored dollars were not made of gold or any other precious metal that would be covered by the proposed bill. His actual point was the federal government was “doing a tremendous job of marking up as well.”
With this as a start, I don’t know whether to cry or cringe.