This article was originally printed in the latest issue of Numismatic News.
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Do buyers of popular precious metal investment coins need added protection from the federal government when they make purchases?
That was the focus of a hearing Sept. 23 held in Washington, D.C., by the Commerce, Trade and Consumer Protection subcommittee of the House of Representatives’ Energy and Commerce committee. The hearing was shown live on a webcast.
Subcommittee member Anthony Weiner, D-N.Y., thinks added protections are necessary and he introduced H.R. 6149, the “Coin and Precious Metal Disclosure Act,” Sept. 16 to spell this out.
The legislation, which has no co-sponsors yet, says dealers must disclose in writing any fees that will be charged in a transaction as well as the purchase price of a coin or precious metal bullion, its melt value and reasonable resale value.
If the communication is by telephone, “the person making the solicitation shall orally disclose the information required ... clearly and conspicuously to the consumer before the transaction is consummated.”
An exemption is given by the legislation for sales of collector coins where the precious metal content is limited or an insignificant part of overall value.
Weiner used the hearing as theater. He called this a classic consumer issue and he was defending the middle class and those struggling to make it.
Though there were other witnesses present, he zeroed in on Scott Carter, vice president of Goldline International.
Weiner held up a copy of President Roosevelt’s executive order recalling gold in 1933 and asked whether it was part of Goldline’s sales materials.
Carter said it was.
Inclusion of this in the materials engenders fear among potential clients, Weiner asserted. He then demanded, “Did you know it was overturned the following year?”
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.
The proceedings seemed to boil down to Weiner’s contention that selling coins for more than they can be purchased for elsewhere by Goldline is fraud perpetrated on the buyers despite the fact that the price spread on coins bought and sold was fully disclosed in materials given to all Goldline clients and the account agreement that they must sign before any purchases can be made.
The Federal Trade Commission witness, Lois Greisman, associate director, thought the collector coin exclusion in the legislation should be dropped, thereby expanding its scope.
For collectors, perhaps the funniest moment was when Rep. Ed Whitfield, R-Ky., revealed that his staff purchased a roll of Native American dollar coins from the U.S. Mint. He said 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 through the Mint was “doing a tremendous job of marking up as well.”
With Congress chomping at the bit to recess for the election campaign, there is little likelihood the legislation will pass.