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The Pitfalls Of Buying Gold And Silver Online, And How To Avoid Them

Back in 2014, online bullion dealer Tulving shocked its many customers by suddenly failing. See Coinweek’s story: How does $40M of Gold and Silver Disappear: The Collapse of Tulving Company

Last week another one bit the dust:

NW Territorial Mint seeks bankruptcy protection

(Seattle Times) – Northwest Territorial Mint, a Federal Way company that sells precious metals and produces medals and medallions, filed for Chapter 11 protection Friday, a month after the company and its owner were hit with large jury verdicts in a defamation case.

Northwest Territorial Mint, a Federal Way company that sells precious metals and produces medals and medallions, filed for Chapter 11 bankruptcy protection Friday.

The move came a month after the company and its owner, Ross B. Hansen, were each hit with multimillion-dollar jury verdicts in a defamation and invasion of privacy lawsuit brought in Nevada by a Los Angeles businessman.

The company’s filing says it has more than 200 unsecured creditors, and its assets and liabilities both exceed $10 million. Its biggest listed debts are a $7 million judgment in favor of the businessman, Bradley Steven Cohen, and a $5.5 million judgment in favor of his firm, Cohen Asset Management, both classified as disputed.

The defamation suit claimed Northwest Territorial Mint and Hansen created anonymous websites that compared Cohen to Bernard Madoff, the Wall Street broker convicted of a massive Ponzi scheme. The lawsuit claimed the animosity stemmed from litigation by an affiliate of Cohen’s firm, which had been the mint’s landlord at an Auburn warehouse.

The federal judge’s order in the defamation case indicates the judgments against Northwest Territorial Mint and Hansen total $37 million.

This morning a DollarCollapse.com reader (and disappointed NWTM customer) sent the the following:

I’ve dealt with this company many times since 2008 and was accustomed to excessive delays, but eventually did receive the ordered products. In September 2015, my wife and I placed an order and paid by credit card. At the time of order, delivery was estimated to be 6 – 8 weeks. In December, they informed us that there would be delays and this repeated in January, February and March. In early March, they told us the order would be shipped in the first week of April and instructed us to call to confirm in April. Yesterday, April 1, my wife called again and the order was still on hold – that, in fact, everything had been suspended. This made me very uneasy and this morning (April 2) we called the credit card issuer to find out what they could do to reverse the charges. Their policy limits that action to 120 days, even if the product wasn’t delivered. When the credit card company checked their information on NWT Mint, they tell us that as of April 1 NWT Mint is now under BANCRUPTCY PROTECTION. That is not good news, and I fear we have lost our $3,000+

Presumably a lot of other people are in the same boat. So here’s how to keep something similar from happening to you:

  • First and foremost, don’t binge; dollar-cost-average. Customers who did all their metals buying with one big order, only to see the whole thing disappear, were devastated by NWTM’s failure. But customers who placed small, regular orders were out considerably less. This is yet another reason (along with the extreme volatility of metal prices) to enter this market gradually and steadily rather than all at once.
  • While your money is at risk, watch for emerging problems. From the previously-referenced Coinweek article:
  • Fortunately, I was suspicious. I don’t consider myself paranoid, but I do believe in Ronald Reagan’s “Trust, but verify.” I looked at the Better Business Bureau (BBB) reports, and saw a big uptick in complaints, from 1 every 6 months to 8 within 6 months. In a private forum, I wrote “So the first sign of trouble with a business like this, in my opinion, would be a noticeable change in delivery times and “juggling” orders.” At that point, I did not think they had a problem. But even if I had, I would have had no clue how monstrous a problem it would become.

    Finally in September, 2013, stories started getting out about delays at The Tulving Company. Someone claimed they had sent $200,000 to Tulving five months prior, and had not received any metal yet. The problem with Internet forums, however, is that while they are great at getting information out, they are nearly anonymous. Some of the early complainers were accused of being shills from competitors. Those that had done business with Tulving before would back up the company, recalling times they had gotten their orders very quickly. Nobody really knew who or what to believe.

    I decided to spend a few minutes back at the BBB website to see where things stood. There was a noticeable change this time, with 18 complaints in 2 months. Not to the point of screaming “scam!”, but enough that I really started to take notice. In the private forum I mentioned, I explained that I was confused because “it doesn’t fit what I would expect the 2 most plausible fraud scenarios to be: [1] funding his retirement, or [2] ponzi scheme funding a flashy lifestyle (ala Bernie Madoff).”

    At that point, I knew there was a problem. From the many reports that Hannes was picking and choosing which orders to ship each day, I thought maybe he was simply unable to properly manage the business anymore. Perhaps he needed some extra people to help ship orders, perhaps his health had deteriorated. After 20 years of impeccable service, it was hard to imagine the worst.

    What I should have focused on at the time was the length of the delays: even in June, 2013 and July, 2013, the average delays reported were 7-8 weeks. The FTC does not allow companies to take orders if they know they cannot ship it within the timeframe they specify (or 30 days, if no time is specified). And Hannes himself stated in his FAQ that he believes taking over 30 days to deliver is a futures contract, which he is not allowed to sell.

    My “Aha!” moment was in October, 2013, when someone reported that she sent Tulving 220 ounces of gold to Tulving, and couldn’t get them to pay her. It’s one thing to delay bullion (there could be delays due to drop-shippers, metal shortages, insurance limits, heavy volume, etc.). But I realized that the inability to pay cash was the smoking gun, since he should have had a huge amount of money sitting in the bank from all the delayed orders.

    It slowly dawned on me that The Tulving Company had a massive backlog of orders worth many millions of dollars that they would not be able to fulfill. I knew this was not going to have a pretty ending, I knew that something was terribly wrong. In a number of cases, people had trusted The Tulving Company with their life savings. Worse, I had recommended Tulving to many people over the years. I had to do something, I had to let people know.

    By the end of November, The Tulving Company had racked up over 150 complaints, and by the end of 2013 they had nearly 250 complaints.

  • Know the “statute of limitations” on your credit card. As the above reader found out, the order could have been cancelled via the credit card up to 120 days in. Presumably different cards offer different terms, so it’s imperative to know when this feature runs out on the card you’re using, and to take advantage of it. Cancel the payment if your metal hasn’t arrived by the expiration of the card’s protection.
  • And finally, keep some perspective. Bullion dealer bankruptcies are a bit like plane crashes. They’re big news when they happen, which makes the event seem more common than it is. Dozens of reputable dealers (see here and here, for instance) have been delivering on time and without hassle — and without publicity — all along. So Tulving and NWTM don’t justify swearing off on-line bullion buying. But they are a good reason for vigilance until that package arrives.

20 thoughts on "The Pitfalls Of Buying Gold And Silver Online, And How To Avoid Them"

  1. How the hell does the NWTM president posting something stupid on a different website have anything to do with NWTM? And how could a judge rule for $38 million in damages? Sounds like the judge is in on the criminal activity.

  2. So how can they legally NOT fill orders or refund but still sell items on their website and receive money?

  3. For those of use who have undelivered product are there any tax deductions for undelivered silver? Any insurance (like renters) that may cover it?

  4. Nobody below has mentioned them but Ive been buying from apmex.com since 2008 with no problems. Whatever I ordered arrived in less than 10 days, usually a week. Frankly I thought all such sellers were the same, with price being the major difference. I usually used NWTM and others for price comparisons and because NWTM was always the highest i never bought anything from them. I’ll count myself lucky.

  5. from what i have heard, the lawsuit is what brutalized them. hansen spent millions defending it, which I gather affected what he spent on acquiring and shipping. at least, if you believe the wall street journal. where is the guy from, hollywood somewhere? isn’t it all ego withthose guys? So he wins 38 million bucks, and now nwtm can’t meet its obligations. all because he can’t take a joke.

  6. Monex (MONEX.com) has worked well for me, although my last purchase and delivery was back in 2010 or ’11, but I’m considering buying some more soon and I have no reason not to use them again.

    If you mail them a check they will mail the goods out within 5-7 days and you should get it within 10 days. If you set up an account and wire them the money they send it out in 3 days and you get in about 6-7 days. I’ve never experienced any delays. I’ve referred them to a few friends too, and they didn’t have any problems either.

    Also, for what it’s worth, “legendary” gold trader/expert Jim Sinclair has (at least he used to) an agreement with his investors that if they buy physical gold or silver and change their minds about it he’ll buy it from that at the prices they paid (even if the spot prices drop.) Anyway, he and his customers transact through Monex.

  7. Every time you move to buy online, always check the most recent reviews of any bullion dealer you are thinking about doing business with. I suggest using HARD-to-FAKE review websites like ????????????????????????????????????????????????????????????????????????????????????????????????????????????????GoldDealerReviews.com.

    As often happens, bad customer reviews will be posted en masse signaling a mismanaged company. Check the sad GoldDealerReviews under the bankrupt Tulving Company in the fall of 2013, or BullionDirect, Merit Gold, etc. NWTM used to be on that website, they have since been take off (probably because of 100s of poor reviews – http://bit.ly/NWTMbadreviews ).

    Just because you’ve ordered successfully from a company for over a decade of time means little to determine the success of your next order. Most of Tulving’s regular clients had been buying from them for years yet they likely didn’t do this latest online review proper pre-order due-diligence before ordering back in 2013. They lost millions.

    Even the “I’ll buy locally crowd” got iced by the Tulving bankruptcy as they were acting as a quasi wholesaler for brick and mortar local coin shops for years. See there ➤https://youtu.be/yYKgxmxzR3U

    If you buy locally, get the bullion in your hand same day. If you buy online, investigate continued solvency of companies each and every time before you buy… make sure recent company delivery times are less than 30 days (even during bullion shortages) as mandated for retail shops by the CFTC.

    Finally build relations with multiple dealers and industry experts if you can. Personal relationships can really help in a pinch down the line. Best of luck and keep stacking.

  8. I NEVER buy gold online….doubt 1933 would happen again, but I will be damned if I give them the chance.

    1. Gold is almost always delivered the next day – Silver however seems to take at least 30 days delivery time – Something doesn’t smell right – Seems like a metal shortage & the are juggling & moving things around to give the illusion that they are still in control.

  9. I agree, and it has always been my policy to buy from several sources including Sprott, Kitco, Silver Doctors, Provident, and a couple of coin dealers (mostly for scrap silver US or Canadian) I’ve known for years. I try to limit any single purchase to $4,000 or less. You just have to be diligent.

  10. Many years ago bought silver thru NWTM. Took forever to get the stuff, but they came through in the end. Never ordered again from them.

    1. NWTM has had complaints on it going back many years, including a couple of State attorney general filed actions. There are plenty of independent sources to check on them. Why they are still around to file bankruptcy is beyond me.

  11. I’ve purchased for years from JM Bullion, Provdent, and Bullion Direct. Never had a problem with any of them.

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