• 3 hours Russian Central Bank Eyes Gold-Backed Crypto
  • 9 hours Alberta’s Unlikely Alliance With The Nuclear Industry
  • 1 day The True Cost Of Opportunity In America
  • 1 day Why Investors Shouldn't Ignore Gold Stocks
  • 2 days Facebook Scrubs Over 2 Billion Fake Accounts
  • 2 days Dow Scrambles To Avoid Fifth Straight Weekly Loss
  • 3 days Is This The World’s First Truly Democratic Stock Exchange?
  • 3 days India’s Wealthiest Set To Hold $23 Trillion By 2028
  • 3 days First Quarter Profits Slip For World's Top Oil Companies
  • 3 days The Yuan May Be China's Biggest Weakness
  • 4 days Hedge Funds Having A Banner Year
  • 4 days Disney Heiress Asks “Is There Such A Thing As Too Much?”
  • 4 days BHP Turns Bullish On EVs
  • 4 days Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 5 days The $90M Inflatable Rabbit Redefining Modern Art
  • 5 days Huawei’s Fate In The Air
  • 5 days Tesla Slashes Prices Again
  • 5 days The Modern History Of Financial Entropy
  • 6 days Italy’s Central Bank Embraces Sustainable Investing
  • 6 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

John Rubino

John Rubino

John Rubino edits DollarCollapse.com and has authored or co-authored five books, including The Money Bubble: What To Do Before It Pops, Clean Money: Picking Winners…

Contact Author

  1. Home
  2. Markets
  3. Other

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 NTM 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 NTM'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 NTM don't justify swearing off on-line bullion buying. But they are a good reason for vigilance until that package arrives.

 

Back to homepage

Leave a comment

Leave a comment