2011 top investor trap, "hot" gold stock scams and gold investments schemes are all
over the Internet. Investors still wary of the volatile stock market are
lured to invest by aggressive sales tactics, ubiquitous marketing campaigns,
and the high price of gold bullion. Unfortunately, according to a recent
investor alert issued by FINRA, many of these heavily marketed "great
deals" are scams.
"Many gold-related investment scams involve the stocks of gold mining
and/or exploration companies," wrote FINRA. "The stock value
is often based on gold reserves that are difficult to estimate, much less
verify. While stock promoters regularly cite the potential value of a
gold reserve, some statements can be deliberately misleading."
Last year, the
SEC filed a fraud complaint against Quri Resources, Inc. (Quri), a purported mining company headquartered
in Miami, Florida with operations in Ecuador, and its CEO, Jaime Santiago
Gomez. The complaint accused Quri and Gomez of issuing "a series
of false press releases and other misleading public statements" about
Quri's gold mining activities, including the claim that the company
"was ready to begin drilling on a mining project in Ecuador with
a probable gold reserve worth over $1 billion." In reality, Quri
had no money and no expectation of raising the funds necessary to begin
To protect themselves from scams like Quri's, FINRA recommends investors
investigate a marketing campaign or sales person's claims before investing
in gold products, and check the SEC's EDGAR database for any available
information about the company.
FINRA also suggests that investors watch out for the red flags that may
signal a gold stock scam, such as:
- The words "prime buyout target" in promotional materials;
- "Price targets or predictions of swift and exponential growth;"
- "Claims that tie stock performance to the general rise in gold prices;" and
- Assertions that a mine could hold "billions in unrecovered gold,"
because of a neighboring mine's success.
For additional tips on avoiding gold investment schemes, read FINRA's