Is Your Stored IRA Gold Genuine?|
November 12, 2013
At the huge Baltimore coin show last week, I again had the pleasure to talk with Mark Oliari, owner and chief honcho at CNT, Inc. (also known as Coins ’N Things). CNT has experienced significant growth over the decades where Mark reported that annual sales have exceeded $8 billion each of the past three years, with the U.S. Mint being perhaps the company’s highest volume customer. CNT is now the largest wholesale vendor of physical gold in the United States. In 2011, the company was listed as the 39th largest vendor to the U.S. government.
Nine months ago an affiliated company, CNT Depository, Inc., was approved to be a COMEX depository. It is one of only six companies that store COMEX gold and silver inventories. The other five are Brinks, Inc., Delaware Depository, HSBC Bank USA, JPMorgan Chase Bank NA, and Scotia Mocatta.
The storage facility is a brand new, state-of-the-art, 30,000-square-foot building just north of CNT’s location in Massachusetts. CNT is independently audited and insures the contents of its depository through Lloyds of London. The company is a primary distributor for the U.S. Mint, Royal Canadian Mint, Perth Mint, Austrian Mint and Rand Refinery in South Africa.
During our conversation, Mark touted the benefits of using his depository for storage of the holdings of Precious Metals Individual Retirement Accounts. In my previous writings, I had warned that it was possible to make counterfeit sealed boxes of U.S. silver American Eagles. Mark told me that there were at least two instances discovered thus far where other depositories distributed customer Precious Metals IRA boxes of silver Eagles that turned out to contain junk instead of the supposed coins.
In another instance Mark told me, a customer had purchased and put into storage 20,000 1996-dated silver Eagles in sealed U.S. Mint boxes. When it later turned out that 1996 was the low mintage year for silver Eagles, these coins began to trade for double and even triple the value of their silver content. When the customer withdrew the coins to sell them, he received 20,000 current year silver Eagles instead. Apparently, this matter is now in litigation.
Another area of concern is the growing number of counterfeit gold bars of sizes 10 ounces and larger. In Mark’s opinion, a crook seeking to bury a customer in counterfeit gold and silver would prefer to sell it to a buyer putting the merchandise into a Precious Metals IRA. The reason for this is that the customer would never have the opportunity to inspect the inventory at time of purchase and the storage facility does not necessarily have the liability of detecting counterfeits it receives to store for such accounts. So long as the storage company returns the exact same items it received for storage on behalf of the customer, which could be years or decades down the road, the depositories claim they have fulfilled all of their legal obligations.
Mark took the time to tell me these stories in order to promote the use of his own depository. CNT does guarantee the authenticity of the items it puts in storage for a customer if the inventory was purchased from CNT. For example, a customer could go to a coin dealer anywhere in the country to place an order for his or her Precious Metals IRA and direct their IRA trustee to store the inventory at CNT Depository. CNT does store Precious Metals IRA inventory for Goldstar, Equity Institutional (formerly Sterling Trust), and other IRA trustee companies. The coin dealer then buys the customer purchase from CNT. Mark said they will only place into customer storage inventory that has been received directly by CNT from the mints or the ingot manufacturers, which they consider assurance of being genuine.
I have previously written that use of a Precious Metals IRA is highly impractical for a number of reasons (such as it doesn’t make sense to place an asset with tax-deferred benefits into an account that itself is tax-deferred). I have also warned of the risk that the U.S. government may soon seize all private retirement account assets, including those in Precious Metals IRAs, and replacing them with U.S. Treasury bonds. Now there is a third reason to be careful with establishing a Precious Metals IRA – the risk of ending up with counterfeits. The problem is only small scale thus far, but you can be sure that the risk will increase in the future.
Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Other commentaries are available at “Coin Week." He also writes a bi-monthly column on collectibles for The Greater Lansing Business Monthly. His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing.
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