Naked Short Sale of Gold Coins from an Online Broker

Morpheus
By Morpheus on Sun, Apr 19, 2015 - 10:22pm

Over a month ago I purchased a small lot of 1/10 th oz American Eagle gold coins from an otherwise very reputable online dealer.  

That purchase was March 15th, 35 days ago. Now, I paid 6 days later, and they have a 7 day clearing period even for the bank check that I sent them, so that left them 22 days to full the order. It still has not been filled to date.  

I sent them an email inquiring and they basically told me this..

Order XXXXXXXXXXXX has the release date of 2015-04-01.  Most orders ship within a few business days of the release date, however, we are experiencing delays.  We apologize for any inconvenience this may cause.  We are unable to give a specific ship date at this time, but we will send an email with the tracking information for your order on the day it ships.

Basically a non-answer. The clock is ticking... 

As gold prices fall, it is cheaper for them to fill this order. Three questions: 

1. Do you think they naked short sold the gold coins to me? 

2. Is this legal? 

3. What should I do about it? 

Per (3), I sent them a follow up email tonight and let them know that it appears to me that it that prima facie evidence suggests a naked sale from their catalog website and gave them my number and asked them to call me. But now I just wait. 

Any further suggestions? 

Morph. 

4 Comments

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1512
It's widespread

From what I've seen, dealers selling gold and silver coins they don't have in inventory is a widespread practice.  I've settled in on using Texas Precious Metals because they are the only dealer I know of who guarantee they have in stock what they're listing for sale.

Morpheus's picture
Morpheus
Status: Diamond Member (Offline)
Joined: Dec 27 2008
Posts: 1200
It has now been 4 days since

It has now been 4 days since the latest email but this time they didn't even bother to respond. 39 days or so is too long so at this point I am asking for a refund.

Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2766
Morpheus

Love what you did for Neo man.

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2237
Buyer Beware re physical PMs

Morpheus, did you ever get delivery of your gold coins from the online dealer?  If not, I'd be curious which dealer it is.  The reason I ask is because something is going on with Bullion Direct (BullionDirect.Com) right now, and people are complaining on the forums re non-delivery.  I asked for a product withdrawal from BD 4 weeks  ago, paid immediately for the shipping, and the order has not yet shipped.  "Luckily for me", the amount of PMs I have in limbo isn't worth a huge amount of $, but it still stings.  Others on the BD forum have been waiting longer for deliveries, some with significantly more $ involved.  I'm wondering if BD was who you were referring to as well, or if it was someone else?

Bullion Direct has a note on the site to expect shipment delays as they've recently moved their Product Processing Facility (from Texas, to Delaware, I think).  But that's been going on for several months.  Today I notice the note actually says they've "suspended operations" to avoid further inconvenience or other adverse consequences to their  customers as they attempt to resolve those issues.  I'm thinking the increasing number of calls to the Texas Attorney General may have had something to do with that as well.  

I wanted to bring this to people's attention, both as a warning about dealing with BD unless/until operations smooth out (I had great dealings with them for several years prior to this).  But it sounds like they have suspended operations anyway.  I also wanted to post this as yet another warning about holding physical PMs oneself vs letting someone else hold onto it...the latter is feeling kinda like having $ in a Greek bank to me at the moment.

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