SILVER

In the summer of 2003 I started listening to a radio show called "The Precious Metals Report" with Harold Siegel. Siegel constantly talks about the value of silver. He claims that its price is about to soar and he suggests that all his listeners call his toll-free number and get their free investor kit.

Listening to this show convinced me that I should be in the silver market so I called the toll-free number and within a week a salesman from World Wide Precious Metals Corporation called me. His name is Brian Thomas. His title within the firm is "Precious Metals Broker" but you will see as I continue to write why I call him a salesman and not a broker.

Thomas convinced me that all of the fundamentals were in place for the price of silver to soar. He also convinced me to make my first investment of US$15,000. The price of silver was $5.86 an ounce when I made my first purchase on December 31, 2003. World Wide Precious Metals charges a $0.30 spread on every ounce purchased plus a 15% commission. Thomas gave me a discount of 5% on my first purchase. World Wide Precious Metals also allows you to buy on margin. Actually they don't just allow you to; they encourage you to.

On Dec. 31, I bought 6,300 ounces at $6.16 each ($5.86+$0.30) for a total of $38,808. The reduced 10% commission was $3,881. The funds I sent were $15,000 and World Wide Precious Metals funded $27,889 on margin. I had to pay $100 to open my account and $100 for my annual administration fee.

I just paid Thomas $3,881 because he convinced me to buy silver. Not because I made money. Not because he did a good job as a broker; simply because he was a good salesman.

One week later Thomas called me again and convinced me to buy another 1,000 ounces. This time I would not have to put any of my own money down because the price of silver had just appreciated to $6.18 and there was now enough credit available in my margin account to fund this transaction. So my greed convinced me to buy more. So World Wide Precious Metals made $300 in spread, selling me the silver for $6,480 and Thomas made $972 commission. At this point Thomas had made $4,853 in commission. He had spent about 3 hours on the phone with me selling his product which happened to be silver. Wow, $1,617 per hour. Not bad for 3 hours work.

The next week he is on the phone with me again letting me know that the silver market is going great and that I should consider buying more. I say that I am not ready and he doesn't push it. The next week the phone rings again. I am not home so he leaves a message asking me to call him back. I rest assured that the market is doing fine and I don't call him back.

He continues to call me every week and tries to convince me to buy more. It begins to feel like harassment. All along he tells me that the core fundamentals are there and that the price will continue to appreciate because the metal is so scarce. On April 5, 2004 he convinced me to buy another 2,700 ounces at $8.31 ($8.01 + $0.30) for $22,437. A 15% commission of $3,366 applied.

On April 13th the carnage began. Less than a week after Thomas convinced me to buy 2,700 more ounces the price started to plummet. I started getting a margin call every couple of days and I would be forced to sell off more and more silver. On May 10th Thomas called me and informed me that I had lost everything. My entire $15,000 investment was gone and $8,219 of this investment was in Thomas' pocket. Wow! Not bad for about 15 hours work over the course of 5 months. If he had 20 customers who each invested $15,000 he would have made $164,380 in commission in less than 6-months. That's over $325,000 per year. Not bad for a salesman.

He convinced me to buy silver less than one-week before its price plummeted. Not because it was a good investment but because he had no incentive to give me good advice. His incentive is not for his clients to make money. His only incentive is to sell his product and he does that well.

If you are interested in buying silver please take my advice, do not buy from a salesman; buy from a broker; someone who only makes a profit if you do. I know how bad it feels to get burned and shafted. I want to make sure that this does not happen to anyone else.

The Royal Bank of Canada is the largest bank in Canada. They have a division called Action Direct. You can call them toll-free at 1-800-ROYAL-60. They buy the physical metal and hold it for you exactly the way World Wide Precious Metals does. However, they only charge an $0.08 spread and no commision. They will not harass you to buy. They will deliver your silver whenever you want it and you can rest assured that your investment is always safe considering they are the largest bank in Canada. They also offer a margin account if you desire to use one.

I have spent many hours reading literature about the silver market and I do believe that Harold Siegel is correct in his assertion that silver will increase in value but buying through World Wide Precious Metals is not a wise decision. As stated above, Action Direct offers much better value for your money. You can call me, Sean Ross, at (514) 694-0060 if you want to talk more about silver.

I have added some more information on silver. Please click here.

Click here to read a story of another customer who got ripped off by World Wide Precious Metals in the Palladium market.

Written by: Sean Ross on May 14, 2004 - Amended on October 11, 2004.