American Federal Coin & Bullion

Conservative radio host Dennis Prager says he bought gold, silver and platinum from American Federal Coin & Bullion in January and he’s happy he did.

“An economic crisis has proven what a smart choice it is” to invest in gold and other precious metals, he said on his nationally syndicated talk show recently (see clip above). “If I had invested in the stock market, my money would be worth at least 12 percent less at the end of May. Instead, my bullion purchases have gained value.”

He ends the segment by telling listeners to call American Federal to “get the facts.”

But the facts are as follows: Like any investment, an investment in gold or any other precious metal carries risks and there’s no guarantee that you’ll make money — or even break even.

According to the FTC, one of the “universal truths” about investing in any form of gold is that the price of gold fluctuates over time. Indeed, while the price of gold is up so far this year, over the last 10 years it has been on a bit of a roller-coaster ride in terms of gains and losses. (Silver hasn’t performed any better over the same time span.)

Client testimonials on the American Federal website also omit the risks of investing in precious metals, not to mention the amount of the initial investment and the rate of return. In addition, the majority of reviews have no date, making it impossible for consumers to know under which market conditions reported gains occurred. For example:

It is also unclear if customers are required to sign any contracts before purchasing precious metals through American Federal that may affect future transactions with the company, such as when they can sell; if employees are in fact licensed investment advisors or mere salespeople; and if there are any fees associated with precious metals purchases.

Prager doesn’t have the answers to these questions — or at least he doesn’t share them with his listeners in what they may not immediately recognize is an ad for American Federal.

Company responds

To get the answers, TINA.org talked to American Federal President Nick Grovich. In a phone interview, Grovich said customers aren’t required to sign any contracts but there is a fee to buy precious metals through American Federal ranging from two to five percent of the purchase price and also a fee to sell. He said his employees earn a salary and commissions and are not licensed financial advisors, which he added isn’t unusual in the precious metals selling business.

In regard to the ad, which Grovich said he approved, he noted TINA.org isn’t the first to complain about it. He said he received an email from a private citizen who argued, depending on what stocks you purchased, you could have made money in the stock market in the first five months of 2020. Grovich said he was pulling the ad and looking into adding disclosures regarding risk to the client testimonials page. He said it wasn’t his intention to predict the future of precious metals.

“If I knew what gold was going to do, I’d bet on it and retire,” Grovich said.

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