This complaint involves an unsatisfactory buy back amount for gold purchased in February of 2013.
On February 26, 2013, I purchased gold and a small amount of silver from Birch Gold via a rollover of my IRA. The gold was set up as an IRA of its own. The cost of the gold and silver minus the fees ($450.42) was $64,236.22. At the time that the purchase was made, gold was selling for $1,616.40 per ounce. As of yesterday, February 12, 2016, the price of gold was selling at $1,249.60. Consequently, the value of gold has dropped 22.7% in three years from the day I bought it.
Using the percentage drop in gold as a reference, I determined that I should be getting approximately $49,655 as a buyback, which represents the same 22.7% drop relative to my original investment.
Instead, I was told that they could only offer me approximately $38,000 for the same gold that I purchased from them three years ago for $64,236.22!
When I expressed shock and disgust at the offer, the Birch Gold rep, ***** ******, claimed that the type of gold that I bought, American Eagle gold proof, was more valuable gold than the price of gold that can be found by googling the price of gold online.
I argued that I compared apples to apples. Therefore, if the price of gold in general drops 22.7%, then I should see a similar percentage drop for my more valuable gold.
In my opinion, his response was shady and smells of a scam.
I contend that Birch Gold is trying to low ball me on the price. They either sold me the gold at a wildly inflated price, which contradicts their claim that they sell gold for a competitive price, OR he is trying to buy back my gold for much less than its genuine value (OR a combination of both).
A $38,000 buyback offer is almost $12,000 below the amount that I should be getting back based on the 22.7% drop in the market price of gold. It also means that while the price of gold dropped 22.7%, the value of MY gold, over the same time period, dropped in value by 40.8%!!!
I don't know why ANYONE would consider investing in gold through this company since I would have to see significant increases in the market price of gold for a significant time period just to break even.
I am seeking a fair buy back for my gold that represents the 22.7% drop in the market price of gold since I purchased it. To be more specific, I am requesting that Birch Gold buy back my gold for $49,655.
At Birch Gold, we take great pride in having achieved an excellent record of customer satisfaction from thousands of clients. We are disheartened whenever a customer expresses any level of dissatisfaction, and no less so in this case.
Mr. ******** has calculated what he believes our "buy back" offer should be based on the change in the spot price of gold - a decrease of about 22% from 2/26/2013 to 2/12/2016. However, as with any purchase of physical precious metals, there are many other factors that must be considered in his calculation. First, the portfolio also contains an allocation of silver, and the change for this spot price (decrease of about 46% since the date of purchase) is not included in the calculation. Additionally, while changes in spot price correlate relatively closely to the change in value of bullion products, the portfolio includes different products that can vary in how they correlate to spot price. Finally, there's of course a cost associated with any purchase, which is not accounted for.
Due to the discrepancy in how Mr. ******** has calculated what he believes his portfolio value should be (based solely on the spot price of gold) and the influence of the above factors that must be considered, naturally, there is a difference in figures. If those additional elements were not present, we would certainly understand his level of disappointment. But this said, we would like to reiterate that he is under no obligation to sell his metals to us. We encourage him - as we do with all customers - to do his due diligence on offers from other precious metals buyers.
We have taken this matter to heart and welcome the opportunity to further discuss with Mr. ********.
(The consumer indicated he/she DID NOT accept the response from the business.)
Birch Gold is trying to argue that my figures are not accurate because in addition to gold, a small amount of my purchase is in silver. I can certainly recalculate my numbers to include the drop in silver, but it is still no where near their buyback offer. They claim that there are other factors, namely "the cost associated with any purchase". What costs could there possibly be for their offer to be THOUSANDS of dollars less than the market drop in price of these metals, excluding of course the likelihood that they unethically sold me my metals for much more than their actual value? It is ridiculous for this company to claim that gold and silver are good IRA investments and that they care at all about customer satisfaction when you literally lose thousands of dollars in the transaction itself. I will be posting my experience with Birch Gold all over the internet to warn others of this company's unethical practices to prevent this company from scamming future prospective customers. If Birch Gold was honorable and cared at all about customer satisfaction, they would buy back my gold and silver at a percentage that corresponds to the percentage drop in the spot price since I bought these metals. The bottom line is that Birch Gold is trying to con me and the Better Business Bureau with their very unsatisfactory response to my complaint. If the Better Business Bureau is unable to get Birch Gold to resolve this case to my satisfaction, then I will be forced to resolve this case via arbitration.
Final Business Response
We're sorry that Mr. ******** did not accept our first response. We also share his disappointment in the drop in the values of gold and silver over these past few years; many of our own accounts have lost value as well, as have those of many of our other clients. Potential losses are the reality of any investment.
That said, we still stand behind each of the facts of our prior response.
In his original filing, Mr. ******** made no mention of the silver in his purchase, and in his more recent comments, he says that "a small amount of my purchase is in silver." The fact is that silver accounted for over 24% - nearly a full quarter - of the purchase amount. For documentation, please see the client invoice on page 1 of the file attached to this response. Given that the spot price of silver declined more than twice that of gold from 2/26/2013 to 2/12/2016, this portion of the purchase cannot be glossed over.
The other important fact that we must reiterate is that physical precious metals can never be bought or sold at spot price; there are always costs associated with the transaction. Mr. ******** acknowledged this when he signed Birch's client account agreement (please see pages 2 to 5 of the file attached to this response), yet he has reaffirmed his misunderstanding in his response, when he asked that Birch buys back his metals at "the percentage drop in the spot price since I bought these metals". Unfortunately, the simple economics of the physical precious metals industry make such a request impossible - not unless we were willing to accept the same money-losing request for every client whose metals went down in value.
Finally, we must say again that not all products correlate precisely with spot price, and this goes for those that Mr. ******** purchased. Birch explains the pro's and con's to all clients at the time of purchase.
We again reiterate our willingness to work with Mr. ******** directly to resolve this matter, and will continue to honor our offer to buy back the gold and silver he purchased from us.
Final Consumer Response
(The consumer indicated he/she DID NOT accept the response from the business.)
Birch Gold writes, "The other important fact that we must reiterate is that physical precious metals can never be bought or sold at spot price; there are always costs associated with the transaction."
The fact is that I did not request that my metals be bought or sold at the spot price. I requested that they be bought back at the percentage drop in the value of gold and silver - a loss that I accept.
Their "transaction cost" claim is pure nonsense. The invoice attachment that Birch Gold included with their most recent response clearly shows the costs of the physical gold and silver. There is nothing else listed as a cost with the exception of an IRA fee of $265 (which I contend IS the transaction cost).
If I were to return a TV that I purchased for $200, I would get $200 back. The company would not hand me a check for $150 and claim that $50 of the purchase was a transaction cost. And if I closed my checking account, the bank would not give me 75% of my balance and claim that the rest is a cost of doing business with them.
It should also be noted that $64,699.55 was rolled over into this particular IRA account as shown on my 2013 Tax Form 5498 (IRA Contribution Information), but the Birch Gold invoice only shows that $63,984.31 was spent on the gold, silver, and IRA fee. Therefore, $715.24 is unaccounted for.
In my original complaint, I kept my calculations simple by referencing only the gold, which makes up most of my purchase. Birch Gold is claiming that if I also factored in the silver that I purchased, the buy back amount would be significantly less. The calculations below prove that to be false.
On the day I purchased silver, February 26, 2013, the spot price of silver was $29.40.
On February 12, 2016, the day that I tried to sell it back, the spot price of silver was $15.76. This is a percentage drop of 46.39%.
Birch Gold apparently thinks I and the Better Business Bureau are idiots with their repeated, irrelevant references to the fact that I did not purchase gold/silver at the spot prices.
I am well aware that I did not purchase my gold and silver at the spot prices. I purchased these metals for MUCH MORE than the spot price, which means I should be able to sell them back for proportionally MUCH MORE than the current spot prices. As they themselves claim, my American Eagle Gold and Silver Proof coins are much more valuable than the spot prices.
Since the spot prices are what is publicly accessible and an "apples to apples" comparison, I referenced the spot prices of gold and silver to calculate the PERCENTAGE DROP in the value of gold and silver, which should be PROPORTIONAL to the drop in the value of the gold and silver coins.
Since I purchased 176 units of 1 oz. American Eagle - Silver Proof at a unit price of $88.93 (total price $15,651.68), then I should be able to sell them back for $8,390.87 (which represents a 46.39% drop in the value of silver over the time from my purchase date to the date I requested the units be bought back).
Since I purchased 19 units of 1 oz. American Eagle - Gold Proof at a unit price of $2,557.77 (total price $48,597.63) then I should be able to sell them back for $37,570.83 (which represents a 22.69% drop in the value of gold over the time from my purchase date to the date I requested the units be bought back).
If Birch Gold were at all ethical in its dealings with customers, I would receive a check in the amount of $46,676.94 ($35,570.83 + $8,390.87 + $715.24) for the buy-back of my gold and silver coins plus the $715.24 difference between what I rolled over and what I purchased as listed on Birch Gold's invoice.
I realize that the price of gold and silver has significantly dropped in value, but I should not be losing almost $9,000 on top of the $17,000 loss in the value of my gold and silver, over the three years that I have owned it, simply because the company that set up this IRA is corrupt.
The only explanation for their ridiculous $38,000 buy back offer is that they either sold me the gold and silver for much less than its genuine value OR they are trying to "low ball me" on the buy back amount now.
If it is Birch Gold's contention that American Eagle gold and silver coins have dropped in value percentage-wise by more than the drop in the spot price of gold and silver over the time period that I have owned it, then they should be able to provide me with documented, verifiable proof of that claim.
Lastly, if they continue to refuse to pay me the accurately calculated value of my gold and silver ($46,676.94), I expect them to initiate the arbitration process immediately. I also want them to know that I will be sharing this company's unethical business practices all over the internet (with details about my specific case) to warn future customers of this scam.