The financial crisis has resulted in increased demand for gold in Austria as well, as gold is considered a secure investment. After a large number of enquiries from consumers, the Financial Market Authority (FMA) has identified an increasing number of companies on the Austrian market as well which have developed a variety of models for trading with gold. These companies market directly to consumers in order to profit from the “gold boom”. Yet many investor protection issues remain unanswered in this connection.
The FMA wishes to point out that trade in gold bars and managing customer accounts for claims against the provider to deliver gold purchased on commission do not represent banking transactions. Operating such businesses does not, therefore, normally require a licence from the Financial Market Authority. This also means that such providers are not subject to supervision by the FMA.
From investor enquiries with the FMA it is evident that, in many of these investment models, gold is purchased without actually being delivered, and often ownership is not even acquired. Instead, the investor usually acquires only a claim, based on the law of obligations, to delivery of the gold. Such a claim may, however, be difficult to enforce in full if the vendor has difficulty meeting payment obligations.
Investors should therefore note that their impression of making an especially secure investment when purchasing gold, either through a one-time payment or via “gold savings plans”, may in fact turn into disappointment when the gold is not handed over concurrently with the payment.
Investors should also be keenly aware of the incidental costs (commissions) associated with such offers. The purchaser should in any case be wary if the vendor demands costly commissions for brokering additional purchases. This is a strong indication of an alleged offence as specified in Article 168a of the Strafgesetzbuch (StGB, Austrian Penal Code; Ponzi or snowball scheme) or Article 146 StGB (fraud).
A licence by the FMA is required for trading if the precious metals offered constitute legal foreign currency (Article 1 para. 1 no. 22 BWG, i.e. exchange bureau business, and Article 1 para. 1 no. 7 lit. a BWG, i.e. trading in a foreign means of payment – foreign exchange and foreign currency business).
For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0676)/882 49 516