Investors in Precious Metals Jangle Coin in D.C.

Posted October 4, 2010 at 6:23pm

With precious metals prices continuing to climb, flush gold and silver investors want to increase their influence in Washington, D.C., setting up a political action committee and registering a seasoned lobbyist to push their legislative agenda on Capitol Hill.

On Friday, food industry lobbyist Nicholas Pyle signed on to represent the Gold and Silver Political Action Committee, a group that pledges to ‘support candidates favorable to collectable and rare coin, currency and precious metals,’ according to a report filed with the Secretary of the Senate.

Nearly six weeks ago, the PAC filed organizing papers with the Federal Election Commission, but it has yet to report its finances.

In an interview Monday, Pyle confirmed that he is representing the PAC for free. The self-described ‘lifelong coin collector’ said the PAC, which had its first board meeting in September, has already begun raising money, but it will hold off until the next Congress on getting involved in House or Senate races.

‘We’re keeping our powder dry until after this election shakes out,’ he said.

The PAC has already raised $200,000 and expects to raise $1 million in the next six months, Gold and Silver PAC President Barry Stuppler said Monday.

According to CQ MoneyLine, fewer than 350 federal PACs have raised more than $1 million during the entire 2009-10 election cycle. Among those raising more than $1 million are the leadership PACs of Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.).

Stuppler, the president of the California Coin and Bullion Merchants Association, also sits on the board of the D.C.-based Industry Council for Tangible Assets.

On its website, the trade group describes itself as representing ‘all who have an interest in precious metals,’ a universe that appears to have expanded dramatically during the country’s recent recession.

As of midday Monday, gold was trading at roughly $1,315 per ounce, an 18 percent increase from its Jan. 1 price. Silver on Monday was trading at almost $22 per ounce, just off last week’s 30-year high of $22.15.

The recent gold and silver booms, Stuppler said, have introduced skittish investors into the once-obscure world of precious metals, which until recently were considered a favorite financial tool of conspiracy theorists and grandparents who came of age during the Great Depression.

‘$1,300 gold is causing a lot of television commentators, financial analysts to focus on some of the products we sell,’ he said. ‘We’re getting a lot more attention now.’

But not all of the attention has been good. On Sept. 23, a House Energy and Commerce subcommittee heard testimony from a New York-based physician who alleged that a lack of regulatory oversight on gold dealers such Goldline International Inc. precipitated a 40 percent loss to his retirement account.

‘I believe that I was deceived by not being provided the very basic information about the market value of the coins at the time of purchase,’ Julius Bazan said in his testimony. ‘I believe that I was manipulated into purchasing coins as opposed to gold bullion when I had originally intended to buy bullion.’

In early September, Senate records show Goldline hired the lobbying firm Prime Policy Group to represent the company on ‘all legislative activities affecting the sale and marketing of precious metals products.’

The PAC’s lobbyist said the coin-collecting community hopes lawmakers will step in to thwart an influx of high-quality Asian fakes, an issue that he said the Treasury Department and the Federal Trade Commission have shown little interest in pursuing. Silver and gold investors are also concerned about disparities in the federal tax code, Pyle said.

‘We’re particularly concerned about the proliferation of counterfeit rare coins from China, which has undermined a lot of the collectible coin market,’ he said. ‘We’re very concerned about the inequity and treatment of bullion and rare coins in capital gains ‘ the treatment is much different than equities.’

The precious metals community is also searching for a new champion on Capitol Hill. Rep. Mike Castle (R-Del.), who lost his Sept. 14 Senate primary to tea party favorite Christine O’Donnell, was considered the community’s No. 1 protector in the House, Pyle said.

If Republicans win the House, the PAC’s lobbyist said the community’s allegiance may switch to Rep. Ron Paul (R-Texas), a possible subcommittee chairman on the House Financial Services Committee.

‘Ron Paul is a great guy, a gold guy and simpatico on a lot of our issues,’ Pyle said.