Ohio gold, silver dealers' law blocked by judge

Ohio stopped enforcing regulations against precious metals dealers on Thursday under orders from a federal judge, prompting the state commerce director to urge caution among consumers buying or selling gold and silver.
Associated Press
Dec 7, 2012


U.S. District Court Judge Michael Watson in Columbus ruled late Wednesday that an Ohio law aimed at curbing gold- and silver-related crime by barring precious metals dealers from advertising without a license is unconstitutional. He ordered the Ohio Department of Commerce to stop enforcing the Precious Metals Dealers Act in place since 1996.

The disputed law set a new framework for regulating gold, silver and precious metals dealers, including coin dealers — a sector that's been regulated in Ohio since 1921.

Watson said advertising for a business classifies as speech protected by the First Amendment — and the state failed to prove that the license requirement was effective in curbing theft, fraud and terrorism as intended.

"Defendants argue the regulation of precious metals dealer activity is in the public interest. That may be," Watson wrote. "It is not in the public interest, however, to have an Act that unconstitutionally burdens only those who engage in commercial speech."

About 300 precious metals dealers are licensed in Ohio.

The libertarian-leaning 1851 Center for Constitutional Law brought the suit on behalf of Liberty Coins, of Delaware — which was unlicensed. The state had threatened to shutter the business for failing to pay significant fines or obtain a license to advertise.

"We are just trying to make it safe for small businesses to operate in Ohio — a mission that we wish our state government would share, rather than thwart," Executive Director Maurice Thompson said. "This act and those enforcing it treat small businesses who make gold and silver available as public utilities at best, and criminals at worst, irrespective of whether they have done harm."

Thompson said enforcement has gone up under the administration of Gov. John Kasich, a phenomenon he attributed to increased lobbying and campaign contributions by pawnbrokers not covered in the law.

Commerce Department spokeswoman Lyn Tolan said there has been no policy decision to step up enforcement.

"Activity began to rise in 2008. It's hard to blame John Kasich for something that happened before he took office," she said. "So what is it that changed in 2008? Prices of gold started to dramatically increase and more people started to hang out a sign: 'We Buy Gold' — unconventional places like gas stations and convenience stores."

State Commerce Director David Goodman urged consumers to be careful as the state weighs its legal options.

"Our concern is for the protection of the consumer," he said in a statement. "Until we determine what comes next, someone who is considering selling gold or silver needs to be as vigilant as ever."

He urged consumers to take these steps:

— Obtain estimates from three businesses, preferably in the same day, before you sell;

— Ask each business for the weight they calculated of your precious metal;

— Do business locally. Never mail gold items off for evaluation or analysis.

The value of gold and silver fluctuates. Gold closed Wednesday at $1,692.40 per ounce. Gold prices peaked at $1,889.00 per ounce in July 2011. Gold is up 113 percent over the past five years and nearly 425 percent over 10 years.

The price of silver peaked at $48.58 per ounce in May 2011 but is up 130 percent over the last five years and up 613 percent over 10 years, the department said.




Caveat venditor.

Since the Govt. is now funding 70% of all consumer debt, it would probably not be a bad idea to own some gold or silver for the next soon to be credit bubble burst.


The economic recovery is just smoke and mirrors boys and girls.

God bless the child that's got his own.

Licorice Schtick

The price of gold looks a lot like a bubble. Not that you can't make money on a bubble, but the risk always becomes more obvious in hindsight.


But low and sell high. Now is not the time to buy a lot of gold at $1,700+ an oz. Gold and silver should only make up 5-10% of your portfolio. If you want some, fine buy some. But don't blow a ton of money because you think its a headge on inflation or you will need it to barter for a loaf of bread one day.


Mostly good advice there Zippy.

$1K an ounce wasn't too high in '09 - I'm up over 60% on (GLD).

Go with the 5%, 10% too high.

The best bet is a well diversified asset allocation of: Stocks, bonds, cash, real estate and alternative investments.

With this spend crazy nut job in the WH and his currency printing buddy "The Bernank," ya gotta be prepared for almost any economic scenario.

Licorice Schtick

Hmm, the President is a nut job?

What's crazy is this decision. It won't hold up to appeal.

This is an example of right-wing hypocrisy. Giving advertising the same first-amendmant standing as political expression should be absurd to an honest originalists.


@ Licorice Schtick:

Mr. Obama wants control of the Federal debt ceiling.

If you agree with that, you'd obviously trust a financially illiterate teenager with your VISA card.



One can't eat any metal just as well as one can't eat paper to survive. See what your silver and gold means when there is nothing to eat.


Is there a food shortage in the U.S. no body but you knows about?


Winnie, agree with everything you said, except the last sentence. Anyway, with gold, I had a one oz. american eagle bought it for $935 in 2008, sold it last year for $1,718. I was happy. I have more, didn't sell it all. I'm more of a collector, but silver and gold is an investment too.


Missed the point, Zip? If the economy collapses (as the doom and gloom traders keep saying), a whole vault full of gold won't buy you a can of Campbell's Chicken Noodle Soup.


Not going to happen, sunshine. Got that bomb shelter made yet?


I don't have a worry in the world, Zip. I enjoy life instead of worrying. :) Bomb shelter? hell, I'll go up and stand on the roof when the sirens blow. Bring it.


We're gonna agree again Zippy.

Two possible scenarios going forward:

1. Severe or hyperinflation - fiat currency becoming increasing worthless.

2. World-wide currency and financial collapse - riots, food shortages, a new "Dark Ages."

For the immediate future, #1 IMO is the more likely.

Hold "paper gold" (GLD) for number one, physical gold for number two.

(GLD) is highly liquid and can be converted into fiat currency.

(For one, Geo. Soros buys (GLD))

Besides, it's easier to convert gold into fiat currency than to convert worthless fiat currency into gold.

15 yrs. from now you find a vault. Which would you prefer to find inside; USD or gold?

Basel III will be stating that gold is acceptable for bank capital reserves, i.e. money.



Live every day. Do for yourself. Most put all on $$. Sad. I do like my 20something fwb.