COLUMBUS, Ohio (AP) -- 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.
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.
- Politics & Government