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Legal Eye: Solid gold returns

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Sovereign credit ratings downgraded, market turbulence, stagnant housing prices: Where can you put your money these days? Despite the uncertainty, there is no lack of choices. Like me, you are probably regularly receiving calls and e-mails from various financial advisors with yet another great investment offer. Among other things, globalization has meant more investment opportunities as only a few legal restrictions exist anymore. The problem starts with trying to sort through all the information, solicitations and advertisements to find an appropriate investment.

While there may not be many limits on investment options, they exist on the claims that can be made in advertising.

Unfair practices

Improper advertising practices are classified as unfair competition under Polish law. This means that a whole murky area of “it’s just not right” can come into play. In addition to complying with law (such as special restrictions on advertising alcohol), advertising should not cross the line of decency or impinge on human dignity. Especially important in these times of uncertainty, fear as a sales tactic is also illegal.

The information in an advertisement is supposed to be truthful. If someone is promising “solid gold” returns, they need to be able to back up that claim. An advertisement may not be misleading, if that half-truth could influence your decision whether or not to buy something. Perhaps equally important in an area like investment services where trust is paramount, advertising may not be hidden under a gloss of supposedly neutral information.


On a related subject, however, it is possible to make some comparisons in an advertisement. Certainly, a showing of historical returns versus other comparative indicators is a favorite selling device for those touting investment opportunities. A whole number of factors come into play in determining whether a comparison is permissible. Above all, the comparison must be “apples to apples” and it is best if it can be backed up with some objective standard. This is the reason for all those references to rankings and other statistics published by various financial media organizations.

Many other factors apply in determining whether a comparison is proper, including that an advertisement cannot serve to discredit the competition or play off on the renown of a competitor.

The penalties for unfair advertising can be severe, involving penal fines or even imprisonment.


Since Poland’s accession to the European Union, the world is potentially an oyster for an investor in the country. Who remembers the extensive prohibitions from the Foreign Exchange Act in Poland on foreign investments from the 1990s? For that matter, the world has come a long way. From the 1930s to 1970s, for example, US citizens could not own gold bullion without special permission.

However, before getting excited about some exotic investment opportunity, it is a good idea to take a look at those remaining investment restrictions. Poland’s Foreign Exchange Act requires that investors obtain individual foreign exchange permits from the National Bank of Poland to make more unusual investments.

For gold, the restrictions are related to the country from which it is to be purchased. You may purchase gold from a person or a company resident in a country that is a member of the European Union, European Economic Area or Organization for Economic Cooperation and Development.

Also, a general foreign exchange permit allows the purchase of gold from someone hailing from one of the more than 60 nations with which Poland has signed a Bilateral Investment Treaty.

While this sounds fairly comprehensive, some major countries, such as South Africa and Brazil, still fall outside of the ambit of either of these. Thus, if you want to purchase Krugerrands, you may want to buy them from someone in Poland.

Source: Judith Gliniecki, Warsaw Business Journal, 17th October 2011