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A big part of becoming financially literate is knowing what's true and what's not. During times of financial stress, there are those who will tell you that gold, silver, and other metals are the "perfect" investment. That may or may not be true, based on a number of factors.
Before diving into the purchase of gold, silver, or metals, the Commodities Futures Trading Commission (CFTC) strongly recommends that you ask questions. It's all about being aware that fraudsters are out there and are more than happy to separate you from your hard-earned money.
According to the CFTC, gold and silver frauds frequently target older workers and retirees. Not only do older workers and retirees typically have more money in their retirement accounts , but they're also more likely to be on the lookout for safe places to keep their money stored.
The truth is this: precious metal prices fluctuate just like any other investment, regardless of what a salesperson tells you. And you may find yourself paying an overinflated price for gold, silver, and other metals. You may also be hit with ridiculous fees and commissions, designed to rob your nest egg and feather someone else's nest.
Before doing anything else, make sure you understand the answers to the following questions.
No. The CFTC says you should never respond to a cold call, unsolicited email, junk mail, or even late-night commercial, no matter how attractive it appears. They're all common tactics used by scammers looking for their next victims.
It pays to know more about the people advising you on personal finance matters. For example, you should be aware that retail metal dealers are not federally regulated. If you find a well-established dealer in your area, contact your state's attorney general office or securities regulator to learn if the dealer has a history of complaints.
No, almost never. That person trying to convince you to rollover your retirement savings into precious metals isn't qualified to offer trading, investment, or tax advice. Most have been trained to talk you out of your savings. No matter how "nice" they appear, never take investment advice from a metals salesperson.
4. Is the salesperson's boss qualified?
Often, if it doesn't look like the salesperson is getting far enough with you, they'll hand you off to someone they call their "lead" or "boss." Ask that person directly if they're registered with the CFTC, SEC, FINRA, or your state regulator. No matter how they answer, do not make a decision until you've verified their registration and studied their history of complaints.
5. What's this I hear about gold self-directed IRAs?
Dealers like to use the term "gold IRA" for self-directed IRAs when they're trying to talk you into using your retirement savings to buy gold or silver bullion. While it's true that money can be rolled over from a 401(k) or other retirement account to a self-directed IRA without penalty, once you do it, you're on your own. You no longer have fiduciaries or advisors who are there to protect you against bad investments.
Besides, if you allow a rollover, you're likely to be hit with high fees, commissions, and administrative costs that take a huge bite out of your retirement. The CFTC reports that some gold or silver IRA fraud victims have lost as much as one-third to one-half of their savings by these markups, fees, and commissions.
If you want precious metals as part of your existing IRA, there are commodity exchange-traded products (ETPs) or pools that offer exposure to metal prices. These products come with their own fees and costs, but they're fully regulated. As with any investment professional, make sure the ETP investment professional or commodity pool advisor is registered before moving forward.
Unfortunately, scammers are going to scam. If you suspect that someone is trying to defraud you, or you know of a fraudulent deal, submit a whistleblower tip at CFTC.gov/complaint . If you're a senior and have questions or concerns about your investment accounts, you can also call the FINRA Securities Helpline for Seniors at 844-57-HELPS (844-574-3577).
You've worked far too hard for your money to allow someone else access to it, no matter how attractive their sales presentation may be.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy .
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