Investing in precious metals may not be so safe, regulators warn

investmentnews.com:

In a joint effort to fight the rise of precious metals fraud, particularly targeting those nearing or in retirement, major regulatory bodies have issued a stark warning. In a statement, the Commodity Futures Trading Commission said it is working with the Financial Industry Regulatory Authority Inc. and the North American Securities Administrators Association to highlight risks associated with investing in overpriced gold, silver, and other metals.

While dealers may talk these investments up as “safe,” particularly as a haven against economic uncertainty, the three watchdogs warned they can entail hefty markups, commissions, and fees, eroding potential profits for the investor.

To empower investors, the CFTC and Finra have released an investor bulletin, 10 Things to Ask Before Buying Physical Gold, Silver, or Other Metals, which outlines critical questions prospective buyers should consider.

Another flyer by the CFTC, Lies Versus Facts: The Truth Behind Gold and Silver IRA Scams, takes aim at common falsehoods propagated by scam dealers.

According to the CFTC, the actors behind precious metal investment scams often sell the idea of retirement plan rollovers because for most people, those plans hold the largest chunk of their investing dollars. Older investors – given their larger retirement account balances and easier access to these funds – are particularly juicy targets.

To deceive the elderly, scam dealers may use affinity fraud techniques including infiltrating specific political or religious communities on social media, sending spam emails, making cold calls, and fabricating fake endorsements from well-known religious figures, pundits, and celebrities.

The CFTC also sounded the alarm on self-directed IRAs, which it