Washington, D.C. – Federal and state regulators are sounding the alarm about a surge in precious metals investment scams targeting individuals nearing or in retirement. The Commodity Futures Trading Commission (CFTC), Financial Industry Regulatory Authority (FINRA), and North American Securities Administrators Association (NASAA) have jointly issued warnings about deceptive practices involving gold and silver investments.
Scammers are reportedly luring investors with promises of “safe” investments in physical precious metals, while simultaneously charging exorbitant markups, commissions, and ongoing fees. These hidden costs often render any potential profit impossible, effectively wiping out investors’ savings. The schemes frequently involve retirement plan rollovers, capitalizing on the larger sums of money held by older individuals and their easier access to funds.
Regulators note that these fraudulent dealers employ tactics known as affinity fraud, specifically targeting individuals based on shared political or religious beliefs. They infiltrate social media groups, utilize targeted advertising, and engage in high-pressure telemarketing – even resorting to fabricating endorsements from well-known figures using stolen images.
A particular area of concern is the exploitation of self-directed Individual Retirement Accounts (IRAs). These accounts, which allow for investment in a wider range of assets, are vulnerable because custodians often provide limited oversight and may not thoroughly investigate the promoter or the asset itself. Fraudsters are using both fake custodians and misrepresentations about legitimate custodians to deceive investors into believing their investments are secure.
According to Melanie Devoe, Director of the CFTC’s Office of Customer Education and Outreach, these scams are particularly devastating for retirees who may lack the time or ability to recoup their losses. The agencies have released investor bulletins – “10 Things to Ask Before Buying Physical Gold, Silver, or Other Metals” and “Lies Versus Facts: The Truth Behind Gold and Silver IRA Scams” – to help individuals identify and avoid these fraudulent schemes. The CFTC and state authorities have successfully shut down several such operations in recent years, but warn that vigilance remains crucial.
Investors are urged to exercise extreme caution when considering precious metals investments, thoroughly research any dealer or custodian, and be wary of high-pressure sales tactics or promises of guaranteed returns.
Source: CFTC.gov
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