Red flags when buying gold: how precious metals scams work

How these scams usually work

The pattern shows up in case after case. Ads run on TV, radio, podcasts and social media, often alongside political or religious programming, sometimes with fake celebrity endorsements. A salesperson follows up by phone. The pitch leans on fear of a crash, bank failures or government seizure, and suggests moving retirement savings into a self-directed IRA that holds metal. Then the buyer is steered from ordinary bullion to “rare,” “limited” or “semi-numismatic” coins at prices far above their value. Many buyers only find out when they try to sell.

The numbers are large. In 2024 the Commodity Futures Trading Commission, FINRA and state securities regulators said fraudulent dealers in the CFTC’s cases over the previous decade had sold more than $500 million of overpriced metals. Two examples:

• Metals.com (2020). The CFTC and 30 states charged Los Angeles dealers with defrauding more than 1,600 people, mostly elderly, in a $185 million scheme. Coins were sold at 100% to more than 300% over the market price, and more than $140 million came from retirement savings.
• Red Rock Secured (2024). About 950 customers paid over $69 million for Canadian coins worth about $30 million. Salespeople falsely claimed a direct relationship with the Royal Canadian Mint and a limited supply. A court ordered about $39 million in restitution.

Red flags

• They contacted you first. The CFTC’s advice is not to respond to cold calls, unsolicited emails, junk mail, infomercials or social media offers.
• The pitch runs on fear. Talk of collapse, confiscation or failing banks is meant to rush you. “The government can’t seize collectible coins” is on the CFTC’s list of common lies; collectible coins have no special federal protection.
• You’re steered away from bullion. Words like “rare,” “exclusive,” “limited mintage” and “semi-numismatic” usually signal a big markup. The CFTC calls “semi-numismatic” a made-up term. Our guide to proof vs. bullion coins shows what collector finishes really cost.
• Prices and fees aren’t in writing. A dealer who won’t state the premium, the buyback price and all fees in writing before you pay is a red flag, the CFTC says.
• You’re rushed to move retirement money. Self-directed IRA custodians generally don’t check whether an investment is sound or fairly priced. Once your money is in the account, you’re on your own.
• “Free” metal or “no fees.” Someone pays for the free silver or waived fees, and it’s usually you, through the price of the coins.
• Home storage for IRA gold. Keeping IRA metal at home can count as a taxable distribution. See can you keep IRA gold at home?
• “We’ll store it for you.” Some dealers have charged storage fees for metal that never existed. Use a known depository that sends regular statements. For metal you buy outside an IRA, taking delivery yourself is another option; IRA metal has to stay with the custodian.
• Financing or leverage. Buying metal with borrowed money multiplies losses, and in some cases dealers never bought the metal at all.
• Prices below spot. Genuine gold is rarely sold for less than the metal is worth, so treat an unusually cheap offer as a reason to investigate. Online listings like this are often fakes or never arrive.
• “Expert” or “inside” advice. Most metals salespeople aren’t licensed advisors. You can check whether someone is registered on FINRA BrokerCheck or with your state securities regulator.

A checklist before you buy

1. Look up the dealer’s complaint history with your state attorney general, your state securities regulator and the Better Business Bureau.
2. Check the spot price and ask for the premium and the buyback price, in writing.
3. Stick to widely traded bullion coins and bars unless you knowingly want to collect.
4. Pay by a traceable method. Outside an IRA, take delivery or use a known depository with regular audits. For IRA metal, use the custodian’s approved depository.
5. Take your time. A legitimate offer will still be there tomorrow.

What gold really costs explains how to check a quote, and buying gold locally covers how to check a shop.

If you think you’ve been scammed

Report it to the CFTC, your state securities regulator and your state attorney general. Online fraud can also go to the FTC at ReportFraud.ftc.gov and to the FBI’s Internet Crime Complaint Center. Keep every record: the ads, emails, invoices, account statements and the names of the people you spoke to. Regulators have won restitution orders in some cases, though getting money back can take years and isn’t guaranteed.

Frequently asked questions