Top 12 Gold IRA Scams to Avoid in 2024

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Last Updated on: 24th September 2024, 12:16 am

The precious metals industry has been home to fraudsters long before the advent of the internet. Only now, they're more visible. The growth in popularity of gold IRA accounts means that scammers are now actively targeting IRA and 401k owners. Thankfully, there are concrete steps you can take to protect your savings from charlatans and fraudsters.

Government & Regulatory Crackdowns

The CFTC recently warned retirees and investors against gold IRA companies charging exorbitant fees. They recommended that all investors check the spot price of gold, and compare pricing from several gold companies. They also recommend that you request all the fees in writing before agreeing to purchase gold or any metal products.

In a similar fashion, the AARP released an article warning retirees against gold companies overcharging for their metals. The AARP article notes that some companies have been charging up to 300% above market prices for their gold and silver bullion coins.

In 2020, a precious metals vendor lost a $185 million lawsuit in a Dallas federal court after defrauding 1,600 retirees in a precious metals IRA scam. Sadly, this is all too common within the self-directed IRA and 401(k) industry.

As a rule, whenever money's involved, you're bound to run into bad actors from time to time. The good news is that they’re easy to sniff out. If you’re vigilant and attentive, you can avoid scammers and hang onto your hard-earned wealth when doing a precious metal rollover.

In this guide, we'll go over the various scam tactics that you should always look out for, as well as various tips and tricks for safely rolling over your IRA.

The 12 Biggest Gold IRA Scams

Below, we've listed, in no particular order, the most notorious and common scams and acts of fraudulence that unfortunately do occur in the precious metals IRA industry. It's critical that novice investors remain vigilant against these precious metal scams to protect their wealth.

No Clear Fees or Commission Structure on Products

One tactic that some unscrupulous Gold IRA companies may use is not being transparent about their fee and commission structure. They may gloss over fees during the sales process and surprise you with hefty charges down the line. This could range from set-up fees, storage fees, annual maintenance fees to high commissions/premiums on the purchase of precious metals. Always insist on a detailed and transparent breakdown of all costs involved before proceeding with an investment.

Some may use “Bait and Switch” tactics which means they may promote a low-priced product initially but then push you into purchasing other high-priced metals once you show interest, while claiming that the initial product is “out of stock” or unavailable at the moment.

Egregious Premiums on “Rare/Limited-Edition” Coins

Many gold companies will try to sell you expensive coins that are supposedly “rare” or “limited edition”. The salespeople will try to convince you that these coins are worth way more than their gold content, and that you will be able to sell them for a fortune in the future due to their scarcity. Some companies have been charging 50% to 300% premiums on such coins, as the CFTC reports.

We recommend that you avoid these overpriced premium coins at all costs because you most likely will never be able to recoup the high premium you paid for them. In fact, most gold dealers will only pay you around spot price for your coin. It is therefore wiser to stick to buying standard bullion coins and bars at the lowest premiums possible. Again, check the spot price of gold right before you buy to determine how much you are being charged above spot. Shop around and call different gold dealers to make sure you are getting the best possible price.

Overpriced Storage and Insurance Costs

Some scam companies may try to charge exorbitant prices for the storage and insurance of your gold. Reputable Gold IRA custodians typically offer reasonable rates for these storage services, and they provide transparent and clear documentation about what these costs entail. Good storage comes at a flat rate and is segregated.

Beware of any company charging significantly higher prices than the industry standard or making you pay for ‘exclusive' storage options that sound too good to be true.

Misleading or False Advertising

False advertising is another common scam in the Gold IRA industry. Some companies may make unrealistic promises about the potential returns on your investment or claim to have exclusive deals that no other company can offer. They may also use fear-based advertising, warning you about an imminent financial disaster to push you into investing. Always verify any claims made by the company independently, and remember: if it sounds too good to be true, it probably is.

Offshore Storage Scams

Some companies may suggest storing your precious metals in an offshore location, claiming that it's safer or offers tax benefits. Be very cautious about these proposals. Offshore storage can present numerous risks, including a lack of regulatory oversight, additional costs, and logistical challenges when you want to sell your assets. In some cases, the company may not even store anything to begin with. While offshore storage in locations like Singapore or the Cayman Islands is technically possible, it's generally not recommended to store your metals away from you as you want to be able to pick them up easily if needed.

Unclear Buy-Back Policy

A reputable Gold IRA company should have a clear buy-back policy, allowing you to sell your gold back to them when you're ready to liquidate your investment. Some companies may lack this policy or make the process difficult and costly. Be sure to inquire about their buy-back terms before investing, and avoid companies that don't offer this service or charge unreasonable fees.

Remember, investing in a Gold IRA can be an excellent way to diversify your retirement savings, but it's important to do your due diligence and be wary of these potential scams. Always consult with a financial advisor before making any investment decisions.

High-Pressure Salespeople

Unfortunately, the alternative IRA industry has its share of aggressive salespeople who do not have your financial best interests at heart—they only have their own. The target demographic of precious metal IRA companies run between the age of 60 and 90, which makes them potential targets of elder abuse. 

If you encounter precious metals salespeople who act aggressive or pushy around you, proceed with caution. Just as you wouldn't allow a high-pressure furnace salesperson to part you from your money, you should never allow an IRA salesperson either. 

It can be hard to tell apart honest but persistent salespeople from fraudsters. However, you can often spot a malicious high-pressure salesperson if they use the following tactics:

• Aggrandizing past performance: Previous performance is no guarantee of future success in a free market; be wary of claims suggesting past returns are replicable.

• Using manipulative language: Reject any sales pitch that involves your family, neighbors, or friends, since these often unfairly prey on your emotions.

• Promising excellent returns: There's no such thing as a guaranteed great return; all potential returns encompass risk. Pass on sales pitches that suggest otherwise.

• Not disclosing information: Transparency is crucial for building trust; therefore, avoid salespeople who don't honestly answer questions in clear language.

• Forcing a quick deal closure: Good deals take time. No respectable salesperson would force you to sign on the dotted line without first deliberating with an advisorHigh-pressure sales are illegal under state or federal law, or may trigger a Financial Industry Regulatory Authority (FINRA) infraction. Often, high-pressure sales tactics constitute fraudulent misrepresentation and therefore should be reported to the relevant authorities.

Adding Collector’s Coins (Numismatics) to a Gold IRA

Let's be perfectly clear: you cannot include collector's coins or numismatic coinage to a tax-advantaged retirement account. Neither a self-directed IRA nor 401(k) allows for coins or any kind to be included. Rather, only precious metal bullion is permitted within these accounts. 

Federal tax law strictly prohibits novelty coins or collector's coins containing gold or silver from IRAs. Therefore, any claim that rare silver or gold coins can be added to one's IRA should be treated with extreme skepticism. As it stands, the Internal Revenue Code Section 408 expressly prohibits the following collectible items from IRAs:

• Stamps
• Rugs
• Artworks (including fine art)
• Beverages
• Antiques
• Coins

While rare collectible coins can be worthwhile investments, they do not belong in an IRA. For more information about what types of precious metals are allowed in tax-advantaged retirement accounts, check out our guide to IRA-approved precious metals. 

Profiting Off Of Recent News

If you encounter a sales pitch encouraging you to capitalize on recent news in the gold or silver market (e.g., the closure or discovery of a new African or South American mine), proceed with caution. Rest assured, if the news has already been covered by credible sources it is therefore public information and has already been priced into the market.

With the abundance of hedge funds and deep-pocketed market research firms, it is virtually impossible to beat the market. Suggestions that you can outsmart the market are almost always precious metal rollover scams. If a salesperson approaches you with a news tip that is not public information, they could be lying to you. 

Unsolicited Sales Calls or Emails

You should be extremely skeptical of any unsolicited phone call, email, or letter from a precious metals dealer. The most reputable gold and precious metals IRA companies do not solicit business from unsuspecting people. 

A predatory salesperson can appear to be charming and well-intentioned at first. Typically, they start the call by making friendly small talk and then pivot to making grand and far-fetched proposals. For example, they might say, “Miss Smith, what if I told you I have a product that can grow your retirement nest egg by 15% in the next two years?”

Sadly, unexpected phone calls and house visits are relatively common occurence in elderly households and especially so among those owned by a single widow. Never allow an uninvited gold or silver salesperson into your home, and never make any precious metal rollover without first consulting a licensed financial advisor.

Complicated Contracts and Business Jargon

Legitimate gold IRA companies don't confuse you with lavish language and fancy technical-sounding jargon. An honest salesperson speaks candidly and clearly, and will gladly answer your questions in language that you can easily understand. Never allow a salesperson of any kind to dupe you into signing a contract by first confusing you. 

The same goes for the contracts themselves. If you're presented with a document that's loaded with fine print, complicated clauses, and a generally confusing structure, don't sign it. Instead, insist that you will have an attorney or paralegal look over the contract for irregularities. If the salesperson insists that you sign anyway, do not proceed with the transaction and consider filing a report with the relevant authorities.

No Authentic Reviews or Customer Testimonials

The precious metals investing industry is highly competitive, and the biggest and best companies within the space tend to have glowing reviews. Therefore, it's crucial that you avoid any company or sales representative pitching a precious metals IRA rollover without first doing your homework. 

If the majority of online reviews of the company are poor, then think twice about doing business with them. This is also true if the company appears to be brand new and doesn't have any public reviews to its name. Only purchase precious metals from vendors or brokerages that are publicly well-reviewed on the major review platforms, including:

• Trustpilot
• Yelp
• Google Reviews
• Ripoff Report
• Better Business Bureau
• YouTube
• TrustLink

Putting The Majority of Your Wealth in Precious Metals

Even the most risk-averse investors shouldn't store the majority of their net worth in precious metals. A good portfolio diversification strategy involves a wide array of assets both traditional and not, including stocks, bonds, mutual funds, ETFs, cash, crypto, and real assets such as real estate and precious metals. 

Taking a majority position in precious metals is generally inadvisable. If a salesperson approaches you with a pitch suggesting that you allocate 50%, 75%, or even 100% of your retirement savings into a precious metals IRA, run. Honest and well-meaning financial advisors and salespeople generally recommend more diversified retirement strategies.

Tips for Avoid Gold IRA Scams and Precious Metal IRA Scams

Fortunately, there are plenty of steps you can take to keep scammers at bay. To avoid precious metals rollover scams, your first line of defense is to independently conduct research on the various interested parties. For example, if approached by a salesperson from Bullion XYZ Enterprises, you must do your due diligence by researching the company beforehand.

Your first step is to look up the company in question with your local authorities, as well as with the Better Business Bureau (BBB). Any company that is not accredited by the BBB should be treated skeptically, and extra time should be spent researching the company and reading reviews from genuine customers. 

It's also a good idea to avoid companies that haven't been in business for a long time. If you’ve found a company that launched within only the past one or two years, consider looking elsewhere, since there's no telling whether the company is legitimate or not. 

Ask The Right Questions

When it comes to avoiding precious metals IRA scams, your next-best line of defense is to ask pointed questions to company representatives. We recommend asking the following questions to any vendor employee selling gold IRA rollover plans:

• Are you willing to buy back any precious metals I purchase from you, and if so, at what spread? 
• Are these products eligible for inclusion in an IRA?
• How do you ensure my gold is stored safely and securely? 
• Do you have a partnership with a registered third-party IRA custodian?
• Do you have any promotions to offset setup costs?
• What is the total price of my order, including all recurring fees, premiums over spot and “hidden” costs?

These questions will help determine whether who you're speaking to is honest or merely trying to push for a quick sale and maximum profit. Don't be satisfied with any response that isn't clear, succinct, and without contradictions or back-tracking. If their responses seem fishy or not forthright, move on without making a purchase. 

Wait Before Committing

You should never make an important financial decision within the span of a single phone call, much less one as consequential as a gold IRA or 401(k) rollover. Respectable salespeople always give their prospects enough time to make an informed decision in collaboration with their financial advisor. If you're rushed while on the phone with an IRA salesperson, that's usually a sign that you should end the call.

What to Do If You've Been Scammed by an IRA Company

Even if we exercise every precaution, there's still a chance that we can fall victim to fraud when shopping for an IRA precious metals account. If you think you’ve been defrauded or become a victim of the precious metal rollover scams, immediately contact your local office of the North American Securities Administrators Association (NASAA). 

Likewise, it’s also a good idea to report the incident to your local state-level consumer protection office. If the magnitude of the scam is large enough to constitute a criminal offense, report it to your local police department using the non-emergency number. Lastly, you can report fraud directly to the FTC via this online fraud report portal.

How to Safely Rollover Your IRA 

Beware of salespeople pushing numismatics and other prohibited collector’s items for your IRA. If you're going to do a traditional or Roth IRA rollover, make sure you only go through reputable companies that have a track record of customer satisfaction. 

When done properly, a precious metal rollover shouldn’t feel like a rushed or opaque transaction. It should feel as if you’ve made a free and independent decision of which you can easily understand the consequences. To avoid common precious metal rollover scams, always speak with a financial advisor before opening a gold or silver IRA. 

Remember, individuals who sell precious metals rollovers earn commissions on each sale. Therefore, they have an incentive to rope you into the transaction even if their motives are illegitimate or even predatory. 

Your first line of defense is to research the best precious metal IRA companies, so you can weed out the bad actors—to get started, check out our official IRA rollover guide.