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Gold IRA Scams: What to Watch for in 2022

Last Updated: September 25, 2022 by Mitt Wilson

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Gold IRA Scam Highlights

  • Be on the lookout for high-pressure sales tactics
  • Look to agencies like the BBB, BCA, and TrustPilot to vet your gold IRA company
  • Be sure to research your gold depositories
  • Do your due diligence on self-storage 
  • See below for our trusted Gold IRA companies:

Goldco

Goldco has an A+ rating from the BBB, and they are experts in gold IRAs. I used Goldco for my own gold IRA, and I am happy to endorse them.

Augusta

Augusta Precious Metals is one of the most trusted names in the Gold IRA business. They offer a low-pressure experience for customers. 

Regal Assets

Regal Assets has been in the gold IRA business for more than a decade. They offer a unique IRA combination of precious metals and crypto. 

Is gold a safe way to protect my wealth and investment portfolio?

I would say yes, for the most part. Any investment or asset class is going to carry risks, but the value of gold simply doesn't drop overnight like stocks, bonds, and even real estate might.

YOU MAY ALSO LIKE: Is Gold a Good Retirement Investment?

Is a gold IRA a smart way to invest in gold? 

I would say yes even more emphatically to this one. The benefits of gold against inflation and economic uncertainty combined with the tax benefits of the IRA shelter are a one-two punch that can power part of your retirement.

Are gold IRA scams something I should worry about?

Unfortunately, I have to answer yes to this question as well. History has demonstrated time and again that individual people and even entire organizations will be willing to take advantage of potential victims through any number of dirty tactics and scams.

This is unfortunately a risk in the gold IRA sector. Retirees or potential retirees are common targets for scams, and gold has been a historical target of criminal activity for thousands of years. You might not be able to avoid all risks entirely, but I'm going to cover the scams you should know about, how to spot them, and how to protect yourself the best that you can.

Top Gold IRA Scams to Watch for in 2022

One of the scary things about any economic sector is that future scams might be something no one has ever seen before. The warnings and guidelines I list later to protect yourself will probably still give you some guidance against future threats. For now, all you can do is know that current scams have already happened to other people so you can protect yourself from those.

There is one consistency at least. Future scams are going to be probably conducted by the same kind of people who have done these scams now or in the past. No matter how much you understand technology or not, being able to read people can be your saving grace.

a hand holds a smartphone with a scam alert icon above it

1. IRA Conversion Scams

One of the great things about precious metal IRAs is how you can fund them with a rollover of a previous IRA or even a 401(k) account. Your early investing accounts can start and grow your nest egg, and then you can later do a rollover for part of the portfolio into precious metals for diversification into an alternative asset class. Your exposure to precious metals should honestly grow as you get older and need to anchor some of your wealth outside the stock market.

Watch for High-Pressure Sales Tactics

One customer fell for the high-pressure tactics of one salesperson over a decade ago. This was a known retailer and not some brand that just opened up. The salesperson convinced the customer to convert their existing IRA into a precious metal IRA and buy $140,000 worth of rare proof coins.

The problem is that while rarity might indicate some market value in such coins, it doesn't reflect the actual gold value. Bullion coins are the only kind of coins that should go in a gold IRA, and the IRS is very strict about this. Since the company in question did this to the customer, that person lost $60,000 in asset value in just one day.

A lawsuit eventually refunded millions of dollars to defrauded customers, and the company in question certainly changed its business practices. The brand is very honest about price markups now, and they no longer use bait-and-switch techniques. In fact, that company is now an accredited member of the Better Business Bureau with an A+ rating from the organization and an average of nearly 4 stars out of 5 by BBB users.

Key Takeaways 

The Better Business Bureau (see Gold IRA ratings), Business Consumer Alliance, and TrustPilot are all potentially great friends to you. I certainly rely on them when I do industry analysis.

an illustration of a glib salesman holding up a stack of cash

2. Glib Sales Professionals 

Some sales professionals might be downright giddy about the future of gold prices. Gold doesn't pay yields, interest, or dividends, so the only way you're going to profit off it is if the price or value of it goes up from the time you buy it to the time you liquidate, withdraw, or do a distribution from your IRA. Unfortunately, some salespersons will assure you that gold is only going to go up.

Know the Potential Ups and Downs of Investing in Gold

I can tell you right now that's not true. Is it likely to go up? Yes, in the long term.

Gold has grown considerably in value in the last 50 years, but that's over five different decades. The 1980s and 1990s weren't so great by themselves. Gold can go down in a five-year period, a five-day period, or even in just 5 minutes.

Watch the spot prices sometimes. They're a rollercoaster. You have to take the long view, and you have to diversify just in case.

Key Takeaways 

Never let someone rush you into buying something that they say will disappear after today. Also, never let anyone tell you to put everything into one particular asset. They might be preying on what some people call your "FOMO", which stands for fear of missing out.

an illustration that says "FAKE"

3. Fake IRAs

Creative scammers might sell you a phony precious metal IRA. They will convince you to actually transfer your money. Then, they will steal it.

Vet Your IRA Company Before Committing 

You'll wind up discovering that you have no gold thanks to someone who was using a fake identity. Once you know something happened, they've disappeared and moved on. They're either enjoying your money or preying on new victims. 

Key Takeaways 

Make sure their supposed company actually exists via the BBB and other resources. If it looks like they do represent a legitimate business, contact that broker directly to make sure the person is actually an authorized representative or one of their affiliates. The gold broker in question will be as concerned as you are if someone is representing them under false pretenses.

an illustration of a gold coin being deposited into a piggy bank

4. Depository Dilemmas 

A gold IRA actually involves two parties. One is the gold IRA broker. The other is the custodian.

The broker sets your gold IRA up, handles the money, and makes the specific metals purchases. Then, they ship the metals to the custodian. They have the depository your metals sit in during your active IRA.

Insurance is Key

Unfortunately, there have been cases where the metals never show up. That might be due to shipping problems or clerical errors, but it might also be due to theft or just the fact that the metals were never actually ordered. Always verify your metals and storage with the depository in question.

At a minimum, there should be a certificate provided to you that the metals arrived. Never do any of this without insurance, although the broker should take care of that as part of their service. Many depositories even send you images or webcam live streams of your part of their depository vault.

Key Takeaways 

Do as much research into depositories as you do brokers. You should quickly see that some of the major depositories are operated by brands known for anything from security systems to armored car transport banks use. Brinks is one example.

an illustration of a stack of gold in a garage

5. Self-Storage

Some gold IRA brokers, especially some newer ones, might tell you that you can actually choose self-storage as an option for your gold IRA precious metals. That basically means they're telling you that you can keep your precious metals at home or wherever you want instead of using an IRS-approved depository. That can appeal to some investors who don't necessarily trust depositories with all their wealth or investors who would rather save money on custodial charges and shipping later.

Should You Avoid This Options Altogether?

I typically don't recommend going the self-storage route. The IRS has never once stated that this is okay. That's mostly because of the risk of theft, but it's also to prevent individuals from possibly committing tax fraud in their IRA, whether intentionally or by accident.

Key Takeaways 

I often argue that investors should have a personal financial advisor to help them map out their investment goals and portfolio diversification, and I will now also strongly suggest you have a good attorney to consult about trying this. It's a legal grey area. The custodial services available in secure depositories are there to protect your money.

a large pile of gold coins

6. Shaved Coins

Certain gold dealers reportedly go through the practice of shaving several grains of gold from every coin, round, or bar that they sell you. Do this enough with high gold values, and it adds up. Gold is easy to melt and form into more bars and rounds.

Reputable Dealers Don't Typically Do This

This is not a common practice among the most reputable names in the industry. It's another case of doing your homework. Look hard into the specific mints that they work with so you know just what each metal product should weigh, and that's usually pretty consistent among gold products.

Key Takeaways 

A little communication with your depository goes a long way here. They can measure and confirm that what was shipped to them was exactly what you ordered and arranged to be stored there. Their scales should be digital and incredibly accurate.

an illustration of a magnifying glass helping to read the fine print of a contract

7. The Fine Print

Setting up a gold IRA involves a legal contract. In fact, it might involve several. Read everything you aren't personally comfortable with before you sign it.

Key Takeaways 

This is the second time I'll advise you to have a qualified lawyer to work with. They can make sure that any contract is totally legitimate. Be sure you're not taking any unnecessary legal risks.

Warning Signs for Potential Gold Scams 

1

Be Wary of People That Guarantee Specific Investment Returns

The first thing I'll warn you about is anyone who tells you that investing in gold isn't risky. It actually really is. You can lose money.

That's not to say gold isn't a great investment for retirement purposes or long-term planning. Gold prices historically have gone up quite a bit over the last 50 years, but they fluctuate a lot in the short term. There are also no guarantees insuring your precious metal like when you save money at a bank.

If someone "guarantees" you specific returns in precious metals, then walk away. There are absolutely no guarantees in this industry. Don't waste your time with anyone who says there is.

2

False Advertising 

I'll assume that if you found this content, you've been searching for information about investing in gold. That's going to expose you to advertisements and lots of them. Be careful about any you specifically respond to, as it's better to do your homework and research to make your own informed decisions.

3

Be Wary of Offers of Buying Metals Below the Spot Price

Think twice about buying any precious metal listed below the spot price. This might be more risk outside of gold IRAs for those buying their own metals. Someone determined to liquidate might go a little below spot price in order to cash out quickly, but precious metal products going for a lot less than spot prices usually have a very troublesome story behind them that you don't want to be a part of.

4

Companies That Want You to Send Money Overseas

This doesn't really matter much for gold IRAs, but be careful about sending your money overseas. Merchants and dealers not in the United States will be outside the reach of American law enforcement. This is one reason you'll see so few international coins or storage options in gold IRAs.

5

Companies That Offer Unsolicited Communications

Don't respond to unsolicited communications. Emails, text messages, and phone calls might come to you and look or sound like they're on behalf of a precious metal broker you've heard of, but it might be someone usurping their identity. Pick your gold IRA broker on your own and then contact them.

6

Companies Make Claims of Limited Supply

Never deal with anyone saying there is a limited supply of gold and silver coins available and trying to pressure you to buy them. Granted, if there weren't limited volumes of precious metals available, they wouldn't be precious, would they? However, I can assure you that if you stick to bullion, you'll still be able to find American Gold Eagles and Canadian Maple Leaf coins on the market tomorrow.

an illustration of a police office in uniform

Reporting Precious Metals Scams

If the worst comes to pass and you think you've been victimized by a precious metal investment scam, then there are a number of authorities you can report your situation to.

Local Police

You might want to start with your local police. Charges might be filed for the jurisdiction that you live in, and they can also point you in the right direction of other potential authorities. Visit a station or call the non-emergency line, as these cases usually don't warrant using the 911 resources reserved for urgent emergencies. 

State Attorney General 

Your state attorney general's office might be interested in the case. They might also know the proper state-level departments or offices to refer you to.

Federal Law Enforcement Agencies

Any transactions happening across state lines usually fall into the realm of federal jurisdiction. The local field office of the Federal Bureau of Investigation might be your starting point for such matters.

Federal Trade Commission 

In cases of fraud, you might just want to start with the Federal Trade Commission.

Commodities Futures Trade Commission 

The Commodity Futures Trading Commission might be an applicable resource.

United States Postal Inspection Service

Report any mail fraud you suspect to the United States Postal Inspection Service.

4.9/5

Gold IRA You Can Trust: Goldco

  • A+ BBB Rating
  • AAA BCA Rating
  • Buyback Guarantee
  • 15+ Years in Gold IRA Business
  • Up to $10,000 in Free Silver

BBB

BCA

Final Thoughts

You can buy gold and own the physical metals on your own, or you can invest in a gold IRA. I think going the gold IRA route is the safer of the two. While there are obviously gold IRA scams that might happen, there are simply far fewer opportunities for scams to happen in an IRA investment ecosystem.

The IRS is a big part of that. Gold IRAs are tightly regulated by the government, and a lot of the rules simply prevent many problems that might happen more often to those who decide to own their own metals outside of the account structure. Theft and lack of insurance are huge concerns for private owners who don't use brokers and depositories.

RELATED: Should I Buy Gold or Silver?

There are two things you can do to protect yourself if you do get a gold IRA, in addition to the steps I listed previously. Do your homework, and diversify. Both are important.

The precious metal industry has dozens of potential brokers you can use for a gold IRA. Research any options that you are interested in to make sure you can actually trust them. Keep an eye on their ratings, feedback, complaints, and lawsuits both before you invest with them and then while you're also with them.

Portfolio diversification is crucial because not every asset class will be going up all the time. However, diversification can also protect your overall wealth from potential scams. If you do fall victim to something in the precious metals asset class, you'll only lose the 5% to 15% of your portfolio that you put into it if you diversified across multiple asset classes, leaving you the rest to keep moving forward with into the future.

Mitt Wilson

About the author

Mitt Wilson has a background in journalism and has been writing about investing for more than two decades. In his free time he enjoys spending time with his wife, touring the United States, and golfing.

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