Gold IRA Scams to Watch Out For

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Contributor, Benzinga
November 22, 2022

Gold IRAs are self-directed individual retirement accounts (SDIRAs) where you can store physical gold or other precious metals for retirement purposes. Unfortunately, different gold IRA scams can make you lose your money once you fall prey to them.

It’s essential to know how these scams work and what you can do to steer clear of them. Read on to learn more about gold IRA scams and fraudulent signs to watch out for. This article lists reputable gold IRA firms to invest in. 

Beware of Gold and Silver IRA Schemes

Gold investments are popular thanks to their many benefits, such as diversification, a sustainable store of value and a hedge against inflation. Unfortunately, the popularity of gold investments has also encouraged gold IRA scams.

Everyone needs to be alert because scammers are everywhere, and you never know when you can fall prey to their schemes. The best way to avoid this retirement fraud is to stay up to date on some of their tactics, explained below.

Bullion, Coins and IRAs

Investors can buy two kinds of physical metals — bullion and collectible coins. Bullions are bars or coins with a certain purity and weight. Collectible coins, on the other hand, are old or rare coins. 

A spot price represents the price at which an asset, such as a currency, security or commodity, can be sold or bought immediately. Bullion prices might include a markup of 5% to 10% on spot prices in the market. Unfortunately, some dealers might entice unsuspecting customers to purchase collectible coins at a cost between 40% to 200% above the spot market price. These dealers try to convince the buyers that these coins will only increase in value because they’re rare.

Meanwhile, collectible coins do not have a liquid market because they are hard to value. Once the buyer realizes that it’s difficult to sell their collectible coins, they return to the dealer, who in turn buys back the coin at a price much lower than the initial selling price.

IRAs can only store certain bullion coins, such as silver, gold, platinum and palladium coins, and some scammers try to increase their profits by inflating the monthly or one-time fees. As a result, customers have often lost a large portion of their investments to these fees.

Leveraged Accounts

A dealer might reach out to you advising that metal prices will soon skyrocket, claiming it is a rare chance to make a fortune even with a small investment.

Dealers might ask you to pay about 20% to 25% of the cost while their company finances the rest. Essentially, you’re borrowing to take the position (adding leverage), which can magnify gains or losses. Meanwhile, these deals involve high-interest charges and speculations that will likely make you lose your money.

In reality, gold prices are volatile, and once the value drops below a certain level, the company can ask you to deposit more money to avert possible losses. In other cases, like insufficient balance, your account could be closed and all funds lost.

Scams like this can be difficult to sniff out, so you should be careful. Once you notice that someone’s trying to pressure you to invest in gold or making unrealistically optimistic predictions, there’s a high chance that they’re scammers.

Also, if you want to use leveraged accounts, confirm that the entity (person or firm) is registered with the Commodity Futures Trading Commission (CFTC). If it isn’t, avoid using that firm.

Compare Premiums and Fees

Whenever you want to invest in gold, you should compare the price that the IRA firm is offering with the price of gold in the market. While the price of gold can be volatile, you shouldn’t pay for something that’s significantly lower or higher than the spot price.

Legitimate dealers will add a profit margin to the spot price because they need to make a profit from the service they’re rendering. However, these additional fees still need to be reasonable.

Overall, compare prices and do the research to confirm that you aren’t playing into the hands of scammers.

Signs of a Possible Fraudulent Sales Pitch

Scammers use fraudulent sales tactics to deceive unsuspecting investors. Here are some sales pitches you might come across.

  • Rare coin valuation: Some scammers use emails to inform naïve or inexperienced investors that they have a rare coin they want to sell for thousands of dollars. They can also include pictures and request wire transfer payments. Once you transfer the money, they disappear, leaving you with no means to get your money back.
  • Bait and switch: You might receive an ad or an email about a deal that sounds too good to be true, like selling gold at a ridiculously low price. Once you start responding to the mail, the fraudsters try to get you to buy something different.
  • Free gold scam: Fraudulent dealers can contact you, offering to create a gold IRA and promising you some gold to set you up. Some will promise you a guaranteed return on investment. However, once you invest, they run away with your money.

Possible Persuasion Tactics You May Experience

Some fraudsters can include buzz phrases in their sales pitches. If a dealer includes any of these words or phrases, chances are they are about to scam you.

  • Guarantees: Scammers tend to guarantee a specific return on investment (ROI), and some might claim that the investment is risk-free. They say this knowing full well that there’s no risk-free investment.
  • Few or limited coins: Some fraudsters can also try to scam you by announcing that there are only a few coins left, and you have to seize the opportunity before it gets too late.
  • Once-in-a-lifetime opportunity: Another common phrase you’ll hear among scammers is that the gold prices will skyrocket, and you only have a once-in-a-lifetime opportunity to make it big.

Find Trustworthy Gold IRA Firms

One of the safest ways to avoid gold IRA scams is to stick with reputable gold IRA firms. These companies usually help you set up your IRA and buy bullion or gold coins. You need to consider some factors before settling for a gold investment firm.

  • Credibility: A legitimate gold IRA firm will have positive reviews on independent third-party sites, as well as verified review sites like TrustLink, Trustpilot and Business Consumer Alliance.
  • Experience: The more experienced a company is, the higher the probability it has a strong reputation to upkeep.
  • Custodian: You should not invest in a gold IRA firm without confirming that it has an IRS-approved custodian. This custodian is a financial firm that performs administrative duties and investment activities for the IRA in order to keep it tax-deferred by the IRS.

For trustworthy gold IRA firms, consider investing with any of the following companies. Based on Benzinga’s findings, they are credible, have experience and use IRS-approved custodians.

  • Augusta Precious Metals: This company allows you to set up an SDIRA so you don’t have to pay management fees. You also get to enjoy the same tax benefits as other IRAs.
  • Advantage Gold: You can set up an SDIRA and have access to a premium customer service team that helps investors buy the precious metals for their specific needs.
  • American Hartford Gold: This family-owned firm boasts a wide product range of silver and gold coins. Working with this provider means that you can qualify for three years of free storage.
  • Red Rock Secured: This firm has one of the simplest investment processes you can find. On top of that, you get to enjoy investor education and top-notch customer service.
  • Lear Capital: Lear Capital offers free setup and storage to help you build precious metals IRAs. However, you need to invest a minimum of $15,000 to get started. 

Frequently Asked Questions


How do gold scams work?


Gold scammers can dupe unsuspecting investors by selling fake or damaged gold, enticing investors to store their gold in fake storage sites.


Is a gold IRA safe?


While there is no foolproof investment, gold IRAs can be safer because they are less affected by inflation and have similar tax perks as standard IRAs.

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