TDCI Raises Awareness About Risks Related to Investments in Precious Metals

NASHVILLE – The Tennessee Department of Commerce & Insurance’s (TDCI) Division of Securities is reminding Tennessee investors that precious metals such as gold or silver are not foolproof investments, despite what some might claim.

During times of economic volatility in the domestic and global economy, some investors will typically move their savings into precious metals such as gold and silver as they perceive these as “safe.”  However, it is a myth that precious metals are always a foolproof investment – a claim that scammers frequently use in order to lure in unsuspecting victims.

Unfortunately, Tennessee investors have found themselves in recent years losing an estimated $13.8 million of their hard-earned monies on precious metals investments, records show. Ultimately, many of those investments, which were targeted at elderly or retirement-aged people, were proven to be fraudulent.

“While our team is working hard to help people recover their lost assets, the best thing that investors can do to protect themselves and their retirement funds is to learn the red flags typically associated with investment scams,” said TDCI Assistant Commissioner Elizabeth Bowling. “Investors should always remember that precious metals are commodities, and their prices can fluctuate dramatically like all commodities. If you or a loved one has questions about precious metal investments, remember to always contact the Securities Division first.”

For more detailed information about precious metal investments, visit our latest blog.

Beware of red flags for precious metals offers when a firm:

• Uses cold calling or unsolicited emails;
• Uses television, radio, and social media advertisements designed to instill fear about the economy in favor of precious metals;
• Touts political or religious affinity;
• Creates a false sense of urgency by claiming limited supply or encourages financing the purchase through loans arranged by the firm;
• Advises investors to liquidate their pre-existing retirement investments to fund investments in precious metals, including through SDIRAs;
• Fails to disclose their commissions and fees in writing.

Investing in precious metals collectibles, such as semi-numismatic (i.e. coins which value is based upon the market price of the metal and collector appeal) or atypical precious metals, could cause the investor to lose a significant portion of their funds immediately upon completing the transaction. This is especially true if the dealer is marking up the coins at an exorbitant rate. In many cases, the actual market value of the precious metals was substantially lower than the value of the securities and other retirement savings investors had liquidated to fund their purchase.

How investors can protect their retirement savings:

• Ask the precious metals dealer directly how they are paid for their services, what are their qualifications and how their products meet your financial needs (get their response in writing);
• Independently verify from a reputable source the value of the precious metals to be purchased;
• Get a second opinion about the benefits and risks of adding precious metals to your portfolio;
• Check the background of the firm and the representatives offering to sell precious metals;
• Compare premiums and fees. Be sure to research how to properly value a precious metals purchase before investing.

Questions about an investment or firm? Contact TDCI’s Securities Division at 800-863-9117 or visit us online for more information or if you suspect a securities fraud has occurred.

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