Gold IRA scams to avoid in 2024

Watch out for these red flags from sketchy gold IRA companies

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Gold individual retirement accounts have become a popular way to own gold while saving for retirement. You can purchase physical gold bullion inside a regulated retirement account, saving on taxes at the same time.

Unfortunately, many scammers and pushy sales tactics have crept into the industry, causing investors to lose thousands of dollars in retirement funds. Here are some of the most common scams and ripoffs to look out for, and what to do if you are the victim of a gold IRA scam.

Key insights

  • There are many gold IRA scams, including high-pressure sales, exorbitant fees and fraudulent companies.
  • Researching gold IRA companies can help you avoid scammers and getting ripped off.
  • If you are the victim of gold IRA scams or fraud, there are several places you can report it to open an investigation.

Common gold IRA scams

Gold IRAs allow you to invest in gold and other precious metals within a self-directed individual retirement account (IRA). But there are several ways that sketchy gold IRA companies can take advantage of you. And there are different tactics that these scammers can use to rip you off.

Here are a few common gold IRA scams to watch out for:

Unlicensed IRA “experts”

While gold IRA companies might be licensed to help you open an IRA, many of their employees are not licensed financial advisors. That means they should not be giving you any financial advice.

The Commodity Futures Trading Commission (CFTC) reports that some gold IRA “experts” showcase themselves as an advisor, but they are simply salespeople trying to get you to open an IRA and buy as much gold as possible.

Giving unlicensed financial advice is a violation of the rules set by the Securities and Exchange Commission (SEC) and should result in fines, but it doesn’t stop some gold IRA teams from doing it anyway.

High-pressure sales tactics

Since many gold IRA companies don’t employ fiduciary financial advisors, the sales team can earn commissions for opening accounts and selling a certain amount of product.

This may result in high-pressure sales tactics to push unsuspecting customers to open an account or buy gold. They may recommend moving over other retirement accounts, or buying more gold than you’re comfortable with.

High markups

Most gold IRA companies include a markup from the spot price of gold to make a profit. While this markup is usually around 5% to 10% of the spot price of gold, some gold IRAs charge far higher markups to unsuspecting investors. And some companies promise low markups while charging astronomical amounts in reality.

In May 2023, the SEC sued Red Rock Secured for pressuring people to sell off investments and roll over their retirement accounts into a gold IRA. Then they marked prices on gold up as much as 130%! It’s important to always look up the spot price of gold (as set by LBMA) to make sure you’re not being ripped off.

Leveraged accounts

Some gold IRA companies have used leveraged accounts to allow customers to make a purchase with as little as 20% to 25% down, and “finance” the rest of the investment. In cases like this, it could turn out to be outright fraud and you never get your money back.

If it’s a legitimate company, this is still a violation of the Commodity Exchange Act and considered fraud.

Shady custodians

The IRS specifies that all gold IRAs must hold your physical gold or precious metals investments with an IRS-approved custodian. But some gold IRAs may not do this, and your gold or other investments could be at risk.

If the custodian is not reputable, they could take your money and disappear. The SEC even warns of fake custodians that attempt to steal your money.

Unapproved “collectible” coins

The IRS regulates what coins and bullion are allowed to be held in a gold IRA. But some gold IRA companies violate this law by recommending investing in “collectible” and “rare” gold coins.

Oftentimes, these coins are only available from the gold IRA company and don’t offer the same liquidity of an approved coin. And these coins violate IRS regulations for what is allowed to be held in an IRA account. If your gold IRA provider is pushing collectible coins, this should be a red flag.

» MORE: Is gold a good investment?

How to spot a gold IRA scam

Gold IRA scams are scary, but there are a few steps you can take to avoid them altogether:

  • Work with a reputable gold dealer only
  • Verify that the gold dealer is properly licensed
  • Don’t respond to unsolicited emails, texts or phone calls
  • Check the IRS database to make sure the gold custodian is approved
  • Make sure your account contract and terms and conditions are in writing
  • Only invest a small amount to start to ensure everything is above board
  • If there are high-pressure sales tactics or fear-based selling, walk away

“When it comes to gold IRA scams, I often find that the companies may be operating within the law but are using fear tactics,” said Nathan Mueller, financial planner and financial coach at BlackBird Financial Planning.

“You hear radio or TV advertising explaining how there are all kinds of threats to the current state of life, and the only way to protect yourself is to invest all your money in gold. It's tough to hear from a financial advisor who knows they aren't giving you advice and are misleading people. I recommend talking to a licensed advisor before moving forward with any investment.”

» MORE: How to choose a financial advisor

What to do if you’ve been the victim of a gold IRA scam

If you believe you have been a victim of a gold IRA scam, there are steps you can take to try and get your money back. Here’s what to do:

  • File a police report. Contact your local authorities and file a police report in the case of suspected fraud. That is the quickest way to get an official investigation started.
  • Withdraw remaining funds. If you have been scammed, it’s important to get your money out. You can withdraw your remaining funds or roll over into a standard IRA.
  • Contact the CFTC. You can submit a tip to the CFTC if you suspect fraud or deceptive practices from a gold IRA company.
  • Report to regulators. In addition to the CFTC, you can file reports with the SEC and the Federal Trade Commission.

The process for getting your money back may take a while, but it’s important to take these steps to even have a chance at gaining restitution.

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    Is opening a gold IRA a good idea?

    A gold IRA can be a good way to diversify your retirement investments, allowing you to invest in gold and other precious metals. But it’s important to avoid putting all your eggs in one basket. Only invest a smaller portion of retirement funds into alternative assets, and watch out for high-pressure sales or other deceptive activity from gold IRA companies.

    What are the typical fees on a gold IRA?

    Gold IRAs typically charge a one-time setup fee of a few hundred dollars to get your self-directed IRA set up, and then may charge monthly fees for maintaining your account and storing your precious metal assets. The biggest fee to watch out for is gold markups, which should only be 5% to 10% of the gold spot price.

    Can I get out of a gold IRA?

    Yes, you can sell your gold and roll over your gold IRA to a regular IRA instead. This process should be fairly straightforward, but you will need to contact your new IRA company and walk through the required steps. If you choose to withdraw your gold from a gold IRA before age 59½ and don’t roll it over to another IRA, you will pay a 10% penalty to the IRS, plus you might pay taxes on it as well.

    Article sources
    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. Commodity Future Trading Commission, "Customer Advisory: Beware of Gold and Silver Schemes Designed to Drain Your Retirement Savings." Accessed Dec. 20, 2023.
    2. Securities and Exchange Commission, "SEC Charges Red Rock Secured, Three Executives in Fraud Scheme Targeting Retirement Accounts." Accessed Dec. 20, 2023.
    3. London Bullion Market Association, "LBMA Gold Price." Accessed Dec. 20, 2023.
    4. Commodity Future Trading Commission, "Commodity Exchange Act & Regulations." Accessed Dec. 20, 2023.
    5. IRS, "Approved Nonbank Trustees and Custodians." Accessed Dec. 20, 2023.
    6. Securities and Exchange Commission, "Investor Alert: Self-Directed IRAs and the Risk of Fraud." Accessed Dec. 20, 2023.
    7. IRS, "Issue Snapshot - Investments in Collectibles in Individually-Directed Qualified Plan Accounts." Accessed Dec. 20, 2023.
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