The Hide and Seek Game of Investing in Precious Metals
Investing in gold and silver may sound like a safe, low-risk way to make big money. But hidden fees, as well as a dealer’s failure to reveal how risky this type of investment really is, could cost you dearly.
The FTC recently announced a settlement with precious metals dealers, who had promised consumers big payoffs through silver and gold investments. The problem? The FTC alleged that, using fancy brochures and high-pressure sales pitches, the dealers convinced people to buy precious metals on credit. The FTC also charged that the dealers loaned people money to buy the gold or silver without telling potential investors upfront how much everything would cost, what they were required to pay, or the effect that up and down markets could have on the metals value.
According to the FTC, when the buyers got their account statements, they were surprised by eye-popping commissions, interest and administration fees; and caught off-guard by exorbitant financing charges on the loan many didn’t realize they had taken out.
So what message can you take away from this settlement? A big one. Before you decide to invest in precious metals, consult a reputable financial advisor who has specialized knowledge in this type of investment. Research the company online for customer feedback, including complaints. Avoid any sales people who use high-pressure pitches. People who say you have to “act now” want to get you to act before you think it through. Take your time.
For more information about the potential pitfalls of investing in precious metals, read Investing in Bullion and Bullion Coins, and Investment Risks. If you spot a scam, file a complaint with the FTC.