CFTC Warns Investors To Use Caution When Buying Precious Metals

CFTC Warns Investors To Use Caution When Buying Precious Metals

As economic uncertainty continues to drive market headlines, many investors are turning to precious metals to diversify their retirement portfolios. In August 2020, gold reached unprecedented heights, surpassing $2,000 an ounce and further underscoring its draw as a safe haven investment.

While now could possibly be a good time to venture into the precious metals space, it’s important to do your research first. According to an advisory from the Commodity Futures Trading Commission (CFTC), the current environment has made way for unregistered precious metals dealers to potentially take advantage of uninformed investors.

The CFTC noted an uptick in such occurrences with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which changes distribution guidelines and creates more options for qualified investors to use their retirement funds. For example, the CARES Act allows for a coronavirus-related distribution, which can be upwards of $100,000 for those who qualify. Moving forward, the CFTC urges investors to remain cautious when considering whether to purchase precious metals.

So, what can you do to help protect your retirement assets?

•  Do your homework. It’s important to prepare by looking up relevant terminology for precious metals. Examples include spot price, spread, bid and liquidity. These terms may surface throughout the purchasing process.

•  Know who you’re dealing with. This means doing some initial legwork to confirm the dealer’s credentials. Are they recognized by the Better Business Bureau? Do they belong to industry trade groups like American Numismatic Association (ANA), the Professional Numismatists Guild (PNG), or the Industry Council for Tangible Assets (ICTA)? The more information you have here, the better.

•  Remain leery of sales tactics. Do not buy precious metals based on an unsolicited email, social media post, infomercial, or sales call. And in your initial contact with precious metals dealers, keep an eye out for overly pushy salesmanship or inquiries upfront regarding your assets. Importantly, don’t feel that you need to complete a transaction if you’re not comfortable with the dealer or unsure of their methods.

•  Understand the precious metals purchase price. This is where the dealer’s fees and profit come into play. For purposes of comparison, obtain quotes from multiple dealers. This will help in understanding the true value of your investment.

Additional resources on investing in precious metals through a retirement account like a self-directed IRA are available on our site. While STRATA Trust remains unaffiliated with individual precious metals dealers, we support investors through our custodial services for SDIRAs.


Disclaimer: The information provided herein does not, and is not intended to, constitute personalized financial or legal advice. The contents of the article are for general informational purposes only and should not be relied or acted upon without specific professional legal or financial advice, based upon an individual’s situation.


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