1. Do Work With Licensed, Well-Reputed Brokers

Quick-talking salespeople looking to earn a quick commission by selling overpriced assets lurk in the precious metals market. Because of this, avoid purchasing precious metals from pawn shops, unsolicited emails and calls, infomercials, social media posts, and the like. Bypass this hazard altogether by working with a trustworthy dealer that charges fair premiums and provides full authenticity guarantees.

2. Don’t Over-Invest When Speculating on Precious Metals

Prices will not always move in your favor. While precious metals hold a real physical value beyond that of traditional stocks, speculating carries more risk than a long-term investing strategy. A good rule of thumb is to invest only as much as you are willing to lose.

3. Do Consider Investing in Bullion

Bullion, such as bars, ingots, or coins, is priced at the market rate plus a fair premium. Numismatic (rare or collectible) coins sell at a price far above the market value for the metal in the asset. Unless you are speculating on the demand for a specific numismatic coin, it is best to choose bullion. Numismatic coins can be challenging to sell and place a value on since their worth is objective.

4. Don’t Jump Into High-Interest, Highly-Leveraged Transactions

Often, these transactions fail to meet the Commodity Exchange Act requirements, and with high leverage comes an increased level of risk. This Daily Business Review article details a case that exemplifies the danger of these kinds of investments. Use caution when entering any high-interest or highly-leveraged transaction.

5. Do Research When Speculating on Precious Metals

Educating yourself lays the foundation for every investment strategy. Always compare costs, study market rates, evaluate premiums, and understand the distinctions in how various types of precious metals behave. Subtle differences have the potential to make or break your investment plan.

Speculating on precious metals comes with unique opportunities and risks. Remember the above do’s and don’ts to keep you from common pitfalls and help you build solid investing habits.

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Anonymous Purchases and Physical Ownership 

Because investing in precious metals does not require a Social Security number, you remain anonymous. History demonstrates the need for this protection. In the 1930s, President Roosevelt forced citizens to sell their gold to the government for unfairly low prices. Should history repeat itself, you would be safe with metals investments. With these privately held assets, no one would come knocking on your door. 

Taking physical possession of your holdings enhances the privacy of precious metal investments. Because you do not store them digitally, you guard your assets against hackers or electronic seizure. Bullion is globally valued. It is liquidated easily and traded across borders, setting it apart from other assets. 

Reporting Rules Affecting the Privacy of Precious Metal Investments

While most believe that you must report all transactions exceeding $10,000 to the IRS, this is not the case. This rule only applies to cash transactions. You do not have any reporting requirements when you purchase precious metals using checks, wire transfers, credit cards, and other non-cash payment methods. Of course, the IRS mandates reporting of gains generated from the sale of assets. Because of this, always verify the documentation requirements for planned transactions. Please see The Truth About Precious Metals Reporting on our website for further information regarding this topic.

With our current political conditions and talk of increased government oversight, many investors appreciate the unique freedom available due to the privacy of precious metal investments. By finding a bullion dealer who understands reporting requirements and your privacy concerns, you can safeguard your future by making an untraceable investment. 

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Under A-Mark’s subsidiary’s “Collateral Finance Program,” customers could purchase precious metals, then use these new assets as collateral for loans to buy additional metals from Goldline. The customers did not receive their precious metals until the loan was satisfied and were required to pay storage fees. This structure violated the 28-day delivery requirement of the Dodd-Frank Act. For further details regarding A-Mark’s case, you may download the attached file to read the full article. 

As I stated to Aaron Cohn, “The vast majority of individuals that are new to investing in precious metals simply wish to purchase bullion coins or bars and take physical possession of them.” Due to investment cons, these individuals often “find themselves having purchased a highly leveraged fractional ownership in precious metals, all of which have excessive markups, high finance charges applied on the entire balance (not just their fractional ownership), and subsequent margin calls on even the slightest decline in price.”

Selecting the right brokerage to do business with is essential to prevent yourself from falling victim to investment schemes such as A-Mark’s. Rather than looking for brokerages offering flashy investment strategies, align yourself with a company committed to educating customers and helping them invest in a way that is tailored to their unique goals. 

I have worked with a lawyer, Aaron Cohn, on these types of precious metals fraud cases as an expert. He is an attorney experienced in representing victims of precious metals fraud that understands how the various confidence schemes work. He is actively pursuing several dozen claims for victims, including claims against brokers that offer leveraged retail accounts to customers. His contact information is here if you have an issue you would like to discuss with him: https://www.wwhgd.com/people-cohn-aaron.html

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