4 Tips to Know Before Buying Physical Precious Metals

1. Say "no" to pushy and overly persuasive salespeople. When investing in physical precious metals, you might encounter high-pressure sales tactics—such as dangling the prospect of large profits or implying that there are limited quantities available—false promises and even fraud, including fraud related to precious metals individual retirement arrangements (IRAs), which are a type of self-directed IRA. Exercise caution if an investment professional pushes you to make an immediate investment decision or tells you that you must act now or risk missing an opportunity. Even if the investment isn’t fraudulent, this type of pressuring is inappropriate. Be particularly wary of unsolicited investment pitches and other red flags of fraud.

2. Check the background of the salesperson and company before you invest. Request the salesperson's name and contact information, as well as the firm’s address and phone number. Conduct an online search for the seller, read reviews and look for complaints. You can check with the Better Business Bureau to see if a precious metals dealer is BBB rated or accredited, and the U.S. Mint maintains a searchable database of coin sellers. If you’re financing your purchase and not physically receiving the metal, check to see if the seller or firm is registered with the National Futures Association (NFA). You can also use FINRA’s free BrokerCheck tool to research the background and experience of financial professionals and firms who sell securities and/or offer investment advice.

3. Understand the risks. Salespeople might try to convince you that precious metals offer greater safety or value than other investments, as well as lower risk. But metal prices can fluctuate, like any other investment, and they’re sometimes quite volatile. The use of leverage (in other words, loans or financing) to finance purchases and the possibility of loss or theft if you store them yourself are among the other risks associated with physical precious metals investments. Ask the salesperson for a risk disclosure statement, which might not provide a full picture but can help you learn more about some of the risks, before you provide any money.

4. Get a full accounting of fees. The firm that sells or stores your precious metals might charge account opening fees, sales commissions, storage fees, management fees, and other fees. In some cases, fraudsters have inflated prices and fees or have charged storage and insurance fees for metal that never existed. Before you invest, make sure you get all fees and other costs in writing and be sure you understand what level of return you’d need to earn to break even.