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George Smaragdis  (202) 728-8988
Nancy Condon (202) 728-8379

FINRA Issues Precious Metals Investor Alert

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Physical Precious Metals: Tips to Avoid Tarnishing Your Portfolio. FINRA's new Alert warns investors of the risks involved with investing in physical precious metals such as silver, gold, palladium or platinum. Enforcement actions by the Commodity Futures Trading Commission (CFTC) and court decisions paint an ugly picture of sellers who charge high commissions and fees but ultimately fail to purchase or deliver the physical assets as promised.

While precious metals can play a helpful role in building a diversified portfolio, some investments are more fraught with risk than others. Precious Metals includes five tips to help the investing public avoid problems:

  1. Say "no" to pushy salespeople. No reputable investment professional should push you into making an immediate investment decision, or tell you to "act now."
  2. Check out the salesperson's background before you invest. Use the National Futures Association's (NFA) Background Affiliation Status Information Center (BASIC) to check whether the firm or individual is registered with the CFTC or an NFA member and whether the firm or individual was the subject of any disciplinary actions.
  3. Be on high alert when you hear "low risk." Don't purchase physical quantities of precious metals based on a promise that the investments are "safe" or have minimal risk of loss. Ask to receive a risk disclosure statement from the salesperson before you send any money.
  4. Look out for leverage risk. Precious metals investments often involve the risky and expensive use of leverage, or borrowed money. You may pay a portion of the cost to invest in the precious metal in cash, but then pay for the rest of the investment (in some cases up to 80 percent of the metal's purchase price) "on margin."
  5. Get a full accounting of fees. There is often an account opening fee with physical precious metals investments, which can be hundreds of dollars. Then there are commissions, which can be 15 percent or more of your investment, including any leveraged portion.

Precious Metals also discusses some of the investment options beyond physical precious metals, as well as key factors to consider before investing in mutual funds or exchange-traded funds (ETF) that invest in precious metals companies or physical precious metals.

FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, and informing and educating the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers the largest dispute resolution forum for investors and firms. For more information, please visit