How to Avoid Gold IRA Scams

After more than a decade of low interest rates and a strong stock market, the economy has taken a turn during the past few years. Inflation hit a 40-year high in 2022, and that has many investors looking to gold as a hedge against future financial uncertainty.

Unfortunately, investors aren’t the only ones interested in gold. Many scammers see gold and gold IRAs as their ticket to defrauding others. They may use high-pressure sales tactics or outright lies to convince people to make purchases. Then, they fail to deliver on their promises.

We’re here to help you avoid gold IRA scams. We’ll cover what they are and how to spot them so you won’t be a victim.    

Examples of gold IRA scams

Thieves take advantage of the complexity of government rules to push gold IRA scams on unsuspecting people. Here are some examples of unethical sales behavior and fraud that have been seen in recent years.

High-pressure sales tactics

High-pressure sales aren’t a problem unique to the gold industry, but we have seen cases recently in which it has risen to the level of perhaps being criminal.

In May 2023, the Securities and Exchange Commission announced charges against three executives of one gold IRA company in response to their sales tactics. The SEC alleges that the company pressured investors to sell the assets in their other retirement accounts and buy gold, insisting it was the only way to protect their money.

Inflated prices

That same SEC case also alleges that the company marked up its products by 130% despite telling clients that the items had only a 1% to 5% markup. Meanwhile, an analysis by Fisher Investments found gold IRA disclosures at other companies said product markups could be as high as 35%.

Assuming markups aren’t misrepresented, it’s not criminal for companies to mark up their gold to this extent. But it could be argued that it is unethical—especially when these same companies are pitching the value of their investments.

Delivery of lesser products

In some cases, scammers make money by promising one thing and delivering something else. That is what happened in one case investigated by the FBI and a local police department earlier this year.

A Texas man pled guilty to taking orders for gold and other precious metals only to fail to deliver on his promises. In some cases, he sent customers a product of lesser quality and other times, he delivered fake metals. He is now facing up to 20 years in federal prison.

Sale of collectible coins

This may occur more out of ignorance than criminal intent, but some gold dealers may encourage the sale of gold collectible coins for a gold IRA. However, IRS rules don’t allow most collectibles to be held in an IRA.

For instance, Sovereign coins from the United Kingdom and U.S. Liberty coins are considered collectibles and can’t be sold as IRA-eligible. Only specific types of gold meeting certain purity standards may be bought and held in a gold IRA.

Only invest in the approved gold securities. Avoid anything that is not regulated.

Erin Kinkade

CFP®

Home storage

If a gold IRA company tries to sell you a safe and says you can store your precious metals at home, run the other way. The IRS requires gold in an IRA to be managed by a custodian and stored in an approved depository. Anyone who tells you otherwise either isn’t knowledgeable enough to be entrusted with your money or is trying to scam you.

Some taxpayers have tried creating LLCs and looking for loopholes that allow them to keep their IRA gold at home, but those attempts have been deemed illegal. In one prominent case, a couple tried doing this but ended up owing the IRS more than $300,000 after the scheme was uncovered.

Outright theft

Some gold IRA scams are of the “take the money and run” variety. That’s what happened to customers of Regal Assets. The company’s owner, Tyler Gallagher, went to great lengths to make his gold business look legitimate, but in the end, he disappeared with about $10 million in investor money.

Fraud on the scale of that seen in the Regal Assets case is unusual, but it’s a reminder that bad actors are out there. If you are planning to invest in gold, you need to understand the red flags that could indicate a problem.

Ask the expert

Erin Kinkade

CFP®

If you suspect you have become a victim of a gold IRA scam, report it to the SEC at www.sec.gov/tcr. Follow the SEC guidelines, which may include hiring an attorney

Red flags to watch for

Gold IRAs are legitimate, and many people have built wealth with gold. So don’t let the scams scare you off, but do be aware of the following red flags which could indicate something is amiss.

• High-pressure sales tactics that insist you make an immediate purchase or move all your retirement savings into gold.
• Promises of guaranteed returns on your investment.
• Websites that appear new or provide no contact information.
• Unsolicited sales calls.
• Evasive answers about pricing, fees or delivery.
• Offers to sell you gold at a price that is only a fraction of its value.
• Contract details that differ from salesperson statements.

Tips to avoid gold IRA scams

In addition to watching for red flags, you can use the following tips to avoid gold IRA scams.

Select reputable companies

That goes for the gold company, custodian, and depository you use for your gold IRA. Look for an internet presence, online reviews, and details such as the company’s date of founding and physical address. You may be able to use the street view on Google Maps to confirm the address—although remember that many office buildings don’t list the names of tenants on their exterior.

Verify licensure

Every state has different requirements, but many mandate that businesses register with their licensing division. You often can search government databases online to confirm that a business is registered and see how long it’s been in business. 

Visit the licensing agency’s website for the state in which a business is based to see if this is an option.

Don’t buy from unsolicited calls and emails

Be wary of any unsolicited calls or emails trying to sell you gold or a gold IRA. You have no way of knowing whether the person contacting you is who they say they are. Instead, do your own research to select a reputable company.

Get everything in writing

Before completing a sale or opening a gold IRA, ask to see the contract in advance. Review it carefully for fees, commissions, restrictions,, and similar language. If anything makes you uncomfortable—or doesn’t match what the salesperson told you—don’t sign it.

Start with a small investment

For peace of mind, consider starting with a smaller investment when doing business with a company for the first time. Most gold IRA companies have minimum deposit requirements, and it might make sense to limit your initial purchase to that amount. 

Once that transaction is successful, you can transfer more of your assets into the gold IRA later.

Ask the expert

Erin Kinkade

CFP®

It is safe to invest online, but it is imperative to follow through with due diligence and not take shortcuts. If the customer does not have time to do the research on their own, it is wise to hire a financial professional who is well versed in gold IRA investing.

Gold IRA scam FAQ

How is a gold IRA different from a traditional IRA?

A gold IRA falls into the category of a self-directed IRA. While any brokerage account can open a traditional IRA, you’ll need a specialized custodian to manage your gold IRA and ensure you are following IRS rules.

Are gold IRAs legit?

Yes, gold IRAs are a legitimate way to save for retirement. However, there are scammers in every industry, so do your homework before opening one.

What should I do if I think a gold IRA is a scam?

You can submit a tip to the Commodity Futures Trading Commission if you suspect a fraudulent precious metals company. Reports can also be made to the Securities and Exchange Commission and the Federal Trade Commission. 

If you have been the victim of fraud, you should also file a report with your local police department.

Are there any upfront fees to open a gold IRA?

In addition to the cost of the gold, you will typically need to pay upfront for a custodian to set up your gold IRA. That may include an application fee plus the first year’s management fee, which may be a flat amount or a percentage of your total investment.

How can I check the legitimacy of a gold IRA company?

To determine if a company is legitimate, check with its state’s licensing agency to see if it’s registered. If the state doesn’t require registration, look for online reviews on websites such as the Better Business Bureau.

Should I invest all my savings in a gold IRA?

It’s important to keep your investments diversified in case a particular asset has a bad year, and many financial advisors suggest investing no more than 5% to 10% of your money in gold. Talk to a trusted professional to determine the right level of gold investment for your situation.