Division of Securities warns consumers about precious metals investment scams
DENVER (Dec. 16, 2019) -- The Colorado Division of Securities at the Department of Regulatory Agencies (DORA) is issuing a warning to all Colorado consumers to give close scrutiny to any type of precious metal investment opportunities they may encounter before spending their money.
Some Coloradans are receiving cold calls and have experienced high pressure sales tactics in which companies seek to leverage particular political ideologies.
Precious metals sales tactics also may come in the form of a link in social media platforms or via email that appears as if its from a trusted news agency or well-known personality. This may be a paid Facebook post or appear on other social media sites that accept advertised posts.
"Some precious metals companies will call their targets repeatedly and try to establish a bond using political fear mongering," noted Colorado Securities Interim Commissioner David Cheval. "After they accomplish this, they attempt to sway their targets to buy their product."
Red flags to look out for include when salespersons from a precious metals investment company suggests that the consumer liquidate their traditional retirement accounts, move to a self-directed IRA (known as a SDIRA), and then buy the metals -- all in the space of a few phone calls.
"They may 'walk you through the process' by calling your broker with you, filling out the forms and having you e-sign -- potentially without even giving you time to read their forms. They may say things like 'you do not have time to read it, the economy can collapse today!'" noted Cheval. "Ultimately these forms may give the salesperson the ability to purchase precious metals that you did not agree to buy."
The coins purchased are often numismatic coins, which exist without a market and the price is heavily inflated. Consumers who have agreed to these purchases receive statements from the SDIRA, which may reflect the melt value. The difference between what the consumers paid and what the coins are worth can show a loss of anywhere from 33 to 70 percent of the amount originally invested. Because there is no market for the coins, these companies will generally not buy their coins back, leaving consumers stuck with a high percentage loss. Additionally, salespersons may receive undisclosed commissions from the sale.
Consumers can protect themselves from falling for a precious metals scam by demanding a few key items from the salesperson they are communicating with, including asking for their license types and checking their license information, asking how they get paid, and ensuring that any oral agreements made be provided in writing before investing.
"The bottom line is, before making these life changing financial decisions, ask lots of questions, do your homework, and contact the Colorado Division of Securities," said Cheval.
Click "Read More" for further details regarding precious metals investment scams. To reach the Colorado Division of Securities, call 303-894-2320.
(if link doesn't work, download the document here).
|
