What the CFTC Warns About Precious Metals Fraud
The Commodity Futures Trading Commission warns that precious metals fraud usually follows a few recognisable patterns: metal you pay for but never receive, financed or leveraged purchases that are not what they seem, heavy markups hidden behind sales pitches, and storage arrangements that cannot be verified. Its consumer pages on CFTC.gov's Learn and Protect section explain how to spot these and where to report them.
Why the CFTC Is Involved at All
Gold and silver are commodities. The CFTC oversees futures and certain other commodity transactions and has authority to pursue fraud in commodity markets, including some cash sales of metal. Its role is especially direct when a retail customer buys metal on credit or with leverage: federal law generally requires such transactions to be conducted on a regulated exchange unless the metal is actually delivered to the customer within a short time set by law. Many of the CFTC's precious metals cases have involved firms that claimed to finance purchases and store metal but never delivered or bought it.
Most dealers selling fully paid, delivered coins and bars are not CFTC-registered, and that alone is not suspicious. The CFTC's warnings are about conduct, not registration status.
Warning Pattern 1: Financed or Leveraged Metal
A pitch might go: put down a fraction of the price, the firm "lends" the rest, and you control far more metal than you paid for. The CFTC cautions that in fraudulent versions of this arrangement, no metal is ever bought, interest and storage charges keep growing, and customers can lose their entire deposit when prices move against them. If someone offers to finance a metals purchase, ask exactly where the metal is, in whose name, and whether the firm is registered, then verify those answers independently.
Warning Pattern 2: Payment Without Delivery
Undelivered metal is one of the most common complaints. Warning signs include repeated delivery delays blamed on mint shortages, requests for additional payments before shipping, and refusal to provide tracking or depository confirmation. A reputable seller gives a delivery window in writing and meets it. Our page on shipping and delivery of precious metals describes normal timelines.
Warning Pattern 3: Bait-and-Switch Pricing
CFTC and state regulators have described cases where buyers asked for ordinary bullion and were persuaded to switch to coins described as rare, protected from confiscation, or more suitable for retirement accounts. Those coins often carried markups far above bullion, which buyers only discovered when they tried to sell. Ask for the premium over spot in writing for every product, and compare prices elsewhere. See premiums and bid/ask spreads and numismatic coins vs bullion.
Warning Pattern 4: Unverifiable Storage
When a seller stores metal for you, you rely on its records. Fraudulent schemes have shown customers account statements for metal that did not exist. Protect yourself by using a named, independent depository; confirming holdings directly with that depository; and preferring arrangements where you can request an audit or delivery. For retirement accounts, IRS rules require an approved custodian, which adds an independent party. See precious metals depositories explained.
Warning Pattern 5: Fear-Based Sales Pressure
Pitches that lean on predictions of economic disaster, warnings that you must move savings immediately, or claims that a product is "outside the system" are common in fraud cases. Some people hold gold as a potential hedge against inflation or uncertainty, and that can be a reasonable choice, but a seller who insists you decide today is giving you a reason to slow down. Our list of high-pressure sales red flags covers typical scripts.
Warning Pattern 6: Retirement Account Schemes
Regulators have also warned about self-directed IRA promotions that misstate the rules: claims that IRA metal can be stored at home, that a particular structure removes all tax, or that a custodian has vetted the product. Custodians generally do not evaluate the merit or pricing of what you buy. Review our guides to precious metals IRA scams and red flags and home storage risks.
Romance and Impersonation Scams
Federal agencies have also described scams in which someone met online, or a caller impersonating a government official, persuades a person to convert savings into gold and hand it to a courier "for safekeeping." No legitimate agency asks you to buy gold and give it to anyone. Report these immediately.
What the CFTC Suggests You Do
- Research the company and its principals before sending money; see how to verify a precious metals dealer.
- Get every term in writing, including prices, delivery and storage.
- Be wary of unsolicited calls, emails and social media contacts.
- Confirm that metal exists, with an independent party where possible.
- Report suspected fraud to the CFTC, and also to the FTC or your state attorney general.
Applying these checks to any company you consider, including Goldco, is sensible. Our page Is Goldco legit? How to check for yourself walks through the same steps for one precious metals company.
Frequently Asked Questions
Does the CFTC approve or endorse metals dealers?
No. The CFTC does not endorse dealers. Registration, where it applies, is not an endorsement.
Is buying gold on credit always fraudulent?
No, but leveraged retail metal transactions are tightly regulated, and many fraud cases have involved them. Verify registration and delivery before agreeing.
How do I report suspected precious metals fraud?
Use the CFTC's tip and complaint system, the FTC's ReportFraud site, and your state attorney general's consumer protection office.
Can I get money back after a fraud?
Sometimes, through enforcement actions or restitution, but recovery is often partial and slow. Prevention is far more reliable.