Here’s one more tricky topic to navigate with your family this holiday season: gold and silver retirement scams. An investigation by Quartz detailed these scams, which con seniors into moving their retirement funds to volatile precious metals investments. Gold and silver investment scams aren’t new, but they’ve been directed at conservative seniors on Facebook over the past two years, according to Quartz.
Facebook has since cracked down on the offending ads, but here’s how they worked: The scammers targeted ads to Americans age 59 and up who indicated an interest in conservative politics. Those ads, which mostly led viewers to a website called Metals.com, promoted gold and silver as a way to protect your retirement savings from a coming economic crisis or drastic actions by Democrats in Washington. After supplying their information online, people got bombarded with phone calls and text messages warning them to “protect” their retirement accounts.
Eventually, persistent sales reps got people to transfer money from their retirement accounts into more volatile precious metals investments.
Here’s one example of how falling for one of these scams tanked the value of a woman’s retirement savings:
Eventually she agreed and, at the direction of the salesman, she said, she transferred $83,000 of her retirement savings into a self-directed Individual Retirement Account (IRA), a special kind of IRA that allows a broader range of investments, including precious metals. Then, with the salesman’s help, her $83,000 was used to purchase silver coins from Chase Metals to be held in the IRA. Separately, she bought $60,000 worth of coins that she had delivered directly to her home.
When she checked her IRA balance online, she said, it turned out that instead of the $83,000 she expected to have, her holdings
were worth less than a third of that. That’s because the price of the coins she purchased was far higher than the value of the precious metal they contained.
To recover some of the money she had lost, that woman sold some of her silver coins back to Chase Metals, but at lower prices than she had purchased them.
Investing in precious metals isn’t inherently bad, but it’s not something you can leap into without first obtaining considerable knowledge. In an investigation of coin scams by AARP, financial advisors said that it’s sometimes OK to allocate up to 5% of your investments to precious metals, if you’re really striving to diversify.
But doing it over the phone is a big no-no. AARP’s 2016 report noted that legitimate precious metals companies don’t cold call, and that you should speak with a financial advisor before moving any of your funds into precious metals.
If you suspect that you or someone you know has been targeted by a gold scam, Quartz says to report it to your state’s office of the North American Securities Administrators Association; you can find your state’s office on this map.
You can also report it to the consumer protection office for your state.