Gold IRA Scams: 9 Red Flags and Real Cases to Learn From

Most gold IRA companies are legitimate businesses. But the product has a few features that make it attractive to dishonest sellers. Buyers are often retirees moving large balances from a 401(k), IRA or TSP. Many are worried about inflation or a market crash, which makes fear-based sales pitches effective. And unlike stocks, there is no single public price for a specific coin, so a buyer often cannot tell how much of the purchase price is the dealer's markup.

In the cases regulators have brought, the yearly fees were rarely the problem. Annual fees for a gold IRA usually run about $175-$300 a year. The real damage came from the markup on the metal itself - the gap between what the gold is worth and what the customer was charged. On common bullion that spread is roughly 5-10%. In the enforcement cases below, it was alleged to be far higher.

These are summaries of public enforcement actions. Allegations in a lawsuit are not findings of guilt unless a court or settlement says so.

• Red Rock Secured (2023). The CFTC, the SEC and the states of California and Hawaii sued the company, alleging it took in about $61.8 million from roughly 950 customers, much of it from IRAs, 401(k)s and TSPs. Regulators alleged average markups of 100-130%, while customers were told markups were 4-29%. Read the CFTC press release.
• Safeguard Metals. The CFTC alleged about $68 million in sales with markups averaging about 50% more than customers were told. The company settled with the CFTC in October 2023. New York's attorney general also brought a case describing it as defrauding seniors.
• Lear Capital. New York's attorney general sued in 2021 over undisclosed markups of up to 33% on about $43 million of sales; the company reportedly paid $5-6 million. It reached a $2.75 million settlement with the Los Angeles City Attorney in 2022, and its Chapter 11 plan in August 2023 set aside $5.5 million for investors through a coalition of more than 40 states.
• Goldline (2012). A Santa Monica judgment required up to $4.5 million in refunds plus an $800,000 fund, after allegations of coin markups above 55%.
• Metals.com. Massachusetts brought an action in which one couple was alleged to have been charged a 54% markup.

The common thread: customers were steered into coins whose price was far above their metal value, and the markup was hidden or played down.

1. Pressure to act today. "Prices are about to jump" or "this offer ends tonight" is a sales tactic. A legitimate company will let you take a week to think.
2. A fear-heavy pitch. Warnings that banks will freeze your money, the dollar will collapse or the government will seize your savings are designed to stop you thinking about price.
3. A switch to "premium", proof or "rare" coins. You call about bullion and get steered to special coins "for privacy" or "better growth". In the cases above, these coins carried markups of 50% to over 100%. Most proof and numismatic coins are also not allowed in an IRA at all - see which metals qualify.
4. No markup in writing. If the salesperson will not tell you, on paper, what the metal is worth and how much you are paying above that, walk away.
5. No clear buyback price. Ask what the company would pay you for the same coins today. A large gap between buy and sell prices means you start well behind.
6. "Free" silver that is not free. Bonus metal promotions are common and can be legitimate, but the cost may be recovered through a higher price on everything else. Compare the total price, not the bonus.
7. Home storage promises. IRA metal must be held by a qualified custodian in an approved depository. Keeping it at home through an "IRA LLC" was treated as a taxable distribution by the Tax Court in McNulty v. Commissioner (2021). See our home storage guide.
8. "IRS-approved company" or guaranteed returns. The IRS does not approve or endorse dealers. Anyone promising that gold "can't lose" or will double is making a claim no honest seller can make.
9. Unsolicited calls and requests to move everything. Be wary of a cold call, or of being urged to move most or all of your retirement savings into metal. Money should go to your IRA custodian, never to a salesperson's personal account.

In March 2024, the CFTC, FINRA and NASAA (the association of state securities regulators) published a joint advisory, "10 Things to Ask Before Buying Physical Gold, Silver, or Other Metals". It is short and worth reading in full. In the same spirit, before you sign anything, ask the company to put these answers in writing:

• What is the total price I am paying for each coin or bar, and what is its current metal (melt) value?
• What is your markup or spread, in dollars and as a percentage?
• What would you pay to buy these exact items back from me today?
• Who is the custodian, and which depository will hold the metal? Is storage segregated or pooled?
• What are all the yearly fees, and who charges each one?
• Are there any fees to sell or to close the account?

A trustworthy company should answer all of these without hesitation. Our gold IRA fees guide explains each cost in more detail.

• Search enforcement news. Search the company name plus "CFTC", "SEC", "attorney general" and "lawsuit".
• Check the BBB and Trustpilot. Read the complaints, not just the star rating. Look for patterns about pricing and buybacks.
• Confirm the custodian independently. Call the custodian yourself to confirm the account is real and in your name.
• Get a second quote. Ask another dealer to price the same coins. A dealer that publishes its prices online is a useful benchmark.
• Talk to someone with no stake. A fee-only financial adviser or a trusted family member can be a valuable second opinion.

Gather your invoices, account statements and any written promises. Ask the dealer for a written explanation of the price you paid. If you believe you were misled, you can file a complaint with the CFTC, your state securities regulator (find it through NASAA), your state attorney general and the BBB. In several of the cases above, customers recovered part of their money through regulator settlements or bankruptcy plans - so reporting matters.

Compare companies that disclose fees more openly in our gold IRA company rankings.

This article is general information, not financial, tax or legal advice. Fees, minimums and promotions change often and vary by custodian and account size - confirm current terms in writing with the company and your custodian before you invest.