Precious Metal Investment Scams

Precious metals investment funds/schemes are quite unpopular, yet they are one of the most effective frauds in the investment industry. Precious metal investment scams have emerged as a common type of financial scam, exploiting the allure of these metals to deceive unsuspecting individuals and lure them into making fraudulent investments.

Through multiple means, fraudsters entice investors into the scam and make them invest with the help of false promises of guaranteed returns, high-pressure sales techniques, and misleading information. Out of all the methods, one of the most common and popular is the sale of counterfeit or overpriced metals.

There are many cases where people lost millions in precious metal investment fraud, and some of them were from legit companies, but they manipulated the market with fake reports and fooled millions to invest in or buy their shares.

Such investment scams run for a longer period, lure more investors into their scheme, and earn millions of dollars from it. These scams will go on, but we have to be vigilant and have enough knowledge about the investment frauds. In this article, we will learn about precious metals fraud, its types, and how to avoid it.

What are Precious Metal frauds?

Precious Metal fraud revolves around the illicit practice of buying, selling, and investing in metals like gold, silver, palladium, and platinum. The frauds are designed in a manner to trick the investors into making false or overpriced purchases and falling into the trap. In the precious metal investment scam, along with fraudsters, there are many companies and individuals affiliated with the company who dupe people.

Common Types of Precious Metals Investment Scams

The precious metals industry is filled with fraudsters, as it is a lucrative market for criminals where they can invest their illicit proceeds. Con artists use multiple methods to dupe investors, and in some cases, they manipulate the market to suck out all the investors' funds in no time. Listed below are some of the most common types of precious metals investment fraud.

Pump and Dump

The pump and dump scheme is one of the most highly practiced methods, where the fraudster manipulates the precious metal securities or stocks of the company to book their profit, and it leads to a huge loss for investors.

In Pump and Dump, the fraudster, company, or individual associated with the company artificially inflates the prices to lure investors into the scheme and make them invest, and in a couple of days or so, they pull out all the funds they own in the shares, which causes the shares to crash gradually.

This method is used multiple times to take advantage of the precious metal market and manipulate the market frequently. One such case became popular as the company made fake reports and inflated its shares.

Counterfeit Metals

Counterfeit Metals are quite common in the investment industry, just like the precious metal market is flooded with counterfeit metals, and companies raise their funding on the basis of fake products by marketing heavily and luring more investors.

Counterfeit metals schemes are sometimes used by fraudsters who use ponzi schemes to lure investors with counterfeit metals and make them join more investors. At some point, the investors in the market invest just to not feel left out of the opportunity.

Unregistered Dealers

Unregistered Dealers are quite flooded in the precious metals industry as the price of precious metals is quite high and there's a lot of cash flow in this industry. Fraudsters tend to grab the opportunity to defraud investors by pretending to be brokers.

They work without licenses from regulatory bodies like the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Thus, they cheat investors easily and are undetected.

How to Spot Precious Metal Investment Scams

Fraudsters are highly skilled, and they use many deceptive techniques to dupe people. It must be quite challenging to Spot precious metal fraud. As the con artist uses illicit ways to entice people into their scams. Still, there are a few red flags you can spot to avoid these scams. Below are the steps you can follow to spot and avoid precious metal fraud.

Choose a reputable source

If you are investing in precious metals, then you should deal with a verified and reputable dealer. The source must have a proven record and be trusted. The most important thing is that the dealer must be registered with the SEC, CFTC, or any other governmental body.

You can do research about the dealer, read reviews, and go through the recent news about the dealer. In-depth research will help you find a legitimate dealer or source.

Do thorough research

Research on your end will always help you invest wisely and know more about the investment. The knowledge you will get from doing thorough research will help you analyze the market and learn about market behavior.

It will help you to know the market trend, and dealers selling metals at higher prices can be avoided easily. Even so, it will widen your knowledge of the metals, so you will be able to see red flags if the stocks of these precious metals or their mining companies are manipulated.


When you come across the source or a dealer who tried to avoid any proper documentation for the sale, avoid the seller and report them. The seller or dealer must provide proper documentation of the metal, including an invoice, the weight of the metal, the purity of the metal, and more.

Review the seller's Pitch

A pitch can be the perfect moment to identify whether it is a legitimate investment option or a hoax. Most of the salesmen affiliated with fraudulent companies use high-pressure sales tactics to entice investors. If the salesman is pressuring you, then it's a sure red flag, and it's one of the things you should look out for.

The salesman may ask for unusual requests for transactions, such as wiring the money overseas or sending them a gift card. Fraudsters use these methods to avoid transaction histories and to safeguard themselves from government officials. In the precious metal industry, first the buyers have to check whether what they are buying is legit or not, and then they proceed with payment.


Winding up the article, precious metals investment scams exploits the desirability and value of metals like gold and silver to deceive investors. These scams involve the sale of counterfeit metals, overpriced products, or the use of fraudulent investment models. To avoid falling victim to these schemes, investors must be cautious, conduct thorough research, and seek advice from trusted sources. And also can contact Financial Options Recovery to get your funds back.

If you fall for Precious metals investment frauds/schemes, you can contact Financial Options Recovery to learn more!

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