U.S. derivatives regulators are warning investors about schemes that promote taking advantage of Covid-19 regulatory relief to convert their retirement savings into precious metals.
The U.S. Commodity Futures Trading Commission (CFTC) issued an advisory noting a “growing trend” of unregistered gold and silver dealers encouraging investors to use rules that have have been relaxed due to the pandemic to shift their savings into gold or silver coins, or make leveraged investments in physical metals.
“These schemes often gouge unsuspecting customers with expensive premiums and hidden fees,” the CFTC said.
“Unlike financial professionals who have a fiduciary responsibility to you, these dealers are not obliged to have your best interests in mind,” the advisory said.
“As a result, commissions and profits often drive their recommendations.”
These investments can come with high markups and large monthly fees for administration, handling, storage, or insurance, the CFTC said.
“In some cases, customers have reported losing half of their investment to fees,” it noted.
The CFTC also warned about leveraged transactions that involve risky speculation and high interest charges.
In its alert, the CFTC warned investors “not to take cash from their retirement plans under relaxed distribution rules…to speculate or invest in gold, silver, or other precious metals without first consulting licensed or registered financial, tax, or legal advisors.”