According to the U.S. Commodity Futures Trading Commission (CFTC), these fraudulent companies offer to purchase metal for the customer through a financing agreement. The customer is asked to pay a small percentage of the total purchase price. The company often charges customers a commission for the purchase transaction, a loan origination fee, an interest charge on the remaining balance (which accrues over time), and fees relating to storage and shipping of the metal the company pretends to purchase.
Be skeptical if the commodity sales pitch:
- Claims their ability to predict prices or the direction of the metals markets;
- Minimizes the degree of investment risk involved in metals investments;
- Fraudulently fails to disclose how much the price of metal must go up for the customer to break even (let alone profit), since hefty finance and storage fees and commissions are deducted from the customer's account before any profit accrues;
- Falsely claims to purchase and store metal, when the company does not actually do so.
- Charges phony "/storage" and "interest" fees.
- Avoid any company that predicts or guarantees large profits with little or no financial risk.
- Be wary of high-pressure tactics to convince you to deliver cash immediately to the firm, via overnight delivery companies, the Internet, or otherwise.
- Be skeptical about unsolicited phone calls about investments from offshore salespersons or companies with which you are unfamiliar.
Obtain as much information as you can about the company and verify that data. Check the company's materials with someone whose financial advice you trust. If in doubt, do not invest. Without solid information about the company, the salesperson, and the investment, you should not risk your money.
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