There is no such thing as a free lunch…. or free precious metals

I learned this the hard way, but there really is no such thing as “free” gold or silver offered as a “bonus” by many metals dealers when you purchase physical metals or a precious metals Individual Retirement Account (IRA).

I am sorry to say, you will pay for those “free” metals one way or another. And quite possibly at a substantively higher price than if you had just bought the same amount of the metals of your choice at the current retail price for bars, rounds or currency coins. For the purposes of simplicity, I will refer to the precious metals as “coins” rather than any other physical forms the metals may come in, because that is what I bought for an IRA.

While my experience was with one specific company I have been told by a reputable precious metals industry expert I consulted with, who was willing to say the quiet part out loud, that “basically all these companies operate with the same, unbelievable fee structure: Rosland, GoldCo, American Hartford, Birch Gold, Lear Capital, and many smaller ones that have come and gone...They are aiming to make 100% profits or more on everything. The way they break them down when you are buying and selling varies slightly from company to company, but at the end of the day it's all the same scheme.”

My hope is that by documenting my own experience that I can help others to avoid the mistakes that I made. Or if you already have invested and are looking for a way out, what I have learned, and how I managed to recoup my initial investment with a small profit. may help you plan your own exit strategy. Everything I am about to tell you happened to me. And much to my surprise my story did have a better outcome than I expected would be possible. So I’m here to tell you that your’s can too.

In 2021 I retired after more than 4 decades as a registered nurse. Over the last 3 decades of my career I worked in various healthcare and health industry-related institutions that offered some form of contributory retirement plan, in which I faithfully participated, and amassed a nest egg I wanted to protect, in what looked to me like an increasingly volatile economy.

That same year gave meteoric rise to the “truther” community, which increasingly seems to be ironically-named. In one after another podcast, I heard lots of discourse on looming global financial crises, the pending crash of fiat currencies, and how the only safe-havens for the life-savings of millions of other working people like me were either untested crypto’s or precious metals, if you were not fortunate enough to own fertile land or some form of income-producing property. And at that time the latter was becoming increasingly risky for those owners needing to collect rent payments. So I fully admit that I succumbed to the sweeping fervor over a potential currency collapse and the safe harbor precious metals could provide. Despite my unfortunate experiences, I still believe in investing in gold and silver, just not the metals sold by certain companies.

Since 2021, I watched many if not most of these podcasters partnering with precious metal dealers, often hosting them as regular guests. They would provide anxiety-generating updates on the precarious state of stocks and bonds, precious metals paper contracts and the overall economy. And while that can all be valuable information for consumers, I have never seen one of these presentations that did not end in a sales pitch to buy their precious metals, offering discounts when using the host’s specific referral link (so the metals dealer can track referrals for the host’s kickbacks). And while everybody needs to make a living, it begs the question, just exactly what kind of living are some of those podcasters making in these arrangements? At the 43:00 mark in this documentary film you can see one example of how this worked in the case of one infamous podcaster. Over the same period, I also observed a proliferation of celebrity endorsements and commercials featuring retired actors and more current public figures beseeching us to buy gold and silver from their preferred metals dealer rather than one of the numerous others competing for your business.

I am not claiming that every podcaster is sponsored by an unscrupulous metals dealer. Like many other industries, there are both upstanding, ethical metals dealers and unethical ones. In fact, many are honest and engage in transparent business practices.

But the precious metals market is unregulated, which unfortunately gives sellers quite a lot of leeway, and makes that market something of a minefield for customers, placing the responsibility solely at the feet of the consumer to figure out which dealers fit into which category.

Through the course of my career, I worked with many sales representatives. Regardless of industry, they routinely work on commission, and do not tell the prospect how the company really makes their money. So even if you, the prospect, think you are asking the right questions, the unscrupulous ones may tell you half-truths, lie by omission, or impart outright falsehoods. I fell victim to all the ways some will lie to their customers, even though I was not new to this market, having started investing in gold and silver following the 2008 financial crisis.

And while I thought I had done the research, scoured the internet for information on the company and read reviews, only later did I learn about one of the tricks of the trade these dealers use to garner the good reviews you may find posted online or on their own websites. In short, they get them early.

Metals dealers can make it quite easy to invest. And as soon as you have signed on the dotted line, your account is open and your funds transferred, they may ask you to write a review, even offering some compensation for your efforts, such as a home safe the size of a toaster. They ask for a review before the IRA administrator would be expected to produce a summary report of your holdings. If the unscrupulous ones waited for that, the reviews would plummet like an avalanche down a steep, snowy mountainside.

Despite my prior experience with buying metals, I made a bad decision. And without delving into every obstacle and mishap that occurred along my journey, I have been told by experts in the precious metals industry they have never encountered a situation as “messy” as mine became. But I believe there may have been a reason for that, as since discovering how big my mistake was, I have received plenty of messages from God/Creator/the Universe (pick your belief system’s nomenclature) that this happened to me so that I could help others. And without experiencing everything I have through this adventure, I would not have learned what I did, so I could share it with others like you, my dear reader.

So, if you, like me, are kicking yourself for opening and IRA through or buying coins from one of the less than scrupulous sellers of precious metals, I encourage you not to be too hard on yourself. I can assure you that many others with both more and less experience with it than yourself have made the same mistakes. Otherwise how would these companies remain in business as long as they have, and still attract new customers every day?

And if you are still doing the preinvestment research, I hope to provide you with short-cuts to learn from my experiences before you make any commitments. There are much better, cheaper options, and more ethical alternatives for investing in precious metals.

Here are some things in hindsight I wish I had known, and done before buying:

· Don’t rely on marketing materials for any factual or detailed information. In fact, I suggest just completely ignoring the marketing materials. They are glossy, colorful, celebrity-endorsed, and completely void of useful information for a reason. I have often wondered if these celebrity endorsers have any idea about the specific business practices of the precious metals dealers they are promoting. I can only conclude they must do it because they are being paid for the promotion rather than being a satisfied client of that company earning great returns on their own investments!

· Do read every word of any and every legal document the metals dealer presents to you before you sign. This would apply to metals purchased inside of an IRA. Insist that a company representative review the document with you before you will sign it, and ask questions about anything that is of concern to you, such as any fees that are characterized in a range of percentages. When does the high and low end of that range apply? Ask for a commitment to a set fee in writing. Ask how the metals are priced and what percent of that pricing above the spot price constitutes premiums and fees. Don’t hesitate to consult an industry expert or a lawyer to look at the documents. Once I knew I had a problem I was referred to AmFed (https://americanfederal.com/) by a lawyer with a background in fraud cases, and they looked at my documents at no charge. If I knew of them and had done so before I signed, I could have avoided the entire saga. The unscrupulous company’s documents are generally well written, iron-clad, and crafted by lawyers who are acting solely on behalf of their client (the precious metals dealer) and designed to disadvantage you (the customer/investor), in the event of contention. And the will employ “arbitration” as a vehicle to do this, because they have more money and more power than you do. These contracts permit the metals dealer considerable latitude in pricing of the metals they sell to you, and buy back from you. Another tactic the metals dealer may use is to have one of their staff in the role of an “IRA Processor” to get on the phone with you when you call your current IRA administrator to move your account. This hamstrings the current administrator from warning their current customer, you, of any pitfalls of moving your funds into the metals dealer’s products. If I had done all of this prior to making my purchase, I can assure you, I never would have purchased anything this metals dealer was selling.

· If the metals dealer will not sell you the least expensive, easiest to sell form of minted coins, rounds or bars, do not buy from them! Examples of sovereign mints include the United States Mint, Royal Canadian Mint, Royal Mint, Austrian Mint, etc. that produce coins like American Eagles, the Canadian Maple Leaf, the British Silver Britannia, etc. You can also buy bars or rounds which do not carry as high a premium over the spot price of the metals as currency coins generally do. But depending on when you buy, a good dealer may even be able to get you a break on the premiums if that is being offered at the time. If the seller instead steers you toward what they call “investment grade” or “premium proof” or “specially minted” metals, and away from standard currency coins, or cheaper rounds or bars, walk away from the deal. If the metals dealer steers you toward one specific metal, and away from others, such as toward silver and away from gold, it is likely the dealer is making a higher commission on selling silver, so they have an incentive to sell it and not sell you gold, or platinum, or any other precious metal. The coins they sell may be specially minted just for that company, limited-edition, and likely will be egregiously over-priced (2.5 or more times spot price is not unusual) precisely for the purpose of creating a closed market (which I will address next). The seller may claim there is a secondary market for their “highly-prized”, “special” coins, such as collectors, coin dealers or online sellers like eBay. But I have not found the coins I bought listed on eBay, or in any other secondary market outside of the metals dealer who sold me the coins. What you want are coins for which the make and quality is standardized, that you can easily compare prices on line, and that any metals dealer will buy back from you. I have heard of customers who realized they got conned, took possession of their “special” coins, and then had difficulty selling them to anyone other than the original dealer, at a price point anywhere near their initial investment.

· Creating a closed market for “specialty” coins is just one aspect of how unscrupulous metals dealers make their money. Every dealer of precious metals charges a premium above the current spot price of the metal itself, and this is generally a small percent above the spot price on that day, not double or more the spot price. Any dealer worth their salt will tell you exactly how much above the spot price what percentage their fees represent included in your purchase price.

An unscrupulous company’s customer agreement may state that the seller is only one potential buyer for your metals at the time you want to liquidate. But what they won’t tell you is they have positioned themselves as the best potential buyer of the over-priced coins they sell to you. If you try to sell your coins to anyone other than the dealer who sold the coins to you, they will likely only offer you spot price for that metal - nowhere near the price the seller would offer you to buy them back, irrespective of how rare and valuable they may tell you they are. I know this because I inquired with other buyers about their purchase price for my coins. And unless and until the spot price of the metal itself substantively exceeds what you paid for the coins originally, you may not be able to recoup even your initial investment by selling your coins to any other metals dealer than the company who sold you the coins.

· When you purchase physical metals through an IRA, the general rule is you cannot take possession of the coins until you close the IRA. I have heard one metals dealer talk about setting up a metals IRA to be able to hold the coins in your possession, though other experts have told me this is at best a legal gray area with strict rules around storage almost no one can comply with. There are reasons metals in an IRA account are routinely held in a depository.

And there are tax implications you will want to investigate before taking possession of the coins or liquidating them. No matter what you paid for them, IRA plan administrators report the current “spot price” of your coins, both on your account summaries and to the IRS when you take possession of or liquidate some or all the metals. In my case, the metals dealer did warn me of this reporting discrepancy in advance of receiving my first account summary (which may be as frequently as quarterly or only just annually) or viewing my account on the IRA administrator’s client portal. But seeing the dollar value of your investment as only a portion of your initial principal can be shocking. Judging from the complaints I saw in this documentary film, and those I read posted to social media sites, many people do not grasp why the difference between the price they paid for specialty coins in their account, and the value assigned to those coins by the IRA administrator is so great, when they first see it in print. Even though I was verbally informed of this discrepancy in advance, I certainly did not recall that conversation as I was staring, dumbstruck, at my first annual account summary wondering how nearly 2/3 of an investment I made less than a year before managed to seemingly evaporate, despite the spot price of the metal itself continuing to rise.

· Buy-back pricing fluctuates daily and can be loaded with hefty fees. To find out what the dealer’s “retail value” and “buy-back value” of the metals in your account are, you may need to specifically request both valuations from the dealer. If you do not specifically ask for a buy-back price, they may only give you the retail price, which could be significantly more than what they will pay to buy-back your coins. Metals prices can fluctuate numerous times daily with the changes in spot price, but it can also change at the dealer’s independent discretion. The difference between retail and buy-back values is characterized as a liquidation fee, and can represent a substantial double-digit percentage less than the retail value they assign to the coins in your account. When you are looking to liquidate, the dealer will likely request that you obtain a count of your coins from the IRA plan administrator (who gets the count of coins from the depository) to do the price calculations.

The unscrupulous metals dealer not only makes money on the front end by selling you over-priced metals, but they may take a significant percentage at the time of liquidation. While they may offer a range of what that percentage is in their customer agreement, they may not necessarily abide by what is printed in their own contracts. In other words, the price at which they are willing to buy back your metals can be completely arbitrary on the part of the dealer. And the language of their contracts protects them in doing so.

When I asked how the company made their money during my initial consultation, I was told by the sales executive that on liquidation the company would take 7% of the value of the metals at the time of sale. Period. But this was the lowest end of the percentage range (7% - 21%) of liquidation fees listed in the customer agreement. However, once I began to request valuations periodically, I was only ever offered a buy-back price of the valuation minus the maximum percentage fee listed in the agreement (21%). While their contracts may specify a range, expect you may be charged the maximum of that range, or even more. When I finally did liquidate my coins, the buy-back price I was offered was more than 24% less than the dealer’s calculated retail value of the coins on that day. This was entirely arbitrary and capricious on the part of the dealer. The price they offered me per silver coin was 13 cents less than what they sold me the coins for three years earlier when the spot price of silver was approximately $8 more than what it was when I purchased them. While this may not be illegal, it is certainly unethical and a very deceptive business practice.

So, given all this, how was I able to recoup my original investment and a small profit?

Remember those “free” bonus coins I mentioned in the first paragraph? At the time of my original purchase the company was offering a time-limited 10% bonus of “free” silver to lure customers into the purchase. If I decided to liquidate the account before holding it for three years (which is specified in the customer agreement) I would only have been offered half of the buy-back valuation for the “bonus silver”. In essence, 10% of my original purchase in “free” coins would have turned into 5% if I cashed out before the completion of the 3-year holding period. If I liquidated after the 3-year period, the buy-back price was assessed at the same value and subject to the same percentage fee as the remainder of my metals – which was an outrageous >24%, nevertheless.

At the time I discovered the situation I was in a year ago, everyone around me who knew of my predicament advised me to get out of this investment. As such, it was a lonely position to be in when I made the choice that the best approach for me was to wait until after the 3-year holding period and until the spot price of silver went up enough to recoup more of my initial investment, and so that the “bonus” silver would be priced at the same rate as the rest of my holdings. I did have to psychologically and emotionally prepare myself to wait an extended period before I could act on it.

Months later, once I was offered a buy-back price I could live with, for the sake of my own peace of mind, I did not calculate the lost opportunity costs, which would only have caused me more distress than I had already experienced over the entire matter. I believed my best choice was to convert my holdings to cash at a time when I could get a decent return on my investment, before the metal’s spot price went up significantly and I could use the funds to purchase new metals at a more reasonable price from another, reputable dealer. I used the interim period to do my research and wisely choose that reputable dealer.

Looking back I could have saved myself a lot of angst, worry and sleepless nights had I known what I know now prior to embarking on this journey. But I choose to view all of it as an opportunity to “live and learn”, and to help others by sharing my story, which was, I believe, God’s will for me. For anyone wrestling with a similar experience to my own, please know that there are honest, experienced, compassionate, professional experts who can assist you to resolve the situation. And that knowledge is nothing short of priceless.

Additionally, you do have recourse if you believe you have been defrauded by one of these precious metals companies. You can report it to the Securities and Exchange Commission online at www.sec.gov or www.sec.gov/complaint/select.shtml, or by phone at 1-800-SEC-0330. You can also report it to other agencies like the FBI, online at https://tips.fbi.gov/home or by phone at 1-800-CALL-FBI (1-800-225-5324), or to the U.S. Attorney’s office in your state.

If you decide to report it, do save every correspondence between yourself and the company – in email, text or hard copy. Use them to document the facts, dates, and specifics of your complaint. I know what it is like to feel that you have been defrauded, but keeping your emotions out of any document you are submitting to a legal authority is a wiser course of action than using it as a

vehicle to vent your feelings. Write them in a diary or journal instead. Or like me, you can write about what happened to you and share it with others who may have experienced a similar fate – I assure you that can be very cathartic. I can also assure you that you will not always feel the way you do now, and later you may wish you hadn’t committed such strong sentiments to writing in a legal document.

Whatever path you chose to resolve your situation, my wish for you is that the information I have shared is useful, assists you to take your power back at a time when you may feel victimized, and that you will achieve a satisfactory outcome to your situation. Stay optimistic!