Investments in commodities and precious metals can be made indirectly through stocks, mutual funds, ETFs, or derivatives or people can directly buy or sell the commodity or precious metal itself. Commodities may include crude oil, coal, sugar, coffee beans, wheat and other goods. Precious metals are gold, silver or platinum. Interest in precious metals has increased in recent years as the price of gold and silver has reached all-time highs. These commodities and gold are bought by investors primarily to hedge against inflation, economic uncertainty, and foreign exchange risk, in the belief that these metals, particularly gold, are repositories of absolute value, whereas paper currencies and securities dominated in such currencies have relative value and are vulnerable to loss. The high value of gold and commodities lead to easy money for scammers. It attracts more vigorously of fraudulent activity. There are many types of common tricks that are actually uncommon to ordinary people.
• Cash for gold – With the rise in the value of gold due to the financial crisis, there has been a surge in companies that will buy personal gold in exchange for cash, or sell investments in gold bullion and coins. Several of these have prolific marketing plans and high value spokesmen, such as prior vice presidents. Many of these companies are under investigation for a variety of securities fraud claims, as well as laundering money for terrorist organizations. Also given that ownership is often not verified, many companies are considered to be receiving stolen property, and multiple laws are under consideration on methods to curtail this.
• High-yield investment programs – HYIPs are usually just pyramid schemes dressed up with no real value underneath. Using gold in their prospectus makes them seem more solid and trustworthy.