A Practical Due-Diligence Checklist Before Buying Precious Metals

Draw the path of cash, metal, legal rights and evidence before reading the pitch

Begin with one sentence: who receives how much money, in exchange for what, when delivery occurs and which legal interest you receive. Immediate delivery of a bar, seller-arranged third-party vaulting, an allocated or unallocated balance, a listed security, an exchange future and an over-the-counter contract have different cash and claim paths. If the seller, payment processor, custodian, insurer, auditor and buyback provider are separate companies, record each legal name and responsibility.

Obtain documents during due diligence, not after payment: quotation, sale or account agreement, custody terms, complete fee schedule, risk disclosure, cancellation and repurchase policy, privacy notice, complaint route and applicable registration details. Web pages change, so preserve URLs, retrieval time, PDFs and dated written answers. If a representative says “always repurchased,” “fully segregated” or “completely insured,” ask for the clause, covered party, limit and exception that supports each word.

Do not fill a missing field with optimism. “A secure overseas vault,” “the international price” and “comprehensive insurance” do not identify a legal entity, location, timestamp, formula or policy coverage. Record each as unresolved before sending funds. A small trial still exposes identity and payment information, so do not send identification scans, card images or banking credentials merely to learn who the contracting party is. Confirm the company and privacy controls first.

1. 01Preserve the pitch

   Save advertisement, URL, time, representative, telephone, quote and promise.

2. 02Separate the parties

   Identify the seller, processor, custodian, insurer, auditor and buyer.

3. 03Summarise the right

   State whether it is title, a contractual claim, security or derivative.

4. 04Question the blanks

   Obtain pricing, fees, segregation, withdrawal, insolvency and complaints in writing.

5. 05Verify independently

   Navigate to public records yourself instead of following the promoter’s link.

Match the licence to the legal person, activity and current status

Match the website name to the contracting legal entity, company number, registered and operating addresses, controllers, telephone, email domain and beneficiary bank account. Fraudsters can copy a real licence number, use a near-identical company name or impersonate an employee. Do not use the link or telephone supplied in the pitch to resolve the check. Navigate to the public register independently and obtain contact details from that source. Incorporation proves existence, not authority to provide a financial service or quality of merchandise.

Required registration depends on country, customer residence, solicitation method, product and activity. In Japan, check the Financial Services Agency lists of licensed or registered businesses and its warnings about unregistered operators, then determine whether the category covers the proposed service. For US commodity derivatives, the CFTC’s registration-check guidance and NFA BASIC provide status, affiliation and regulatory-history information. An ordinary full-paid retail bullion sale may not require the same financial registration. Avoid both shortcuts: “unregistered means automatically illegal” and “some registration means every offered activity is safe.”

Registration is a gate, not a warranty. Misconduct, financial deterioration, cyber compromise, subcontractor loss and product unsuitability can occur after authorisation. A warning list captures entities known to an authority at a point in time; absence is not clearance. Save the date, licence class, permitted activity, customer-asset rules, complaint or compensation route and disciplinary history. Recheck immediately before contracting, especially if the beneficiary, domain or representative changes.

Applicable law and permission requirements are fact-specific. Ask the regulator or an authorised legal professional where the classification is uncertain.

Calculate the same-day round trip before modelling appreciation

For the same timestamp, metal, fineness, weight and payment method, obtain both the dealer’s sale price and buyback bid. The difference divided by the purchase outlay gives a simple view of the immediate round-trip hurdle. Add commission, fabrication, delivery, insurance, custody, assay, bank transfer, foreign exchange and early-exit charges. “No commission” can coexist with a large embedded markup and buyback discount. Ask how the provider earns its money and reconcile the answer to the two executable quotes.

Identify the price formula, not only the name of a reference. Which benchmark or exchange price, timestamp, currency and weight unit applies? How are foreign exchange and retail premium added? May the provider suspend or change quotations during volatility? A collectible or “rare” coin needs its bullion value separated from numismatic premium. Obtain independent bids for the exact item. A story about future scarcity is not an enforceable exit price, and an appraisal is not necessarily a cash offer.

A buyback promise needs price, quantity, period, condition, identity checks, assay, payment timing and suspension terms. “We always buy” does not say at what discount. If the original dealer is the only practical exit, credit and liquidity are concentrated. Check whether unrelated dealers accept the product, what happens if packaging or documentation is missing, and whether an executor or heir can sell. Preserve the current policy while recognising that it can change.

Break “vaulted and insured” into ownership, segregation, bar evidence and coverage

The contract should state when title passes, which metal is allocated to the customer and whether the seller or custodian may pledge, lend, exchange or set it off. An account statement showing “100 grams of gold” can represent identified property or merely a contractual claim for metal. Check the mapping between customer ID and bar serial, refiner, weight and fineness, its update frequency and independent reconciliation. Ask which document would prove title if the seller failed tomorrow.

Verify custodian legal name, country and city, facility type, subcustodians, access controls, inventory reconciliation, audit frequency and auditor. An audit report’s value depends on scope: did it cover total ounces, selected bars, customer allocations, authenticity, every site and the whole period? A seller-generated balance certificate, a custodian’s aggregate confirmation and an independent customer-level bar reconciliation provide different evidence. Read the assurance conclusion and limitations.

For insurance, identify policyholder, insured party, insurable interest, covered event, valuation method, per-event and annual limits, exclusions, deductible, territory, transit cover, employee dishonesty, cyber-authorised transfer, force majeure and who may make a claim. Compare total customer holdings with available limits where disclosed. If the insurer and policy number cannot be provided, request an independently verifiable coverage summary and broker contact. Price depreciation is normally a market loss, not an insured casualty.

Check product quality separately from mine-to-refinery due diligence

For the item, verify refiner or mint, weight, fineness, dimensions, serial where applicable, evidence, seal and assay method. An LBMA Good Delivery List or exchange-approved brand is useful for the specifications and accreditation of a refiner in a particular market. It does not automatically authenticate every secondary-market item, validate a retail website using its logo or prove that a custody balance exists. Navigate to the official list, match the exact brand and status, and consider the production date.

For responsible sourcing, look beyond whether every mine of origin can be named. Review the risk-based policy and controls for supplier due diligence, sanctions, money laundering, conflict financing, human rights, bribery, environmental impacts, artisanal mining and remediation. The OECD Due Diligence Guidance provides a government-backed framework across mineral supply chains. The LBMA programme applies responsible-sourcing and independent-assurance requirements to Good Delivery refiners. These frameworks concern processes and risk response, not a claim that harm can never occur.

Certification is not absolute protection. Read the audit period, entities and sites covered, assurance level, exclusions, non-conformances, remediation and latest version. Recycled material can support circularity, but “recycled” does not by itself resolve theft, cash purchases, mixing or processor controls. If the seller cannot provide sourcing evidence, record the ethical claim as unverified rather than allowing a logo or broad policy statement to substitute for product and supplier records.

Leave a proposal that creates urgency, isolation and irreversible payment

Warnings highlighted by the CFTC and other authorities include unsolicited calls, emails or social messages; claims of government, celebrity or major-company affiliation; certain gains from public news; limited secret inventory; “wholesale” access; expensive free gifts; extreme markups; and an agreement that does not identify where metal is held. A promise to double, never lose or expire today is not research. It is a reason to end the contact and verify independently.

Refuse payment to a person or unrelated company, a last-minute beneficiary change, crypto, gift card or cash-only demand, split transfers, or an extra tax, bond, verification or release fee required to withdraw. A balance and profit on a screen are not evidence of withdrawal. Disconnect if asked to install remote-control software, ignore a bank warning, misstate the transfer purpose, disclose a one-time password or provide unnecessary identity data. A legitimate urgency does not require bypassing security controls.

If loss or compromise is suspected, stop additional payments, preserve advertisements, chats, emails, calls, accounts, wallet addresses, transaction IDs, contracts and screenshots, and contact the bank or payment provider immediately. Report to police, consumer-protection channels and the relevant regulator. Be alert to recovery fraud that promises to retrieve funds for an advance fee. Change passwords, enable multi-factor authentication, inspect devices and email-forwarding rules, and consider credit-file protections.

In an active incident, protect funds and accounts first and follow current instructions from the bank and public authorities.

Do not let borrowing, margin or a price-difference contract hide behind “physical”

Separate a full-paid purchase that transfers title and delivery from a transaction using a small deposit to obtain a much larger price exposure. Even if described as “physical metal in storage” or an instalment plan, borrowing from the provider, settling only a price difference, closing through an offset, posting additional margin or facing forced liquidation changes the economic substance and may change the applicable regulation. Read what must happen under the contract, not the product nickname.

Leverage magnifies a metal move relative to deposited cash and can create rapid loss, additional-funding demands, gap slippage and forced close-out. Customer protections and whether loss can exceed the initial amount vary by product and jurisdiction. This article does not duplicate CFD pricing, margin, overnight financing or rollover mechanics. Use the dedicated CFD material and the provider’s current risk disclosure. Evidence about a vault or bar must never be repurposed as proof that a separate derivative is low risk.

The SG Group Financial Templates Hub can organise entity, permission, rights, custody, insurance, pricing, buyback and red-flag evidence. Only when a leveraged product is under consideration should verified terms be entered in the Trade Cost Calculator. Its output is not a safety certificate, provider investigation, contract interpretation, live quote or trading recommendation. If descriptions conflict, do not send money; ask the regulator or an appropriately authorised professional.

1. Classify the contract as full-paid title transfer or one involving credit, margin or price-difference settlement.
2. Check the required entity and product permission, customer-asset rules and possible loss.
3. Document price reference, forced close-out, additional funds, fees and withdrawal conditions.
4. Do not treat physical custody or insurance evidence as protection for a leveraged contract.
5. Stop and seek independent help after any unexplained term, pressure or beneficiary change.