The Netherlands Authority for the Financial Markets (AFM) observes that the offer of precious metals (usually gold and/or silver) has increased considerably. It usually concerns an investment if precious metal is stored by the seller or by a third party following the purchase. Providers of investment are required to hold a licence from the AFM or be exempted from the licence requirement.
The AFM recommends that anyone who wants to invest in precious metals properly assesses the licence requirement of the party with which they will do business, but also the related economic risks. Investing in precious metals remains an investment whereby a return cannot be guaranteed. The price of gold can drop in better economic times.
Specific risks concerning the sale via web shops
The AFM observes that precious metals are often sold via web shops. Sale via the Internet, whereby the purchased product is managed by a third party immediately after sale, entails special risks. It is more difficult for investors to check whether the product ordered has actually been delivered.
If investments are offered via a web shop and there are no options to contact the provider, or this is only possible via email, the provider may be mala fide. An investor has to be extra vigilant if a provider of precious metals has been in business for only a short period of time, does not hold an AFM licence or makes an offer that seems to be too good to be true (deviating low price setting and/or the promise of very high returns).
When do precious metals become an investment?
The AFM considers precious metals to be an investment if the investor does not manage the precious metal personally. The provider may store the precious metal for example in a safe or have it stored by a third party. The precious metal is not handed over to the investor. There are also several other criteria in order to determine whether a precious metal can be considered to be an investment. Consumers can read more about this on the AFM website.
Investments may be offered to investors if the AFM has granted a licence or if an exemption does not apply. Licences that have been granted are listed in the AFM register. The AFM emphasises that a licence does not remove the risks an investor runs when making an investment. Providers of an investment may also be exempt from the licence requirement, for example if the investment offered involves an amount in excess of €100,000. In that case the provider does not come under AFM supervision.
The AFM is committed to promoting fair and transparent financial markets.
As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.