Overview
The victim expects to profit from investment or trading of commodities, or by using a specific commodity trading app or platform.
How It Works
Commodities are valuable physical resources such as gold, silver, oil, and so on.
Commodities trading may appeal to certain victims more than other investments, such as securities or cryptocurrency, that are harder to understand or which do not exist in the real world as physical entities.
"Spot gold" trading (pricing gold at this exact moment in time, as opposed to trading on its future price) is a common way scammers will operate.
Scammers may lure victims into using fraudulent trading platforms/apps or may promote specific new commodities trading strategies with promises of high returns.
Like 1.1 Securities Investment Scams and 1.3.1 Cryptocurrency Investment Scams, many commodities investment scams rely on fake apps and scammer-controlled web infrastructure (see Fraudulent Platforms) that makes it appear to the victim as if they have made a profit on an investment, when they have in fact only sent money to the scammer.
Like other investment scams, commodities investment scams also have a potential for very high dollar losses.
Like other investment scams, commodities investment scams require significant buy-in capital, so are sometimes targeted at older victims with more net worth. Scammers will encourage victims to liquidate retirement savings for the scam.
Related Articles
Beware of Precious Metal Scams, DC Department of Insurance, Securities and Banking (DISB)
Caution on Precious Metals Investment Scams, Kohn, Kohn & Colapinto law firm
Gold Futures vs. Spot Gold: What’s the Difference?, NinjaTrader
Related Scams
1.3.1 Cryptocurrency Investment Scam: Both 1.2 and 1.3.1 scams often use fraudulent platforms to make victims think they are earning profits. Both also have similar targeting strategies and psychological indicators. Both can be carried out as "pig butchering" scams. Some victims may feel differently about investing in gold versus cryptocurrency.
8.1 Romance/Sweetheart Scam: Some commodities investment scams resemble romance scams because both may start with the angle of romance or friendship. It can be confusing to keep these separate though, and the media coverage does not help as it constantly confuses the two. If a victim loses money investing in commodities on the advice of a fake romantic partner, what kind of scam is it? In differentiating these, the question to ask is about the nature of the deception at the time of the loss.
If the victim lost money because they were deceived into thinking a bad commodity investment was actually a good investment, then it's a commodities investment scam - regardless of how they came to believe it was a good investment (e.g. trusting a fake romantic partner).
If the victim lost money because they were trying to show a fake romantic partner that they loved them, then it's a romance scam, regardless of whether they gave the scammer money in gift cards, gold, crypto, or some other method of payment.
Related Crime Schemes
A particular instance of this scam may embed one or more of these related schemes.
Fraudulent Platform: Any scheme that relies on custom built software that assists the crime. Includes fraudulent trading platforms, fraudulent clickworking platforms, and the like.
Ponzi: A ponzi scheme is a type of investment fraud in which the scammer (or "Ponzi") pays "dividends" to initial investors using the funds of subsequent investors.
Pump-and-Dump: A pump and dump scheme is a type of investment fraud in which promoters falsely hype up a new or obscure stock so that new investors will rush to buy it, thus inflating the price (the "pump"), at which point the scammer sells their portion of the stock at these high prices (the "dump"), leaving the other investors with a worthless stock.
Pyramid scheme: A pyramid scheme describes a scam or fraud in which participants only make money by recruiting new participants into the program.
Victim Targeting Context
The scammer may use one or more of the following techniques to reach the victim.
Advertising: The scammer uses advertising to passively reach the victim.
Spray and Pray / Scattered: The scammer approaches many victims at once such as through bulk email or SMS.
Targeted Conversational Approach: The scammer approaches the victim through targeted, topical online conversation.
Social Engineering: Psychological Manipulations
The scammer may use one or more of these psychological techniques to accomplish the scam.
Accident: The scammer contacts the victim under the guise of an accident (such as a wrong number), so as to lower suspicion.
Boost of Trust: The scammer employs an initial boost of trust technique to increase trust with the victim. An example is letting the victim withdraw some of their earnings in order to show that the scheme is legitimate.
Celebrity: The scammer claims a celebrity endorsement in order to increase trust or interest from the victim.
Codes or Jargon: The scammer will often use codes or technical jargon about finance or cryptocurrency to confuse the victim or to add legitimacy to the scam.
Complexity: The scammer has a complicated story to explain the scam, or leverages scientific/economic complexity in order to confuse the victim.
Easy Money: The scammer promises easy money or makes appeals designed to leverage victim's greed.
Gradual Commitment: The scammer asks the victim to make a small commitment at first, but these escalate over time.
Not a scam: The scammer goes to great lengths to convince the victim the scheme is not a scam.
Peer Involvement: The scammer uses the victim's peers to encourage the victim to engage in the scam, claiming that "others are doing it" or suggesting that the victim will miss out. Often the peers are also scammers.
Romance: The scammer promises love or friendship to victim.
Secret Knowledge: The scammer may imply that the investment scheme relies on secret or hidden knowledge.
Sunk Cost Fallacy: The scammer concocts a scenario where the victim will lose everything they've earned so far if they don't keep going with the scam, claims "you've already invested and you'll lose it all".
Trust Building & Legitimacy: The scammer builds legitimacy or trust over time.
Social Engineering: Impersonation Techniques
The scammer may impersonate one or more of the following groups as part of the scam.
Banking / Finance: The scammer impersonates a banking official or financial institution.
Business or NonProfit: The scammer impersonates a business or nonprofit.
Catfishing: The scammer creates a fictitious online profile or persona.
Celebrity: The scammer impersonates a celebrity.