Buying Gold and Silver: The New Advertising Rules Explained

Any ad that presents gold or silver as an investment has to make clear that buying physical precious metals for investment is unregulated. It has to be easy to spot. A line of small print at the bottom of a web page isn't enough.

When you save with a bank or invest through a regulated firm, you get safety nets. Buying gold and silver bars or coins as an investment doesn't come with them:

• The Financial Services Compensation Scheme (FSCS) won't pay you back if a gold dealer goes out of business.
• The Financial Ombudsman Service can't look into complaints about it.
• Gold dealers don't need FCA permission to sell you bullion, and the FCA doesn't supervise them.

You're still a consumer, so normal consumer law still applies. What you buy must be as described and of satisfactory quality. You can complain to the ASA about a misleading ad, and the Citizens Advice consumer helpline can pass complaints about a business on to Trading Standards.

Any ad that presents precious metals as an investment must make clear that their value can fall as well as rise. The only exception is where a return is guaranteed, and nobody can guarantee the price of gold or silver.

Gold and silver prices change every minute the markets are open. They can fall sharply, and they can stay low for a long time. Whatever you pay today, there's no promise you'll get it back.

There's also a gap between buying and selling prices. Dealers sell above the market price and buy back below it, so the market price usually needs to rise before you'd get back what you paid.

Say you pay £1,000 for a gold coin, and soon after the gold price drops by 10%. The coin is now worth less, and any dealer buying it back will also offer a little under the market price. You could get back noticeably less than £1,000.

If an ad talks about how gold or silver has done in the past, it must also make clear that this doesn't tell you what will happen next.

A chart that climbs from bottom left to top right is persuasive, but it only shows what has already happened. In one of the cases behind these rules, an ad showed 30 years of rising gold prices and said they were "still climbing". The ASA said that suggested gold would keep rising, which nobody can know.

Gold has had long stretches where the price fell or barely moved, some lasting many years. If you'd bought at the top of one of those, you could have waited a long time just to break even.

Two things here. If an ad uses past figures, they must be representative, meaning a fair picture rather than the best-looking moment picked out. And any factual claim in an ad has to be backed by evidence the dealer holds before the ad goes out.

It's easy to make returns look bigger by choosing the right start and end dates. Pick a low point to start from and a high point to finish, and almost anything looks like a great buy. The rules say dealers can't do that.

An ad counts as an investment ad if it suggests gold or silver will make you money or protect your money, even if it never uses the word "investment". In the cases behind these rules, the ASA treated all of these as investment ads:

• Prices rising
• "Proven long-term growth"
• "Protect your wealth"
• "Hedge against inflation"
• "Investment-grade" jewellery
• "Wearable investment"
• Gold prizes described as investments
• Free "investor guides"

If an ad hints that gold or silver will make or keep you money, the warnings should be there. If they aren't, be wary.

It also explains why you won't see the warning on every ad. When an ad simply sells a coin as a Christmas present or a collector's piece, and says nothing about money, it isn't an investment ad and doesn't need it.

The two risk warnings (the value can fall, and past performance is no guide) must appear in the ad itself. They can't first turn up after you click, on the website, or in the terms and conditions.

The "unregulated" message should also be in the ad. The only exception is an ad with genuinely no room for it, such as some small social media ads. Then it can go on the web page the ad links to, but it has to be easy to see there too, not tucked away at the bottom.

You should see the warnings before you click, not after you've already made up your mind. If an ad is all about gold going up and the warnings only appear later, that ad isn't following the rules.