Last Updated: September 15, 2025
Before investing in precious metals, you should consider carefully the risks described below. Gold, silver and other precious metals are highly volatile. Past performance is not a good predictor of future returns. Past performance is not a guarantee of future results.
An investment in precious metals is speculative and is not intended as a complete investment program. An investment in precious metals should be considered only by persons financially able to maintain their investment and who can bear the risk of loss associated with an investment in precious metals.
The precious metals market is volatile. You could lose money on your investment , and the market for precious metals is unpredictable. This creates the potential for losses, regardless of whether you hold precious metals for a short-, mid- or long-term period. The prices of gold, silver, and other precious metals have fluctuated widely over the past several years. If precious metals markets continue to be characterized by the wide fluctuations that they have shown in the past, their prices will change widely and unpredictably. This exposes your investment in precious metals to potential losses if you need to sell your precious metals at a time when the price is lower than it was when you made your investment in those precious metals. Even if you can hold precious metals for the mid- or long-term, you may never realize a profit because precious metals markets have experienced extended periods of flat and/or declining prices.
Certain risks affecting precious metals prices.
Several factors may have the effect of causing a decline in precious metals prices. Among them:
Clients should be aware that while precious metals can be used to preserve wealth by investors around the world, there is no assurance that precious metals will maintain long-term value in terms of future purchasing power.
Timing the precious metals markets; ratio trade.
Certain clients will enter and exit the precious metals markets to take a profit or avoid losses. Specifically, some clients may engage in a "ratio trade" when the prices of gold and silver, compared to each other, diverge from their historical averages.
The profitability of a ratio trade depends on the relative price movements of gold and silver. Even if both gold and silver appreciate, the investor will effectively realize a profit only if gold appreciates more than silver. Conversely, if silver appreciates more than gold, or if gold depreciates while silver remains stable or appreciates, the investor will incur a greater loss relative to having maintained their original silver holdings. The investor must acknowledge that the future relative price movements of gold and silver are inherently uncertain and subject to a multitude of market forces, including but not limited to industrial demand, investment sentiment, geopolitical events, and currency fluctuations, which may disproportionately affect one metal versus the other.
The transaction costs associated with any trading, including but not limited to the 8% fee charged by KEPM on the purchase of precious metals, markups charged by precious metals sellers, storage and transportation fees, and liquidation fees, will reduce the potential profitability of the trade. These costs must be factored into a client's analysis to determine whether the potential gains from the ratio trade outweigh the associated expenses. The investor should carefully consider the break-even point required to offset these transaction costs and realize a net profit, if that is the investor's goal.
KEPM does not provide advice.
KEPM's business is acting as a broker to facilitate purchases and sales of precious metals for its clients. Any information provided by KEPM about its services is general in nature and provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. This includes general information provided by KEPM (including by Kirk Elliott) about precious metals, precious metals markets, buying and selling precious metals and about any potential opportunities (including any ratio trade opportunities). The information contained in or provided from or through KEPM's services is not intended to be, does not constitute, and should not be relied on as financial advice, investment, trading, tax, legal, or any other advice, nor does any information provided by its services constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. The information on KEPM's services is not specific to you or to anyone else. You should not make any decision -- financial, investment, trading, tax, legal, political, or otherwise -- based on any of the information presented by KEPM's services without undertaking independent due diligence and consulting with a financial advisor or other qualified professional. You alone assume the sole responsibility of evaluating the risks and merits associated with the use of any information or other content on KEPM's services or in placing orders with KEPM.
The costs inherent in buying or selling precious metals may detract significantly from investment results.
Buying or selling precious metals involves fees. When buying or selling precious metals through a broker or other intermediary, you will likely incur a brokerage commission, or other charges imposed by that broker or intermediary. In addition, you may incur the cost of the "spread," that is, the difference between what investors or market makers are willing to pay for the precious metals (the "bid" price) and the price at which they are willing to sell precious metals (the "ask" price). Because of the costs inherent in buying or selling precious metals, frequent trading may detract significantly from investment results, and an investment in precious metals may not be advisable for investors who anticipate regularly making small investments.
Holding precious metals involves various operational risks.
Holding precious metals can expose you to various operational risks, including human error, information technology failures and failure to comply with formal procedures intended to mitigate these risks, and is particularly dependent on electronic means of communicating, record-keeping and otherwise conducting business. Although it is generally expected that any service providers and agents holding or servicing your precious metals investment will have disaster recovery or similar programs or safeguards in place to mitigate the effect of such unforeseen circumstances and events, there can be no assurance that these safeguards are in place for all parties whose activities may affect your precious metals holdings, or that these safeguards, even if implemented, will be successful in preventing losses associated with such unforeseen circumstances and events.
Any depository used to custody precious metals depends upon information technology infrastructure, including network, hardware and software systems. A cybersecurity incident, or a failure to protect their computer systems, networks and information against cybersecurity threats, could result in loss or unintended disclosure of information or loss or theft of assets. Despite implementation of network and other cybersecurity measures, these security measures may not be adequate to protect against all cybersecurity threats.
Precious metals can be lost or damaged in circumstances in which you may not be able to recover the corresponding loss.
KEPM uses depositories, which are responsible for the safekeeping of bullion, and which also facilitate transfers of bullion into and out of the depository. KEPM depends on the depositories to comply with best practices and applicable regulation, and to implement satisfactory internal controls for its bullion custody operations. Depositories are responsible for loss or damage to bullion only under limited circumstances and often provide indemnity from losses in a limited manner. KEPM does not control any depository and cannot guarantee any depository will act in accordance with KEPM's instructions or avoid any physical loss, destruction, or damage to bullion. Depositories often have no obligation to replace any bullion lost under circumstances for which they are liable.
Lack of regulation.
KEPM does not trade in or offer precious metals futures contracts. KEPM provides access to physical bullion. Because KEPM does not trade in futures contracts, it is not regulated by the CFTC under the Commodity Exchange Act as a "commodity pool," or "commodity trading advisor." In addition, investors in bullion do not benefit from the protections afforded to investors in futures contracts on regulated futures exchanges.
