The Commodities Futures Trading Commission (CFTC) has issued a warning to investors regarding the potential risks associated with artificial intelligence (AI)-created trading algorithms in the cryptocurrency market. The commission advises investors to exercise caution and conduct thorough background research on companies or individuals offering such algorithms.
Risks of AI-Created Trading Algorithms
The CFTC has identified crypto-asset trading schemes, trade signal strategies, and automated trading algorithms as examples of AI-created software that scammers are utilizing to target unsuspecting investors. These algorithms often promise unrealistic returns or claim to have a 100% success rate, which should raise red flags for potential investors.
Concerns over Scammers Exploiting the AI Hype
The CFTC is particularly concerned about the increasing number of cases where criminals exploit the hype surrounding AI to defraud individuals. They highlight the role of social media platforms and influencers in spreading false information about these AI-created trading algorithms. Unlike traditional media or advertising firms, influencers and social media platforms are not subject to the same marketing or advertisement regulations.
Steps Investors Should Take
The CFTC advises investors to take several precautions before committing their funds to AI-based investing or trading bots. These steps include:
- Conducting thorough background research on the company or trader offering the AI-created algorithms.
- Examining the trading history of the company selling the algorithms.
- Seeking a second opinion from experts in the field.
- Understanding the risks involved in using AI-created trading algorithms.
OCEO Director Melanie Devoe explains that the purpose of this advisory is to caution investors about the potential risks and dangers associated with the hype surrounding AI. It serves as a reminder that AI, like any other tool or technology, cannot accurately predict the future.
Avoiding Investment Scams
In addition to warning investors about investment schemes that promise above-average or guaranteed returns, the CFTC advisory aims to help investors identify and avoid potential scams. It emphasizes the importance of skepticism and critical thinking when evaluating investment opportunities.
Ultimately, investors should be aware that no algorithm or technology, including AI, can guarantee profitable outcomes in the cryptocurrency market. It is essential to exercise due diligence and seek reliable sources of information before making investment decisions.
What are your thoughts on the CFTC's warning? Share your opinions in the comments below.
Frequently Asked Questions
Should you Invest In Gold For Retirement?
It depends on how much you have saved and if gold was available at the time you started saving. You can invest in both options if you aren't sure which option is best for you.
Gold offers potential returns and is therefore a safe investment. It's a great investment for retirees.
Most investments have fixed returns, but gold's volatility is what makes it unique. Its value fluctuates over time.
However, this does not mean that gold should be avoided. Instead, it just means you should factor the fluctuations into your overall portfolio.
Another benefit to gold? It's a tangible asset. Gold is much easier to store than bonds and stocks. It can also be transported.
As long as you keep your gold in a secure location, you can always access it. Plus, there are no storage fees associated with holding physical gold.
Investing in gold can help protect against inflation. You can hedge against rising costs by investing in gold, which tends to rise alongside other commodities.
Additionally, it will be a benefit to have some of your savings invested into something that won't lose value. Gold tends to rise when the stock markets fall.
Another advantage to investing in gold is the ability to sell it whenever you wish. You can easily liquidate your investment, just as with stocks. You don't even need to wait for your retirement.
If you do decide to invest in gold, make sure to diversify your holdings. Don't put all of your eggs in one basket.
You shouldn't buy too little at once. Start by purchasing a few ounces. Add more as you're able.
It's not about getting rich fast. It is to create enough wealth that you no longer have to depend on Social Security.
While gold may not be the best investment, it can be a great addition to any retirement plan.
Can I buy gold with my self-directed IRA?
Your self-directed IRA can be used to purchase gold, but first you need to open an account with a brokerage firm such as TD Ameritrade. If you have an existing retirement account, you can transfer funds to another one.
The IRS allows individuals to contribute as high as $5,500 ($6,500 if they are married and jointly) to a traditional IRA. Individuals are allowed to contribute $1,000 each ($2,000 if married or filing jointly) to a Roth IRA.
If you do decide to invest in gold, you'll want to consider purchasing physical bullion rather than investing in futures contracts. Futures contract are financial instruments that depend on the gold price. These contracts allow you to speculate on future gold prices without actually owning it. Physical bullion, however, is real gold and silver bars that you can hold in your hand.
What Should Your IRA Include in Precious Metals?
You should remember that precious metals are not only for the wealthy. You don't need to be rich to make an investment in precious metals. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You might think about buying physical coins such a bullion bar or round. It is possible to also purchase shares in companies that make precious metals. Or, you might want to take advantage of an IRA rollover program offered by your retirement plan provider.
You'll still get the benefit of precious metals no matter which country you live in. These metals are not stocks, but they can still provide long-term growth.
And unlike traditional investments, they tend to increase in value over time. This means that if you decide on selling your investment later, you'll likely get more profit than you would with traditional investing.
Statistics
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
External Links
cftc.gov
investopedia.com
bbb.org
law.cornell.edu
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement funds
How To
Gold IRAs: A Growing Trend
Investors are increasingly turning to gold IRAs as a way to diversify and protect their portfolios from inflation.
Owners of the gold IRA can use it to invest in physical bars and bullion gold. It can be used for tax-free growth and provides an alternative investment option for those concerned about stocks and bonds.
Investors can manage their assets with a gold IRA without worrying about market volatility. Investors can protect themselves from inflation and other possible problems by using the gold IRA.
Investors also benefit from physical gold's unique properties, such as durability and portability.
Additionally, the gold IRA has many benefits. It allows you to quickly transfer your gold ownership to your heirs. The IRS doesn't consider gold a commodity or currency.
Investors looking for financial security are increasingly turning to the gold IRA.
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By: Terence Zimwara
Title: The CFTC Warns Investors About Dubious AI-Created Trading Algorithms
Sourced From: news.bitcoin.com/ai-hype-cftc-urges-investors-to-be-wary-of-ai-created-crypto-asset-arbitrage-algorithms/
Published Date: Sun, 28 Jan 2024 08:30:23 +0000
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