Gold has proven to be a source of steady and stable growth compared to the more volatile stock market, which is why more and more retirement investors are turning to gold IRAs. This allows them to diversify their traditional IRA portfolios and hedge against market volatility and inflation. Precious metals IRAs could be a viable option for some investors concerned about inflation and market volatility. However, they are more expensive than some other investment options and may carry a higher risk than traditional IRAs.
Augusta Precious Metals — Best Orion Metal Exchange Overall — Best for Low Fees Birch Gold Group — Best for Fear Transparency Augusta Precious Metals has plenty of customer information on its website. Ironically, one of the features that make this company the best of our favorites is their video blog series with reasons why you shouldn’t own gold. Many gold IRA companies use scare tactics or exploit investors’ fears of a (highly unlikely) collapse of the entire financial system and a full-scale US collapse. In general, an IRA investment in a metal or coin is considered an acquisition of a collectible item.
Therefore, the transaction is marked as a taxable distribution by the IRA, followed by a purchase of the metal or coin by the IRA owner (you). In fact, this general rule prohibits IRAs from investing in precious metals or coins made from precious metals. This specialized IRA can help diversify a portfolio, as precious metals, including gold, are often seen as an investment to combat inflation. For example, you could have an IRA that is invested in precious metals and another IRA that invests in liquid assets such as publicly traded stocks and mutual funds.
Many of these companies allow investors to buy precious metals, which include silver, platinum, and palladium in their IRAs in addition to gold. Given today’s stock market valuations and historically low interest rates for fixed-income investments, some IRA owners may be interested in switching some funds from low-risk stocks and securities (such as government bonds and money market funds) to precious metals. According to Drew Feutz, certified financial planner (CFP) at Market Street Wealth Management Advisors, perhaps the most important thing is that precious metal IRAs are more expensive than other investment options. Precious metal IRAs are generally only useful if you have a strong portfolio and want to diversify your investments by setting aside a small amount for physical gold, silver, platinum, or palladium.
Self-managed IRA custodian banks allow investors to invest in alternative assets such as precious metals and real estate. Using an IRA to invest in precious metals investments becomes particularly problematic if you’re at or near retirement age. However, there are specially developed precious metal IRAs that allow you to invest in gold, palladium, silver, and other valuable metals for retirement. If you want easier exposure to these investments without having to open a specific type of IRA or find custodians, dealers, and depositories, consider investing in securities such as exchange traded funds (ETFs) or mutual funds that track precious metal indices or prices.
Precious metals invested in a self-governing IRA must be stored in an authorized depository such as the Delaware Depository. For example, you can’t store precious metals that you’ve invested in your IRA in your own home under IRS rules. With self-directed IRAs, you can invest in a wide variety of unconventional assets, including precious metals, real estate, and even cryptocurrencies. Thankfully, the IRS now states that IRAs can buy shares in precious metals ETFs classified as grantor investment trusts without such problems.