A Gold IRA often comes with higher fees than a traditional IRA or Roth IRA, which invests exclusively in stocks, bonds, and mutual funds. Precious metal IRAs could be a viable option for some investors who are concerned about inflation and market volatility. However, they are more expensive than some other investment options and may pose a higher risk than more traditional IRAs. When you think of the world’s obsession with gold, it’s easy to get caught up in adventures and mysteries like panning for gold during the gold rush, pirate ships, and treasure maps.
Because they involve buying and storing valuable physical metals, there are a few additional things you need to consider when thinking about precious metal IRAs. Unless you want to get into jewelry making, investing your hard-earned money in precious metals such as gold, silver, and platinum isn’t the best use of your money. The custodian is an IRS-approved financial institution (bank, trust company, brokerage firm), but many financial services and mutual fund companies that handle regular IRAs don’t use a self-directed version. Self-directed IRAs allow you to invest in a wide range of unconventional assets, including precious metals, real estate, and even cryptocurrencies.
Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers over other financial assets, such as paper currency and stocks. However, there are specially developed precious metal IRAs that allow you to invest with gold, palladium, silver, and other valuable metals for retirement. Self-managed IRA custodian banks allow investors to invest in alternative assets such as precious metals and real estate. Currently, you can’t hold rare coins or collector coins, Swiss francs, British government bonds, and Deutsche marks in a self-directed IRA.
You can then select investments for the account, and your custodian bank and metal dealer will complete the transactions on your behalf. Keep in mind that not every self-managed IRA custodian offers the same investment options. So make sure physical gold is among their offerings before you open an account. If you want to hold physical gold in an IRA, the first step is to open a self-directed IRA (SDIRA), which you manage directly with a custodian bank. If you want easier exposure to these investments without having to open a specific type of IRA or finding custodian banks, dealers, and custodians, consider investing in securities such as exchange-traded funds (ETFs) or mutual funds that replicate precious metal indices or prices.
You’ll also need to choose a precious metals dealer to make the actual gold purchases for your IRA (your custodian may be able to recommend one). You can set up the SDIRA either as a traditional IRA (tax-deductible contributions) or as a Roth IRA (tax-free distributions).
