A cumbersome process, but technology platforms make it simple. A diversification strategy, but one that takes a long time. A popular strategy during economic stress, but a mistake. Great potential returns, but higher risk of losing money.
A gold rage allows you to take advantage of the market by buying cheaply and selling high. If gold prices are about to fall, you can sell your coins and bars to avoid losing your investment. Just keep profits in a money market fund until the right time to buy back. Learn more at “Take Control of Your Retirement Savings with a Self-Directed IRA for Precious Metals.
Gold IRAs attract investors who want a diversified retirement portfolio. While IRAs can benefit all investors, gold IRAs are not ideal for everyone. There are many reasons why this is the case, and in this section we will discuss what those reasons are. Specifically, we will evaluate the pros and cons of precious metal IRAs and, more specifically, the advantages and disadvantages of gold IRAs, evaluating their fees, storage limitations, counterparty risks, opportunity costs, and their impact on expected returns.
Below, we list some of the main advantages of investing in physical gold over gold on paper, such as mining stocks or ETFs. It should come as no surprise that the IRS applies a series of strict and specific rules for gold IRAs. If you want to keep physical gold in an IRA, the first step is to open a self-directed IRA (SDIRA) that you manage directly with a custodian. Gold-based securities, while offering some exposure to the gold market, do not offer the same benefits as genuine gold products.
If you really think it's a good idea, at least check the IRS rules and custodian's fees before you put gold into your IRA. As publicly traded securities, paper gold is very liquid and therefore prone to erratic price movements, especially compared to the spot price of gold. This can be challenging for Gold IRAs and may require you to sell shares to comply with RMD rules. Standard custodians, such as Fidelity, Schwab, or TD Ameritrade, will not handle physical gold in an IRA.
Gold IRAs provide the “portfolio insurance” you need to protect your wealth from financial market risks that could affect your life savings. You can set up SDIRA as a traditional IRA (tax-deductible contributions) or a Roth IRA (tax-free distributions). There's also the fact that gold doesn't pay dividends or interest, so keeping it in an IRA defeats part of the purpose of the tax-advantaged savings vehicle. Recently, the IRS amended this rule to allow physical storage of gold IRAs in vaults and approved international countries.
If you suddenly needed gold to barter for food, you would first need to call your custodian and complete the necessary documentation to access your own gold. Examples of accepted forms are the American Eagle and Canadian Maple Leaf coins made of gold and silver, the Austrian Philharmonic coin, the PAMP Suisse gold bars and most platinum bars.