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. Many financial experts recommend holding 5 to 10% of a portfolio in gold. In retirement, you need an investment that either generates current income or is reasonably expected to appreciate so that you can sell and use it for consumption in the future. You’re essentially wasting tax-deducted space on something that doesn’t generate income. So you’re not saving before taxes.
As with any other traditional IRA account, the value of the account is subject to taxes upon withdrawal. In contrast to ownership of stocks, investment funds, ETFs, etc., examples of accepted forms include the American Eagle and Canadian Maple Leaf gold and silver coins, the Austrian Philharmonic coin, the gold bars from PAMP Suisse and most platinum bars. While regular IRAs are limited to securities such as stocks and bonds, the IRS allows alternative investments in self-managed IRAs.
To properly set up an individual retirement account (IRA), you must find a custodian bank that allows you to hold precious metals, such as gold, within the IRA. While the majority of IRAs invest in more traditional assets such as stocks, bonds, and cash equivalents, the tax code also allows “self-controlled vehicles” that can hold precious metals such as silver or gold. However, since the Great Recession, there has been a wave of advertising encouraging retirement savers to convert their savings into precious metals in an individual retirement account or gold IRA. To help customers avoid this threat, for example, some IRA companies buy back their gold at the wholesale price then in effect.
The advantage of gold ETFs is that you can buy and sell stocks, such as stocks, and hold them in a traditional IRA or 401 (k). No special account is required. Many online Gold IRA providers have streamlined systems and work closely with established custodians to take the guesswork out of making these decisions. For anyone concerned about financial security in retirement, these ads, which promote gold and silver IRAs on conservative-leaning cable TV channels and on digital news outlets, can sound pretty compelling. Proponents of gold IRAs argue that these costs are worth the peace of mind of being protected from a potential financial apocalypse.
Including gold or other precious metals as a significant part of your IRA is usually a long-term mistake due to high costs, relative volatility, and mixed investment balance. So protect your money by investing it in tangible assets that can weather a crisis, or, as Devane puts it, “an IRA backed by gold and silver, not paper and promises. These companies go through an audit process to ensure that the gold they receive is the gold you ordered. This can be challenging for gold IRAs and may require selling inventory to comply with RMD rules.