A Gold IRA often comes with higher fees than a traditional IRA or Roth IRA, which invests exclusively in stocks, bonds, and mutual funds. Proponents of gold IRAs argue that these costs are worth the peace of mind of being protected from a potential financial apocalypse. But let’s assume that a disaster really does happen. How would you redeem your gold if it was in a depot across the country?
Gold IRAs are a special type of self-directed IRA that allows you to invest in physical gold and other precious metals, such as silver, platinum, and palladium. Investing in a Gold IRA requires the services of a custodian bank, a broker to buy gold, and an approved custodian to store gold. Like other self-directed IRAs, gold IRAs can be traditional or Roth. Specialized custodian banks Standard custodians such as Fidelity, Schwab or TD Ameritrade do not handle physical gold in an IRA.
You must store the gold in a Gold IRA in an IRS-approved custody account. You can’t keep it in a locker, a safe at home, or under your mattress. Gold has proven to be a source of steady and stable growth compared to the more volatile stock market, so more and more bond investors are turning to gold IRAs. In addition, while the IRS allows gold coins such as the American Gold Eagle, American Buffalo, Canadian Maple Leaf and Australian Gold Nugget, it does not allow investments in South African Krugerrand or British Sovereign gold coins. Many of the custodian banks and brokers that open mainstream IRAs and invest in traditional assets are unable to open and operate an SDIRA, including a Gold IRA.
While most IRAs invest in conventional assets such as stocks or investment funds, tax legislation also allows special IRAs with “self-directed” or “alternative assets,” which can hold physical silver or gold. In addition, the IRS only allows certain gold coins, such as the American Gold Eagle or Canadian Maple Leaf. For anyone concerned about financial security in retirement, these ads, which advertise gold and silver IRAs on conservatively oriented cable TV networks and by digital news outlets, can sound pretty compelling. The job of an IRA Gold company is to facilitate the creation of the IRA and the purchase of gold coins or gold bars.
It should be emphasized that a Gold IRA is only required if an investor wants to invest in physical gold bars, coins, and gold bars. While most IRA investors invest in more traditional assets such as stocks, bonds, and funds, tax legislation allows investments in precious metals such as gold and silver via specialized IRA accounts. Many gold IRA companies work with a custodian, and either the custodian or the gold IRA firm may select a custodian.