Today, it seems that more eager investors than ever before have begun to enter the fray of the modern-day gold rush, resulting in a number of crucial questions about best practices. For example, some people are spending all of their time wondering where they should buy gold – whereas others are recognizing the concerns around how precious metals should be stored.
The great thing about a gold investment, is that precious metals will always have value – even if prices seem to rise and dip during the time you have your investment. Most experts suggest that it’s a good idea to have at least some gold in your investment portfolio – but that doesn’t mean you shouldn’t read up about the rules on what you can buy and how you can store it.
What is the Truth About Home Storage?
Although for many things the internet can act as a fantastic source of useful information on what you can do to diversify and improve your IRA account – it is crucial that you be careful about what you believe in – especially in buying gold and silver.
Regardless of the information online that might try to convince you otherwise, it is essential to store precious metals with a self-direct IRA third-party custodian. Simply storing your gold at home is not legal according to the IRS code, which means that you would need a depository or bank to store the metals for you. Some firms advertise as though you can actually store your metals at home, but this would likely open you up to penalties and taxes.
Managing Your Metals Safely and Securely
Although it is true that an LLC can have a checkbook IRA account – allowing owners control over regular transactions – it’s important to make sure that you don’t believe you can simply form an LLC, buy a number of precious metals, and them store them in your bathroom cupboard.
Self-storage is completely out of the question and would be considered a distribution if you took possession of your metals to store them improperly. Remember, when you do have a gold IRA, annual reporting must be conducted by the client or LLC, and determining value in this instance can be somewhat difficult.
With a normal IRA, a custodian can determine the value and report that amount to the IRS.
Private Storage, Selling & Distributing Precious Metals
Selling and distributing precious metals would also be significantly difficult if you were to hold your gold yourself. The reason for this is that a client or LLC would need to either ship the metals back to the dealer or find a buyer in a local pawn shop.
Generally, this doesn’t work out for the best as local coin brokers and pawnshops can charge incredibly large liquidation fees that can have a negative impact on the profit for the client. What’s more, mailing the metals that you own to a new firm can turn out to be incredibly expensive, and you would have to pay for the insurance of those metals during delivery.
Fortunately, traditional depositories and custodians can buy metals back on the same business day and fund the client within 3 business days.
The Pros and Cons of Home Gold Storage
The most common option for storing gold is using a depository or private firm. In addition to offering specialized bullion vaults that are highly safe, secure, and most importantly – insured, you can obtain good geographical and political diversification for the gold that you own.
You can also deal with better liquidity because you can sell your metal whenever you like and have the proceeds sent to you as quickly as possible. The issue with a private storage option is that you – as a client – will need to start an LLC which does cost time and money.
Not only do you need to maintain that LLC according to the rules and limitations of your home state, you also need to adhere to the fees that come with that LLC. This can create a lot of different forms and annual paperwork that you will need to fill in on a regular basis.
However, with a custodian, you can have all paperwork handled for you – which is incredibly convenient.
What Should You Do?
In conclusion, it is possible to store metals close to your home with a private custodian, but you cannot store them within your home yourself. When it comes to precious metal IRAs, remember that there are advantages and disadvantages to every scenario, but you should always seek out the option most convenient to your circumstances.