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How to Invest in a Precious Metals IRA

Donny Gamble
January 25, 2022
gold and silver IRA
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Many investments have different goals.  Some are for long-term gain with low risk, some for large gain in a short timeframe. Conservative investments are to protect your assets in the event of the dollar collapsing, and t o protect against inflation in the meantime.

Precious metals are one of the most sought-after methods of investing to protect your money. Gold is valuable everywhere, but beyond that, it accrues in value over time.

Gold has its ups and downs, but it bounces back and proves to be a solid investment. Other metals like palladium see even higher returns over time.

A precious metals IRA turns tax-deferred dollars into gold, silver, platinum, palladium, and other precious metals deemed worthy by the IRA (which can change from time to time).

The most popular choice is gold and silver for their steady growth and lower volatility, but it’s not as simple as buying gold and silver bullion and storing them in an account.

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How Much of Your IRA Should Include Precious Metals?

On average, your IRA should include no more than 10% of precious metals. The conservative choice is between 5% and 10%, but it’s not always so easy to figure out if you have numerous assets in your IRA.

Many of these estimations were made before individuals also included cryptocurrency and other assets in their IRAs, so now the question becomes: is there a perfect percentage of each asset in your IRA?

It depends on what metal you purchase. Universally, gold is accepted just about everywhere for various reasons, but it’s not like you can just pull the gold out of a depository in the event of a financial collapse.

It’s more complicated than that.  Because access to your physical gold is nigh impossible in an IRA, you should err on the side of being conservative and go for a 10% cap. 

It should be noted that while many respected investors have vehemently spoken out against gold in the past, the king of investing himself, Warren Buffet, has invested in gold and gold mining companies in the past.

If you really want to invest in more gold than 10%, you should do it in gold mining company stocks to accompany an index fund in your IRA.

What Precious Metals Can You Invest in for Retirement?

You can invest in a few precious metals in your IRA. There use to be more options, but the IRS has limited it to these four main asset-worthy metals.

  • Gold: Gold is the most universal metal out there, and is the most common or sought-after metal for IRAs. Because it’s so popular, it’s always in some form of demand, while other metals may not be.
  • Silver: Silver is typically not the most sought-after metal, and that’s because it sees dips in the market for longer periods than gold. Many investors and IRA holders currently avoid silver in 2022.
  • Palladium: Palladium is like the Bitcoin of precious metals. The rise over the last decade alone has been fantastic. This is a much more scarce metal, and much of it is privately owned, so getting your hands on “new” palladium is pricey and difficult.
  • Platinum: Platinum is in the same boat as silver. It’s accepted in an IRA, but it has its spikes up and down and doesn’t rise the same way that gold does. Despite being one of the rarest minerals on earth, it just doesn’t have the same demand or utility that gold and palladium do.

Where Do You Store Precious Metals in Your IRA?

Your precious metals must be stored in an IRS-approved depository to be included in your IRA. Depositories are secured locations with custodians and custodian services to maintain your precious metals.

These facilities are assessed and approved by the IRS. In order to store your gold or other precious metals in a depository, you would need to fulfill a gold order, which you cannot do alone.

If you buy gold from a late-night infomercial that says they can mail it to you so it’s safe, you’re being scammed. Yes, it’s real gold. Yes, they’ll mail it to you, but you’re not able to put it in an IRA, and you’re subject to paying tax on that purchase.

You’re also subject to paying the long-term capital gains tax rate, which is around 20% to 28% depending on the circumstances. That’s what happens when you sell gold.

In an IRA, the gold accrues value with tax-deferred dollars, so you never have to pay tax on the purchase price when it’s all bought within your IRA.

Either way, you’re going to have to pay long-term capital gains tax when you sell that gold. However, an IRA holds it in a safe, IRS-approved account that protects your retirement and insures that gold.

It’s not insured in your home, and it’s treated as a collectible.

Should You Buy Precious Metals in Your IRA?

Yes, precious metals are part of a healthy IRA portfolio. At the end of the day, every asset in an IRA (including liquid cash) is subject to failure. The likelihood that the entire market will collapse or take a hit at the same time is extremely unlikely, which is why it’s important to diversify your IRA assets.

Precious metals have their place in every modern IRA. Understand what portfolio volatility is, and how to diversify your investments, and you’ll be on your way to a colorful investment situation for your retirement.

Final Thoughts

Precious metal IRAs are an important part of investing in your retirement and your future, but it’s not everything. You should explore precious metal options to increase your IRA portfolio value and decrease your volatility, just don’t put all your eggs in one basket. 

Use an IRA firm to purchase gold and be selective with the custodian service that you choose ahead of time.

Precious Metal IRA FAQ's

What are the benefits of a precious metals IRA?

Precious metals IRAs use tax-deferred income to help you purchase an asset that increases value over time, cutting down on inflation that would ruin your cash value anyway.

While gold in an IRA is still subject to capital gains tax over time, you’re also insured on your gold to add stability and security to your investment. The goal is to increase your gold value over time and increase your wealth to sit on for retirement.

Is a precious metals IRA a good idea?

Yes. Putting precious metals in your IRA is a good idea to diversify your assets and lower volatility. While gaining access to your gold and silver in an IRA isn’t possible, its value will eventually bounce back after economic downturns (as we can see with historical 100-year charts).

Even if it endures a dip, it can and often will go back up. Cash doesn’t appreciate in value due to inflation, which is why precious metals often replace liquid cash in IRAs.

Is silver a good investment?

Silver is generally reviewed as a solid investment, although since 2011, there’s been a sizable hit in its value. It’s considered undervalued right now, but as we know silver is still utility and valuable, some sources are claiming that it’s on the rise again.

Historically, gold outperforms silvers which is why it’s more favorable, so silver can be included in that 10% precious metal cap on your IRA, but it should not be the dominant metal.

Goldco Precious Metals

Goldco is a leader in the precious metals industry, with over a decade of experience helping customers protect their retirement savings.

About the author 

Donny Gamble

I’m Donny. I’m a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

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