With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks of mining companies or mutual funds that hold those stocks. Another alternative is a gold ETF, an exchange-traded fund that tracks the performance of gold as an asset. Gold IRAs are aimed at investors who want to diversify their wealth to save for retirement. Precious metals such as silver and gold, platinum and palladium are considered a hedge against inflation and stock market volatility. Gold IRAs allow you to keep these precious metals in an individual retirement account.
The accounts offer the same tax benefits as IRAs invested in stocks, bonds, mutual funds, and ETFs. A Gold IRA is a type of self-directed individual retirement account (IRA) that allows you to own gold bars. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are engaged in gold, such as stocks of gold mining companies or exchange-traded gold funds (ETFs). 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. Even if you open a Gold IRA, it’s important to note that you can’t fund your account directly with gold bars or coins you own. The leading gold IRA companies offer unbiased educational resources, investor information, and responsive customer support.
The company offers gold and silver investment options. It uses Delaware Depository, a popular choice among gold IRA providers, to hold client assets such as gold coins and gold bars. Some people prefer the idea of holding physical gold rather than getting involved in precious metals by buying stocks of gold mining companies or gold-based ETFs. Once you’re 72 years old, you’ll be required to accept the required minimum payouts (RMDs) from a traditional Gold IRA (but not from a Roth IRA). Then you have to buy the approved gold or other precious metal and have it transferred to the custodian bank so that the custodian can deposit it, explains Moy.
Mint, the corresponding authority of certain other countries, or designated private minting companies may be held in a Gold IRA. These investments are available in a normal brokerage IRA, which means you wouldn’t have to do the work and additional costs of setting up a self-directed Gold IRA. Once you’ve opened a self-directed Gold IRA, you can transfer cash to the account to fund your purchase of physical gold. However, it is important to remember that financial advisors generally recommend allocating 5% or less of a portfolio to precious metals, as gold pays no dividends and gold investors have no guarantee of making money from their investment, even over a long time horizon.
For gold IRAs, government regulations determine what type of gold can be stored in the account and where it should be stored. When choosing a reputable Gold IRA company, transparency and customer feedback are key tools to assess what type of experience you’re likely to have. Self-directed IRAs can be traditional IRA (traditional SDIRA) or Roth IRA (Roth SDIRA), and they have the same rules for contributions, income limits, and payouts as mainstream IRAs. Some IRA companies guarantee that they will buy back the gold for you at current wholesale prices, but you could still lose money if you close the account, which is not usually the case when opening and closing regular IRAs.