A gold IRA often has higher fees than a traditional IRA or Roth IRA, which invests exclusively in stocks, bonds, and mutual funds. Precious metals IRAs could be a viable option for some investors who are concerned about inflation and market volatility. However, they are more expensive than some other investment options and may carry a higher risk than traditional IRAs. You can’t currently hold rare or collectible coins, Swiss francs, British government bonds, and German marks in a self-governing IRA.
Precious metal IRAs are generally only useful if you have a strong portfolio and want to diversify your investments by setting aside a small amount for physical gold, silver, platinum, or palladium. You can set up the SDIRA either as a traditional IRA (tax-deductible contributions) or as a Roth IRA (tax-free distributions). Self-managed IRA custodian banks allow investors to invest in alternative assets such as precious metals and real estate. You can then select investments for the account, and your custodian bank and metal dealer will complete the transactions on your behalf.
The IRA custodian bank processes the payments and the dealer sends your precious metals to the custodian. With self-directed IRAs, you can invest in a wide variety of unconventional assets, including precious metals, real estate, and even cryptocurrencies. Remember that not every self-governing IRA custodian bank offers the same investment options. So make sure that physical gold is among their offerings before you open an account. Physical metals must meet IRS fineness standards in terms of purity and weight and be stored in an IRS-approved insured depot.
If you want to hold physical gold in an IRA, the first step is to open a self-directed IRA (SDIRA), which you manage directly with a custodian bank. When you think of the world’s obsession with gold, it’s easy to get caught up in adventures and mysteries such as panning for gold during the gold rush, pirate ships, and treasure maps. The custodian is an IRS-approved financial institution (bank, trust company, broker), but many financial services and mutual fund companies that process regular IRAs do not use the self-directed version. Unless you want to get into jewelry making, investing your hard-earned money in precious metals like gold, silver, and platinum isn’t the best use of your money.
Since they involve buying and storing valuable physical metals, there are a few additional things you need to consider when considering precious metal IRAs.
