Read The Benefits of a Precious Metals IRA Review

  • Precious metals IRAs are self-directed IRAs that enable individuals to invest in physical precious metals, such as gold and silver.
  • Precious metal IRAs, also referred to as "physical gold IRAs" or "gold IRAs," are a type of self-directed IRA that allows individuals to invest in precious metals.
  • Precious metals are highly valued assets that are considered an alternative to paper investments, such as stocks, bonds, and mutual funds.

Precious metals IRAs, also referred to as "physical gold IRAs" or "gold IRAs," are a type of self-directed IRA that allows individuals to invest in precious metals. Precious metals are highly valued assets that are considered an alternative to paper investments, such as stocks, bonds, and mutual funds.



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What Is a Precious Metals IRA?

A precious metals IRA is a federally approved type of IRA that allows people to own physical gold and silver in their retirement accounts. This type of IRA differs from the traditional types of IRAs (traditional, Roth, and SEP IRAs) in that precious metals, like gold and silver, can be held within a precious metals IRA.
This type of IRA has been allowed since 1997, when the Taxpayer Relief Act was signed into law.

Understanding the Benefits of a Precious Metals IRA

A precious metals IRA account is an IRA account that invests in precious metals such as gold, silver, platinum, or palladium. A precious metals IRA account is not the same as a precious metal IRA. A precious metal IRA account invests in physical precious metals, while a precious metals IRA invests in precious metals futures contracts and not physical metals.
The precious metals IRA account differs from the traditional IRA account in several ways. First, the precious metals IRA account is tax-deferred while the regular IRA account is tax-deferred or tax-free for Roth accounts. Second, the precious metals IRA account allows you to withdraw funds before you reach age 59 1/2, but you must pay a 10% penalty. With the regular IRA, you cannot withdraw funds until you reach age 59 1/2.
Third, the precious metals IRA account provides you with greater liquidity. With a regular IRA, you must wait until you are 59 1/2 before you withdraw funds. With a precious metals IRA account, you can withdraw funds at any time.

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Precious Metals IRAs vs. Other Investment Vehicles

Investors have many options when it comes to investing their IRA contributions. Many consider precious metals IRAs a valuable option. A precious metals IRA is a type of self-directed IRA, which is an IRA that you hold and control. It allows you to invest in precious metals such as gold, silver, platinum, and palladium.

Precious Metals IRAs Have a Low Correlation to Stocks

Precious metals are not correlated to stocks. This means that when stocks are falling, precious metals tend to rise. This makes sense since when investors flee the stock market, they are looking for an alternative investment.
Precious metals such as gold and silver are tangible assets that investors know they can always hold. Gold and silver are tangible assets that are trusted and valued by investors worldwide.

Precious Metals Are a Little Less Volatile

The volatility of precious metals' prices is lower than that of stocks. This is chiefly due to supply and demand factors. Generally, when demand increases, prices rise, and when demand falls, prices fall. Since supply and demand factors are taken into account, this tendency is buffered somewhat.
The price of gold, for example, has fluctuated within a range of 20% to 30% over the last decade. In the last year, gold prices have risen by about 11%, but in the year 2016, they fell by nearly 15%. Unlike stocks, precious metals tend to follow a relatively steady upward trend.

Precious Metals Don't Move With the Stock Market

The stock market moves up and down based on investors' confidence in the economy. If the economy is doing well, investors will feel confident and will want to invest their capital. If the economy is doing poorly, investors will withdraw their capital, which causes stock prices to fall.
Precious metals are an asset class that is often overlooked because it usually doesn't move with the stock market. Precious metals have value regardless of the state of the economy.

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Precious Metals Can Maintain Value

The precious metals market has a history of maintaining value. With inflation, fiat currencies can lose value over time. When the U.S. dollar loses value, prices tend to rise.
However, since precious metals are valued based on how much demand there is, their prices tend to rise over time.

Precious Metals Are Not as Volatile in Retirement

Traditional IRAs, Roth IRAs, and 401(k)s all place limits on how much you can invest in one investment class. For example, an IRA or 401(k) can hold a maximum of $5,000 worth of a single stock.
Since investing in metals makes your portfolio riskier than investing in stocks, you have to put more money in your investment account to hold the same amount of metals. For example, if you invest $5,000 in gold or silver bullion, you'll have to buy 100 ounces of gold, which is more than $30,000.
The greater volatility of metals is what scares some investors away. However, the volatility of precious metals at retirement may actually be friendlier than the daily fluctuations of stocks.

Precious Metals Are More Stable During Financial Crises and Recessions

As the markets continue to show signs of weakness and volatility, customers seeking higher returns and more stable opportunities may want to consider investing in precious metals. Precious metals, like gold and silver, are viewed as safe haven investments that show less volatility than other investments.

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Precious Metals Are Not Tied to Individual Countries

Governments, central banks, and corporations around the world are grappling with how to navigate through the current turmoil. Deals are being made, and portfolios are being shuffled. In times of political uncertainty and economic instability, gold is often seen as the safe haven for investors.

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Precious Metals Have No Transaction Fees

Buying, selling, and storing precious metals doesn't cost anything when you buy them inside an IRA. If you buy gold, silver, or another metal from outside an IRA, you may have to pay fees, depending on the company you choose.

Precious Metals Have No Management Fees

Precious metals IRAs have no management fees. They are self-directed, meaning that the owner of the IRA gets to choose the trustee that holds his or her precious metals. The trustee takes care of all administrative and record-keeping tasks for the precious metals IRA.



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The Bottom Line

Investing in gold, silver, and platinum, through a precious metals IRA, offers a number of benefits to investors:
Safety - Precious metals have no counter-party risk because you own the physical metal.

Diversification - Precious metals IRAs offer diversification across multiple asset classes, including physical metals, stocks, and bonds.

Cost - Precious metals IRAs usually have a lower annual fee than standard brokerage accounts.

Liquidity - Precious metals IRAs allow you to withdraw gold and silver from your IRA on a quarterly basis.

Security - Precious metals are stored in a vault, minimizing the risk of theft, damage, or loss.