Can I Buy GLD in My IRA?
Your Individual Retirement Account (IRA) does not allow for physical gold purchases, but you can invest in precious metals through exchange-traded funds (ETFs), mutual funds dedicated to gold investments and even shares of mining companies. Just be mindful of IRA rules regarding contributions, disbursements and taxes when doing this investment strategy.
Suzanne Hutchins, an investment manager with Newton’s Real Return Investment team at Bank of New York Mellon, favors GLD because it is physically-backed.
How Does GLD Work?
GLD provides an easy and hassle-free way of accessing the price of gold without incurring the costs and complications associated with physical bullion purchases, storage, and insuring. GLD’s performance directly corresponds with its market price of gold which may change depending on factors like supply/demand dynamics, geopolitical tensions and monetary policies.
GLD is an exchange-traded fund, meaning its shares can be bought and sold on the NYSE Arca as any stock would. Its primary aim is to track the price performance of gold bullion by purchasing and holding physical bars in a vault managed by HSBC Bank of New York Mellon’s trustee and custodian (note Hutchins works for this trustee). Only authorized participants (registered broker-dealers who have entered into agreements with its sponsor and trustee) are authorized to create and redeem GLD shares in baskets of 100,000 shares each. All gold held within trust is held within an “allocated account,” separate from client accounts stored with HSBC HSBC accounts that store client assets.
What Is GLD?
GLD, the second-largest exchange-traded fund by assets, holds physical gold bullion as part of its assets, trading shares on NYSE Arca and offering exposure without incurring costs from buying and transporting physical bullion directly. Many investors find GLD an easy way to gain exposure without incurring costs associated with buying and transporting it themselves.
As GLD’s value fluctuates, its share price reflects this movement in bullion prices. While this makes investing more democratic than owning physical metal directly, its liquidity injection adds extra price volatility and may exacerbate price swings.
Because of this, it’s crucial that your IRA holdings are regularly evaluated. Doing so allows you to quickly respond to market fluctuations and take advantage of opportunities quickly – this is especially critical when dealing with commodities like gold which experience rapid and significant price swings.
How Can I Buy GLD in My IRA?
Gold or Precious Metals IRAs are self-directed Individual Retirement Accounts that permit investors to invest in precious metals like gold, silver, platinum and palladium physically. When opening one it’s essential that you work closely with an investment professional in order to comply with all IRS restrictions.
IRA custodians typically do not select specific dealers for their clients; rather, they offer a list of approved dealers from which you can select one that best meets both your needs and budget.
Though Gold IRAs are popular retirement investments, your funds could also be put to better use buying other alternative investments such as mutual funds or exchange-traded funds (ETFs) focused on gold mining companies or stocks in their portfolio. Whatever approach you take, regular portfolio reviews should be done so as to sell underperforming assets and replace them with more lucrative ones in order to maximize returns and limit losses.
Which Custodian Should I Use?
No matter whether you opt for gold backed ETFs like GLD and SLV or physical precious metals like coins, bullion, or jewelry as investments within your IRA, choosing a custodian that meets all these criteria is of vital importance. When researching firms to hold your assets it’s wise to do your research – check their track record with previous clients as well as which gold IRA companies they work with – the choice should not be random!
Make sure that the firm offers knowledgeable staff members to answer any inquiries that come your way online or via telephone. Nothing is more infuriating than waiting around for answers when something arises which needs immediate resolution.
GLD shares may be backed by physical gold, yet exchanging them is more complex than trading actual bullion directly due to “authorized participants.” Only those who hold accounts with these institutions can redeem GLD shares for physical gold.
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