Can I Buy Gold From a Brokerage Account?
Brokerage accounts allow investors to trade securities like stocks, ETFs and mutual funds easily and safely – an invaluable way for pursuing long-term financial goals and building wealth.
Most investors envision gold investments in terms of large, shiny bars stored away safely in vaults; however, investing in physical gold requires significant costs related to shipping, storage and insurance costs.
Buying Physical Gold
Physical gold investments come in various forms. Investors may purchase bars and coins through Morgan Stanley brokerage accounts or purchase American Eagle coins through retirement accounts; or keep physical metals at home, if desired. Unfortunately, investing in physical gold can be expensive due to transaction fees and storage costs; it is also essential that consumers verify its purity as unethical dealers may mix other metals such as tungsten in with it in order to cut costs.
Gold-backed securities like exchange-traded funds (ETFs) and mutual funds may provide another means for investors. While ETFs and mutual funds track gold prices, they offer greater liquidity and lower costs compared to purchasing physical bullion. Furthermore, profits from ETFs and mutual funds are taxed at ordinary income rates whereas physical gold investments may incur long-term capital gains tax of up to 28%, since the IRS considers physical gold to be collectible property.
Buying Gold-Leveraged Securities
There are various methods available for you to purchase gold-backed securities in your brokerage account, from ETFs and futures contracts to leveraged gold ETFs which provide more diversified exposure. Leveraged gold ETFs offer enhanced performance through derivative instruments. They typically carry higher fees, so experienced investors should only buy them.
ETFs (Exchange-Traded Funds) are popular daily trading vehicles that hold various assets ranging from commodities and stocks to bonds and may provide you with an economical means of adding gold into your portfolio. You can find them both online and through brokers; either way they’re a cost-effective solution that should not be ignored when investing.
Physical gold coins, bars and jewelry offer another method for investing in gold. While tangible assets may appeal to some investors, they also incur costs related to purchasing, storage and insurance compared to investing in stocks or bonds; plus they’re taxed as collectibles by the IRS which could increase prices so much that profits evaporate completely.
Buying Gold Through an IRA
Gold can play an essential part in a diversified portfolio, serving as an anchor against economic or geopolitical unpredictability. But it can be volatile; unlike stocks or real estate investments it doesn’t generate dividends, or experience capital appreciation like they would.
Investors looking to add gold to their retirement accounts have two options for adding it: either purchasing physical bullion through a precious metals dealer, or investing in gold-leveraged securities via an exchange-traded fund or mutual fund with exposure to it. Before purchasing either option, investors must carefully consider markups and storage costs, not forgetting they are holding onto something with a potentially substantial cost tag.
Investors can also contribute to an Individual Retirement Account (IRA), commonly referred to as a Gold IRA, through an independent custodian or depository. These allow investors to invest in alternative assets like gold that may otherwise not be permitted within traditional and Roth IRAs.
Buying Gold Through the Stock Market
If you want to incorporate gold into your investment portfolio but are hesitant about making the leap into physical bullion, there are other solutions. One option is investing in shares of gold mining companies trading on the stock market. Many mining stocks pay dividends that help offset some of the costs of investing directly.
To purchase futures securities, you will require both a brokerage account and futures broker who specializes in that commodity. The National Futures Association’s Background Affiliation Status Information Center can assist with verifying credentials of potential brokers.
Gold futures contracts traded on the New York Mercantile Exchange are another alternative, promising you an agreed upon amount and date of gold at an agreed upon price and date in the future. One main advantage is avoiding storage or insurance fees that can add significantly to physical gold’s cost; however, these instruments tend to be more volatile than stocks and don’t always offer equal opportunities for capital appreciation.