Can You Buy Physical Gold With an IRA?
Gold and other precious metals have long been considered an investment option to protect retirement savings against inflation, but can you buy physical gold through an IRA?
People seeking exposure to precious metals through their IRA have various investment options available to them for investing in precious metals: stocks, ETFs or physical coins and bullion. Although owning physical precious metals carries additional fees associated with purchasing, storing and transporting them.
Investing in Physical Gold
If you want to purchase physical gold with your IRA, it’s essential that you understand its rules for doing so. Since collecting metals through an IRA is prohibited by the IRS, investing through an IRS-approved precious metals dealer provides options for purchasing and storing bullion coins bars as well as various precious metals.
Gold does not pay dividends or yield, so the only return from an investment in it comes through price appreciation. Gold may be included in retirement portfolios as a hedge against inflation or as an insurance against economic uncertainty; additionally, its low correlation to other investments such as stocks or real estate makes it an effective means of diversification.
When selecting a precious metals dealer, be sure to investigate their reputation, track record and fees carefully. Reputable brands such as American Bullion and APMEX offer customers quality products at reasonable prices while providing personalized service – they even adhere to IRS standards for self-directed IRAs by keeping precious metals stored safely within an IRA-approved segregated account!
Other Options for Investing in Gold with Your IRA For an easier way to invest in gold, consider opening a self-directed IRA that enables direct purchases of ETFs, mutual funds and mining stocks. Or you could set up a retirement account that invests directly in physical gold but this would require finding a custodian who accepts rollovers from existing traditional or Roth IRA accounts.
Buying Physical Gold
Physical gold may be an attractive investment option for some investors; however, owning it through an IRA comes with certain risks. Aside from paying taxes and fees associated with traditional or Roth IRAs, purchasing, storing, and selling physical precious metals also comes at a price. Furthermore, adding physical gold into your retirement portfolio raises the bar on how much the metals must appreciate before making a profit is possible.
Physical gold differs from stocks or mutual funds in that it doesn’t produce income and pay dividends, which may make it less appealing as a long-term investment. Furthermore, its value depends on someone else (the custodian) holding your asset; this presents potential counterparty risk and makes owning physical gold in an IRA more complex than other investments.
Investors looking to purchase physical gold using an IRA must find a custodian that specializes in these accounts. Most often these firms charge an establishment fee before providing storage service where your gold will be kept safe from theft or loss. Annual fees also vary, while there may also be charges such as transaction, inventory management costs and shipping expenses that apply.
Additionally, these companies may not be able to purchase your gold back if you decide you need to sell it and may leave you with the hassle and expense of finding another buyer for it.
To add exposure to gold in their retirement portfolio without purchasing physical bullion, they can purchase a gold-focused mutual fund or ETF instead. One such fund is Vanguard Precious Metals and Mining Fund (VGPMX), which invests in companies that mine or refine precious metals like gold. While not a pure gold fund, this low-cost option still acts as a hedge against inflation and market volatility while diversifying your assets among multiple asset classes.