Silver and Gold IRA: What to Know Before Investing

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Precious metals such as gold and silver are durable and tangible assets. They multiply in value during a lot of social phases like the rising and falling of stock markets and inflation. Even without these factors, many investors who desire to have different retirement accounts apart from the usual ones like bonds and stocks put their stakes in Gold IRAs.

Although silver and gold are quite volatile, it hasn’t stopped people from believing that they are good investment choices for growing and retaining value over a long period. For instance, the reviews about legit company, Lear Capital shows that people who are not even major investors are buying gold. Since investors are not permitted to hold precious metals in a traditional IRA (individual retirement account), another account was specially designed for that purpose – precious metals IRA.


What’s a Precious Metal Individual Retirement Account?

Precious metal IRA is a special type of individual retirement account that allows investors to hold physical bullion such as silver and gold bars. It is almost the same as a normal retirement account in the sense that they both have the same rules of distribution and contribution limits. The difference is that the former is strictly for holding gold bars, coins, silver, palladium, platinum along other precious metals.

The standard individual retirement account is limited to bonds and stocks which are paper assets. Precious metals IRAs may as well contain gold funds invested in both stocks or bullion or any of them, gold indexes tracked by gold ETFs, and gold mining shares.

Gold and Silver IRA Investment

If one desires to hold gold, the first thing to do is create an SDIRA (self-directed IRA). This account would be managed by you with the help of a custodian. Custodians are financial institutions approved by the IRS, this includes brokerage, trust companies, and banks.  

Your custodian might recommend dealers in precious metals or you could elect one by yourself. The dealer would be responsible for purchasing gold for the IRA. You may create/set up either a Roth IRA which is tax-free distributions or Standard IRA (tax-deductible distributions).

The next step to be taken is funding the account by rolling over funds from a qualified plan, contribution, or transfer. Afterward, your metals dealer and custodian would complete the transaction after you have selected investments for your account. The physical ingot or bar you purchase must pass the IRS standards of fitness and subsequently be kept in an approved and insured IRS depository.

Bear in mind, that there are governmental limitations. You can visit to know about such limitations.


Advantages of a Precious Metals IRA

The advantages of a precious metals IRA are as follows:

  • Control. You have control over your account and your holdings. You also make the decisions on investments.
  • Holding for the long-term. You can buy and hold gold and silver for a long time and don’t need to touch them until retirement. The duration might be from a few years to decades.
  • Guards against inflation. Precious metals IRA guards against inflation as well as provides diversification of your retirement portfolio. Gold value shoots up when paper value nose-dives.
  • Beyond the reach of banks. The lot of financial institutions are no longer as secure as they used to be. Assets in the bank are at high risk of hacks or liquidation. Therefore, it is safer to have tangible assets stored away from their reach.
  • Non-existence of third-party risk. Once you own physical gold, you own it completely and it cannot be taken from you. It is free of financial crises or other risks associated with a third party.
  • Assurance of stability. Gold offers a considerable measure of stability. History has it on records how gold is acquired and coveted over the centuries. Acquiring it gives stability as believed by many investors.

Risks Involved in Precious Metals IRA

The drawbacks of a precious metals IRA are:

Restrictions in Funding

You cannot personally purchase precious metals and then send them to your retirement account. Your custodian must perform every transaction. In addition, you are restricted from moving precious metals you previously own into your precious metals IRA.

Absence of Income That Is Tax-Advantaged

Precious metals IRAs are not entitled to the aspect of individual retirement accounts investment that the growth is tax-free. There are no returns, dividends, or interests paid by gold bullion.

High Fees

It is not possible to keep gold in your house or a safe deposit. You must hire a custodian who ships/transports, stores, buys, and insures your precious metals. This makes the custodial fees for precious metals IRA more expensive than management fees for the regular IRA. You can read this article to learn more about SDIRA.

Final Thoughts

Silver and gold investment has a lot of risks and these risks must be taken into consideration before any decision is taken. Financial experts advise keeping between 5%-10% portfolio in gold. Precious metals IRAs will always be a wise option for people looking to have other retirement plans as well as enjoy the benefits of gold compared to the usual.