Is A Gold IRA Really A Good Idea? Things To Know


Maybe you’re looking for a way to open an IRA in which you can invest in assets other than the ones most brokers recommend. One option is gold, and not a gold ETF, but real physical gold bullion that you can acquire through a self-directed IRA. Not a whole lot of big name brokerage firms offer this kind of self-directed IRA, but there are a few financial institutions who do. There are several benefits and risks you should factor in if you’re considering a gold IRA.

The Risk Of Total Loss Is Virtually Non-existent

A physical gold IRA is stored in a depository until the time of withdrawal, so it doesn’t carry the same risks of loss that other investments have. For example, when you buy stocks, you’re putting your faith in a company that it will have good management and make profits as opposed to going bankrupt. Likewise, you’re also taking on debt risks with bonds that while a little safer than stocks still could have significant losses if the borrower defaults. With gold, you are holding a hard asset that has never had a value of zero, and since its supply becomes more and more limited each year, its value tends to go up over the long-term. The main risk to buying gold through your IRA is making sure you’re buying it from a legitimate company.

You Can Rollover A 401(k) Into A Gold IRA

Just as with other traditional IRAs, you do have the option for a gold 401k rollover with a self-directed IRA. The main thing to remember is since most 401(k) rollovers need to be made into a traditional IRA, that kind of IRA is subject to taxes once you make a withdrawal from it at the appropriate time. So you may want to see about converting it to a Roth IRA if possible if you wish to acquire gold with after tax dollars.

A Gold IRA Still Has IRS Limits On It

You do have to follow certain guidelines from the IRS in order to ensure your gold investment qualifies for an IRA. That includes following a process by which you will have to open storage at an IRS approved depository, and approved personnel must transport it there and not you. The costs for this can be significant. Also, the IRS does have limits on the kind of bullion you can purchase through your IRA.

There Are No Guarantees Your Investment Will Make Gains

While previously mentioned that gold always has value and your investment is secure while in the depository, it still is subject to changes in value due to market conditions. Many experts do recommend it as a hedge against inflation because there are economic conditions where inflation may rise and the price of gold overcomes the rate of inflation. However, gold certainly can experience fallouts and periods of less demand and lower value. Plus, if you plan to sell your physical gold you may have limited options in terms of its liquidity. This is why some experts recommend buying silver instead.

In summary, gold has its strengths and weaknesses, but those who want something different and believe the precious metals market will work for them can invest in it without being taxed on the increase in value. Opening up a physical gold IRA requires getting the right paperwork in order to ensure it meets all the IRS requirements. And as a self-directed IRA, you are responsible for making your own investment decisions with little to no advisory assistance. But if you’re in it for the long run, the potential return on investment is well worth it.


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