Precious Metals
With fears of recession growing among more and more Americans, the possibility of a 2008-style recession seems to be growing by the day. Millions of Americans have benefited from the economic and market growth of the past several years, but now they’re asking themselves how they can keep all the wealth they’ve gained.
The 2008 financial crisis devastated the savings and investments of millions of people, wiping away years or decades of hard work in a matter of months. So the prospect of seeing a repeat of those losses isn’t exactly appealing to most Americans. The last thing anyone wants to have happen is to lose tens or hundreds of thousands of dollars that may be nearly impossible to win back in a reasonable amount of time.
That’s why more and more Americans are looking at ways to protect themselves and their financial assets. And many of them are doing so by buying gold and silver with a precious metals IRA.
In the aftermath of the 2008 financial crisis, gold and silver were some of the only assets that seemed to perform well. They went on to move toward all-time high prices, at a time when it seemed like financial markets were struggling to make headway. Many people who remember gold and silver’s performance back then have turned to precious metals today in an attempt to help preserve and protect their assets ahead of a potential recession.
If you’ve never heard of a precious metals IRA before, it’s just an IRA account that owns and holds physical precious metals rather than the more typical conventional financial assets you might expect an IRA to own. Aside from that, a precious metals IRA is subject to all the same rules and regulations as any other IRA account.
There are a few important things to note about the difference between a precious metals IRA and a conventional IRA. If you already have an IRA account, you may already know the pertinent IRA rules and regulations. But even still, there are a few things to point out about a precious metals IRA.
The first is that a precious metals IRA is an example of what’s known as a self-directed IRA. Instead of opening an IRA and being given a list of investment choices to choose from, you choose the assets you want to invest in and then choose an IRA custodian who is willing to manage those assets.
A precious metals IRA, just like any other IRA, requires its assets to be managed by a custodian. In the case of precious metals like gold and silver, most IRA custodians aren’t able to or don’t want to deal with precious metals, so you’ll need to find a custodian you can work with. Goldco partners with IRA custodians who have significant experience managing precious metals IRAs and precious metals assets.
Self-directed IRAs like a precious metals IRA allow you to invest in a wider array of assets than in a conventional IRA account. Aside from a handful of assets that are forbidden from all IRAs, your options are nearly unlimited. Practically speaking, however, you’ll be limited by finding an IRA custodian who will manage those assets.
Some self-directed IRA custodians specialize in precious metals, while others will manage other alternative assets such as real estate, cryptocurrencies, or private equity. But a self-directed IRA like a precious metals IRA can open up far more investment choices for you.
A precious metals IRA can offer you numerous benefits. Here are four of the most important ones.
Possibly the most important benefit of a precious metals IRA is the tax-free growth that it offers you. Just like any other IRA account, your precious metals assets accrue gains tax-free. If your precious metals IRA is a Traditional IRA, you would only pay taxes at distribution. If it is a Roth IRA, you would pay no taxes at distribution.
A precious metals IRA can also help you diversify your investment portfolio. Last year was a perfect example of how even a supposedly diversified portfolio of stocks and bonds can lose money, as both stock and bond markets suffered losses.
In the event of a systemic financial crisis, losses to stocks and bonds could be catastrophic. That means that investors need to try to find assets that can either minimize those losses or counteract them.
Because gold often performs well when financial assets don’t, it has developed a reputation as a countercyclical asset, one that can help protect a portfolio during times of recession. Holding gold can therefore provide you with diversification that could help mitigate your losses during a financial downturn.
Because gold has maintained its purchasing power over time, it has developed a reputation as a hedge against inflation. Whereas the US dollar has lost 97% of its value since 1913, gold has gained over 9,000%.
During the stagflation of the 1970s, gold and silver’s annualized gains over the course of the decade were over 30%, far outpacing both markets and inflation. Many precious metals owners today are undoubtedly hoping for gold and silver to repeat that kind of performance today if inflation ends up becoming entrenched.
Gold can also help protect the value of your assets during times of financial crisis. During the 2008 financial crisis, for instance, gold gained 25% during the same period that markets lost over 50%. That ability to protect wealth even in the midst of financial turmoil continues to make precious metals a popular investment option.
While there are numerous metals that are considered precious metals, not all of them are eligible for ownership by a precious metals IRA. By law, a precious metals IRA can invest in only four types of precious metals.
Gold is perhaps the best known of the precious metals, and the one that gets the most headlines. With a long-standing reputation for being able to protect wealth, gold remains in demand from both institutional and individual investors around the world.
Silver often plays second fiddle to gold, if only because gold is far more valuable. But silver can sometimes outperform gold. During the last great boom in the aftermath of the 2008 financial crisis, for instance, gold nearly tripled in price but silver more than quintupled in price. That’s why many precious metals buyers will sometimes buy both silver and gold, both for extra diversification and for the extra potential to take advantage of silver’s growth potential.
With silver playing an important role in the production of solar panels, the recent push for green energy is providing a boost to silver demand. If that demand keeps up in the future, silver prices could rise on the back of greater silver usage from industry.
Platinum’s best-known use is probably in the production of automotive catalytic converters. But it has remained a popular precious metals investment, with mints and refineries around the world offering various platinum coins and bar products.
Palladium is the latecomer in this pack and, like platinum, is perhaps best known for its use in catalytic converters. It’s also not the most widely available of the precious metals, although the US Mint and others produce palladium coins for investment purposes.
Starting a precious metals IRA can be done simply and relatively quickly. Depending on how you fund the IRA and what kind of precious metals you buy, the process from start to finish could take just a few weeks.
The first step to opening a precious metals IRA is to identify trusted partners to work with. Goldco has helped thousands of customers over the years benefit from adding precious metals to their portfolios, and our experts are ready to answer any questions you may have about the precious metals IRA process.
We work with established IRA custodians and bullion depositories to ensure that your precious metals IRA assets are properly managed and protected, so that you don’t have to worry about your assets remaining secure. When you’re putting your hard-earned money into precious metals, trust is essential at every stage of the process, which is why Goldco works so hard to earn that trust.
Once you’ve decided to open a precious metals IRA, you’ll need to decide how to fund it. One of the most popular means of funding a precious metals IRA is through a 401(k) rollover. Many Americans have built up their 401(k) holdings over the past few years, but now they’re looking for ways to protect them.
With a 401(k) to IRA rollover you can move assets from your 401(k) account to a precious metals IRA tax-free. That allows you to safeguard your existing assets by rolling them over into gold and silver.
A 401(k) isn’t the only source of funding for a precious metals IRA, however. You can roll over or transfer funds from a 403(b), TSP, IRA, SEP IRA, SIMPLE IRA, or similar retirement account into a precious metals IRA, again tax-free. So if you thought you would have to cash out your retirement savings and subject yourself to potential taxes and penalties in order to protect them, that’s not the case. A simple rollover can help you protect your existing retirement savings.
Once you have decided how to fund your precious metals IRA, you’ll have to decide which metals you’ll want to purchase. Gold and silver are the two most readily available precious metals, and the two most popular metals to purchase. But platinum and palladium are also options.
Goldco offers a wide variety of gold and silver coin and bar products directly from the mints that produce them. We want to ensure that the precious metals you purchase are 100% authentic and get to you as quickly as possible.
Because a precious metals IRA is subject to the same rules and regulations as any other IRA, it’s important that you are aware of those rules and regulations. Here are a few of the most important ones.
No IRA is permitted to own collectibles. Using IRA assets to purchase collectibles is considered a distribution of assets and will subject you to taxes and potential penalties. Coins and metals are normally considered collectibles, but with a few important exceptions.
26 U.S.C. 408(m)(3) allows IRAs to own certain coins produced by the US Mint (Gold and Silver American Eagles) as well as any coin or bullion meeting minimum fineness standards for futures contracts. In practice, this means that any gold that is at least 99.5% pure, any silver that is at least 99.9% pure, and any platinum or palladium that is at least 99.95% pure is IRA-eligibile.
Goldco’s precious metals products are designed to be IRA-eligible so that you don’t have to do the hard work of determining IRA eligibility for yourself, and so that you won’t accidentally subject yourself to taxes and penalties. Yes, it would be nice to own classic gold coins and Morgan silver dollars in an IRA, but the coins Goldco offers are every bit as beautiful, in addition to being IRA-eligible.
If your precious metals IRA is a Traditional IRA, as most are, you’ll have to take required minimum distributions (RMDs) at age 73 (or age 75 starting in 2033). These are the same RMDs that you would be required to take from your other retirement accounts that are funded with pre-tax dollars, such as a 401(k). If your precious metals IRA is a Roth IRA, you won’t have to take any RMDs.
If you take distributions from an IRA before you turn 59½, you could subject yourself to potential penalties in addition to any income taxes you might owe. Failing to take RMDs after age 73 could also subject you to penalties. If you’re unclear about whether you can take a distribution, or how much you need to take in RMDs each year, you may want to consult with an investment or tax advisor so that you don’t accidentally fall afoul of the IRS.
Opening a precious metals IRA can give you one more tool in your investment arsenal, a way to safeguard your existing retirement savings and protect your money from the possibility of loss to inflation or financial crisis. If you think a precious metals IRA might be the right choice for you, call the experts at Goldco today.
With thousands of satisfied customers and over $1 billion in precious metals placements, we know what it takes to make our customers happy. Let us help you protect your retirement savings with precious metals.
Free Precious Metals Guide
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Free Precious Metals Guide
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DISCLAIMER: This site is general in nature and not tailored to the specific goals of any individual. All investments carry risk. Some of those risks associated with precious metals include the following: prices may rise and fall, which means the value of your metals may go up or down over time and you may sell for more or less than you paid. Past performance does not guarantee future results. Goldco cannot guarantee, assure, or promise future market movement, prices, or profits. Even though Goldco and its representatives are precious metals specialists, we are not licensed financial advisors and do not give financial advice. Additionally, Goldco cannot provide tax or legal advice and will not advise as to the tax or legal consequences of purchasing or selling precious metals or opening a Precious Metals IRA. Individuals should consult with their investment, legal or tax professionals for such services.
