Asking which precious metals are gold IRA eligible may seem like a funny question, since it seems like the answer is obvious: gold. But gold IRA is a term very often used synonymously with a precious metals IRA, since gold is generally the most popular precious metal for investors.
A gold IRA doesn’t just have to hold gold. It can also hold other precious metals too. This enables you not just to diversify your overall portfolio with gold, but also to diversify your precious metals holdings with other metals aside from gold.
But before we get into the discussion of which precious metals are gold IRA eligible, let’s discuss what a gold IRA is and what its benefits are.
What Is a Gold IRA?
As the name suggests, a gold IRA is an individual retirement account (IRA) that owns physical gold coins or bars. It’s just like any other IRA except that instead of owning financial assets such as stocks and bonds, or shares in funds, it holds actual physical metal that is stored at a bullion depository.
The Benefits of a Gold IRA
Owning gold within a gold IRA has numerous benefits. Here are some of them.
Diversify Your Portfolio
Gold has always been popular as an asset to diversify an investment portfolio. Many people think that investing in an index fund or a handful of stocks, bonds, and funds is enough to diversify your portfolio. But so many financial assets depend on the health of Wall Street for their financial performance.
In the event of a financial crisis, a portfolio that is too dependent on financial assets could fall victim to major losses, as many people found out during the 2008 financial crisis. Diversifying your portfolio could help you lessen the amount of money you lose during a crisis.
Hedge Against Inflation
Gold has also been popular as a hedge against inflation, as it has a reputation for maintaining its value and purchasing power over the long term. Even in the short term gold can help protect against inflation, as witnessed by gold’s performance during the 1970s.
Despite inflation peaking at 11% during the stagflation of the 1970s, gold’s real annualized returns that decade were over 20%. That’s pretty impressive performance for any asset for that length of time, but it goes to show how gold can behave during times of economic weakness.
Many gold buyers are undoubtedly hoping for similar performance from gold if inflation today ends up becoming entrenched. They’re unsure whether the Federal Reserve is willing to do what it takes to really tame inflation, and so they’re trying to hedge their portfolios against inflation by buying gold.
Tax-Free Asset Growth
A gold IRA also offers you the ability to grow your wealth tax-free. Just like any other IRA, the gains you make within a gold IRA are not taxed unless you make a distribution.
If your gold IRA is a Traditional gold IRA, your gains accrue tax-free and you pay regular income taxes when you take a distribution. If your gold IRA is a Roth gold IRA, your gains accrue tax-free and you pay no taxes when you take a distribution.
As with any other IRA, all the other usual IRA rules apply, including those for required distributions after age 72, potential penalties for distributions before you turn 59 ½, and the special rules for Roth accounts.
One popular method of funding a gold IRA is through a 401(k) to gold IRA rollover. This allows you to roll over funds from an existing 401(k) account into a gold IRA tax-free. In that way you can protect any assets you have in your 401(k) account by buying gold, while still maintaining the same tax advantages that you currently enjoy with your 401(k) accounts.
If you have a 403(b), 457, TSP, IRA, or similar account, you can do that same type of rollover or transfer too. Goldco’s specialists have years of experience helping customers just like you go through the 401(k) to gold IRA rollover process.
Safety and Security
As with any other IRA account, the gold in your gold IRA is managed by a custodian. And your gold will be stored in a bullion depository. That ensures that the gold you buy remains as safe as it possibly can be.
Goldco partners with some of the most experienced and respected companies in the industry to make sure that the gold you buy remains safe and secure.
Other Metals You Can Invest in With a Gold IRA
As mentioned above, a gold IRA doesn’t have to be just for gold. Here are some of the other precious metals which are gold IRA eligible.
Silver very often plays second fiddle to gold. Gold garners the headlines, while silver quietly works in the background. But that doesn’t mean silver can’t be a good potential investment.
For one thing, silver is cheaper than gold, which can make it an ideal beginner metal for investors. Many people have started in precious metals by buying silver, then moved into gold. The low silver price compared to gold makes it an attractive and alluring asset for those looking to dip their toes into the waters of precious metals investing.
Silver also has a tendency towards greater price swings than gold, in part due to the fact that roughly half of silver demand comes from industry. But when precious metals prices begin to rise, silver often rises more percentagewise than gold does.
For example, during the aftermath of the 2008 financial crisis, gold nearly tripled in price, but silver more than quintupled in price. So investing in silver as a hedge could end up resulting in bigger gains than just investing in gold alone.
Because silver is cheaper, there are often a greater choice of silver products to buy. Silver coins are minted by mints around the world in a wide variety of sizes, while silver bars are available in a multitude of sizes, from 1 gram all the way up to 1,000 ounces. That gives silver investors the ability to tailor their silver purchases to their needs.
Platinum’s primary uses are in industry and in jewelry. Many people may be familiar with platinum’s use in rings, particularly wedding bands. But the primary industrial use for platinum is in the construction of automotive catalytic converters.
Because of platinum’s anti-corrosive qualities, it, along with palladium, is used in automobile catalytic converters. It is also heavily used in electronics and dentistry. About 30-40% of current platinum demand comes from the automotive industry, 25-30% comes from the jewelry industry, 25-35% comes from other industrial demand, and the remainder of demand comes from investors.
Platinum’s production is also highly concentrated. Over 70% of world platinum supply comes from South Africa, with Russia, the United States, and Canada contributing much of the rest. That leaves platinum exposed to potential supply shocks.
In recent years the price of platinum has decreased to the point that it is significantly less expensive than gold. That’s a result of falling demand for platinum in catalytic converters. Many automakers had switched from platinum to the cheaper palladium. But with palladium now rising significantly in price, many automakers may once again be thinking about switching back to platinum, which could boost the platinum price in the future.
There are numerous platinum products available on the market which are gold IRA eligible, including bars and coins, although availability is generally more limited than gold and silver IRA eligible products.
Palladium belongs to the platinum group of metals, which includes platinum, palladium, rhodium, and others. Palladium was only discovered in 1803, and it is a relatively rare silver-colored metal that is about 15% denser than silver.
Palladium ore deposits are very rare, with only a handful of mines around the world containing palladium, including in South Africa, the United States, Canada, and Russia. Russia produces about 40% of the world’s supply of palladium.
Palladium has numerous industrial uses, most notably in automobile catalytic converters. But it’s also used in electronics, jewelry, and dental applications.
The palladium price started rising significantly in late 2018, and at one point in 2020 it reached nearly $3,000 an ounce. While the palladium price has fallen a bit since then, palladium is currently still more expensive than gold. That has given it a lot of attention in recent years from investors who otherwise would have stuck to gold, silver, or platinum.
The major factor that drives demand for palladium is its use in automobile catalytic converters. With ever more stringent automotive emissions standards, catalytic converters have to become ever more efficient.
For years platinum was the dominant metal used in catalytic converters, but it was expensive, as expensive as or more expensive than gold. Palladium was comparatively cheaper, so many companies began to make the switch to palladium in catalytic converters instead of platinum.
But that increased demand for palladium caused the price to rise, and now palladium is more than twice as expensive as platinum, and even more expensive than gold. Since it can take years for car manufacturer supply lines to switch from palladium to platinum and vice versa, many companies are sticking with palladium despite the high price, which could keep the palladium price elevated for years to come.
Palladium products that are gold IRA eligible are available, but they’re not nearly as available even as platinum products are. Many mints still treat palladium as a curiosity, creating one-off coin or bar products, but without consistent production.
Part of that is related to uncertain demand from retail investors, as well as palladium’s greater volatility when compared to gold. Still, if you’re looking for precious metals that are gold IRA eligible, palladium will fit the bill.
Is Now the Time to Buy Gold IRA Eligible Precious Metals?
With inflation continuing to rise and more and more people fearing a coming recession, wealth preservation and asset protection are becoming increasingly important topics. Many people have already made the move to protect their assets with gold, silver, and other precious metals, and consumer demand for precious metals is booming.
If you haven’t yet protected your assets with gold IRA eligible precious metals, what are you waiting for? Call the precious metals experts at Goldco today to learn more about how you can benefit from precious metals.