Is a Gold IRA a Good Idea?

gold IRA retirement nest egg

With uncertainty growing all the time, more and more people are looking at ways to protect their wealth against the possibility of recession and financial turmoil. Millions of Americans watched in horror in 2008 as the savings and investments they worked so hard to build up melted away in a matter of months. So the growing likelihood of a recession occurring this year is putting fear into the hearts of many.

Many Americans have already started to think about protecting their assets, taking advantage of the time they still have to find alternatives to their current investments. Gold has always been a popular option when it comes to wealth protection, so it’s no surprise that demand for gold from retail investors has increased in recent months.

One option that is becoming increasingly popular is a gold IRA, which allows you to own physical gold coins and bars in an IRA account. But with so many options to protect your assets, how do you know if a gold IRA is a good idea?

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What Is a Gold IRA?

If you haven’t already heard of a gold IRA, it’s just an IRA account that owns physical gold coins or bars rather than conventional financial instruments. If you already have an IRA account, there’s a good chance that your current custodian doesn’t offer gold as an investment option. That’s because most IRA custodians don’t want to deal with precious metals.

Gold IRAs are therefore most commonly the purview of IRA custodians who specialize in alternative assets such as precious metals, real estate, private offerings, etc. These gold IRAs are a type of self-directed IRA, in which you as the IRA owner make the decision about which assets your IRA owns, without being artificially limited in your choices.

Benefits of Owning Gold

Owning gold has a number of benefits, which is why gold has remained a popular asset for centuries. Here are three of the best known benefits of owning gold.

Wealth Protection

Gold has a reputation first and foremost as a protector of wealth. When paper currencies become worthless, when companies that issue stocks and bonds go bankrupt, when governments collapse, gold is still there maintaining its value.

That long-term stability can be especially beneficial during times of financial turmoil and economic uncertainty. You may not know what’s going to happen a year or two from now, but you do know that gold in the vault will remain gold in the vault.

Over the long run, gold maintains its purchasing power and gains in value when paper currencies don’t. The dollar, for instance, has lost 97% of its value since 1913, while gold has gained over 9,000% in value. That kind of performance helps gold retain its popularity as an asset for long-term wealth protection.

Inflation Hedging

Gold has also played a role as an inflation hedge, as it tends to perform especially well during periods of high inflation. The last time the US experienced prolonged high inflation was during the stagflation of the 1970s. During that decade, gold grew at an annualized rate of over 30%, far outpacing financial markets and inflation.

Now that inflation has once again become a problem, gold could play an important role in protecting portfolios against inflation. If inflation becomes entrenched again as it was during the 1970s, and if gold repeats its 1970s performance again today, it could really take off.

Portfolio Diversification

Putting all your eggs in one basket is something that has been frowned upon for centuries. Yet we all probably know someone who is guilty of doing that. Are you guilty of it?

How much diversification is ideal is a matter of personal preference, and is going to depend on your investment aims. And you could certainly invest in so many different assets that you end up having trouble keeping track of all of them. But most Americans are probably under-diversified rather than over-diversified.

How many people invest in anything outside stocks and bonds? The danger in concentrating in financial assets is that in the event of a systemic financial crisis, both bonds and stocks could end up getting hammered.

Protecting your wealth in such a situation would mean diversifying into assets that continue to perform even in the face of recession and financial calamity. During the 2008 financial crisis, for instance, gold gained 25% during the same period that markets lost more than 50%. That kind of countercyclical performance is why gold has been a popular asset with which to diversify investment portfolios.

Advantages of a Gold IRA

Owning gold through a gold IRA offers additional advantages to gold ownership. Here are two of the most important ones.

Tax-Free Growth

Because a gold IRA is a tax-advantaged account just like any other IRA account, it offers you tax-free asset growth. A Traditional gold IRA would purchase gold with pre-tax dollars, accrue gains tax-free, and you would pay taxes at distribution. A Roth gold IRA would purchase gold with post-tax dollars, accrue gains tax-free, and you would pay no taxes at distribution.

Another advantage of a gold IRA is that you could end up paying a lower tax rate when you own gold in a gold IRA versus owning gold outside an IRA. Gold held outside an IRA is subject to the tax rate on collectibles, which can run up to 28%. Gold held within an IRA is taxed at marginal income tax rates, which depending on how much income you make could very well be under 28%.

Protecting Your Retirement Savings

The tax-advantaged status of a gold IRA means that you can transfer or roll over funds from existing IRA, 401(k), 403(b), TSP, and similar retirement accounts into a gold IRA tax-free. This can allow you to protect your existing retirement savings by moving your existing assets into physical gold coins or bars.

Protecting your retirement savings doesn’t mean that you have to cash out of your 401(k) or IRA and take a big tax hit or subject yourself to potential penalties. With a gold IRA you can buy gold seamlessly with your existing tax-advantaged assets and don’t have to worry about paying taxes, as your wealth will remain in a tax-advantaged retirement account.

Gold IRA Rules

As with any other IRA account, a gold IRA is subject to IRS rules and regulations. These are the same laws and regulations that govern all other IRA accounts, but they’re especially important to know for a gold IRA.

No Collectibles

No IRA account is allowed to own collectibles. Attempting to purchase collectibles with IRA assets would be considered a distribution of assets and would trigger potential taxes and penalties.

The tax code defines all coins and metals as collectibles, but makes a few important exceptions. These are a handful of coins produced by the US Mint, such as the Silver American Eagle and Gold American Eagle coins, as well as any coin or bar of gold, silver, platinum, or palladium that contains the minimum fineness needed to satisfy a futures contract.

For gold, this means that any gold coin that is at least 99.5% pure gold is IRA-eligible. So if you wanted to try to buy Krugerrands, Austrian 100 Corona, or Swiss 20 Franc coins for your gold IRA, you’re out of luck.

Thankfully mints around the world produce numerous gold coins that satisfy that minimum fineness requirement. Goldco partners with many of these mints to bring you authentic IRA-eligible gold coins that you can purchase for your gold IRA.

Custodian and Depository

As with all IRA accounts, a gold IRA must have its assets managed by a custodian. And because a gold IRA holds tangible physical assets that require storage, they must be stored at a bullion depository. Goldco partners with established custodians and depositories who have significant experience in managing precious metals assets and keeping our customers’ gold holdings safe and secure.

No Home Storage

If you’ve done any research about a gold IRA, you may have heard about something called a home storage gold IRA. This purports to be a gold IRA arrangement that allows you to purchase gold coins with pre-tax dollars and allows you to store them at home. If that sounds too good to be true, that’s because it is.

While it is perhaps theoretically possible for an individual to satisfy the requirements to be an IRA custodian, the bar is set so high that no one has ever done it. Attempting to set up a home storage IRA based on something you may have read on the internet could leave you facing taxes and penalties.

Don’t fall for something that sounds too good to be true. Stick to tried and true products like a gold IRA and work with reputable partners like Goldco so that you don’t end up putting your retirement savings at risk.


A gold IRA is subject to the same IRS rules and regulations surrounding distributions. This means that you’ll be required to start taking required minimum distributions (RMDs) once you turn 73. Any distributions you take from a Traditional gold IRA will be subject to taxes, while distributions you take from a Roth gold IRA will not be. You can take your distributions either in cash or in physical gold.

Learning More About a Gold IRA

If you think that a gold IRA might be a good idea for you, now is the time to learn more. A gold IRA can be a powerful tool to help you protect your existing retirement savings and harness your hard-earned wealth to make the maximum impact during a time that could potentially feature a severe recession.

Thousands of people have already made the decision to start a gold IRA and buy gold in recent months, trying to stay ahead of developments in the economy. They’ve taken the opportunity to protect their assets while they still can, before markets correct.

If markets suffer a correction during the next recession as bad as the one they suffered in 2008, millions of Americans could end up suffering financially. Preparing for the next recession means taking steps to minimize your potential losses, so that the next time recession hits and markets plummet, you won’t lose your shirt.

Gold can be one potential way to help protect your wealth during a recession, and a gold IRA can be one tool that can help you achieve your aims. The experts at Goldco have helped thousands of customers protect their retirement savings with gold over the years, with over $1 billion in successful precious metals placements.

Give Goldco a call today and find out how you can benefit from starting a gold IRA today.

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