What is a Precious Metals IRA?
In 1974, the US Government passed a law called the Employment Retirement Income Security Act (ERISA). This new law allowed individuals to open up Individual Retirement Accounts. Prior to the law being passed, unless you had an employer-sponsored pension, it was very difficult to leverage the tax benefits of a retirement account. With ERISA, this allowed individuals to open up Individual Retirement Accounts. This was further expanded to the formation of Self-Directed Individual Retirement Accounts, which allows individuals to direct retirement funds to invest in non-traditional investments such as real estate, bonds, private companies, and precious metals. A precious metals IRA is a Self-Directed IRA that allows individuals to contribute to a new account or rollover a portion of their current retirement accounts to invest in certain types of physical gold, silver, platinum, and palladium.
If you are the owner of an individual retirement account (IRA) and are worried about economic inflation affecting the value of your assets, investing in precious metals may be a good choice. Precious metals are time tested and proven to be a solid investment in a volatile market because the price of precious metals tends to rise when the stock market is down. Including precious metals products in your account will ensure diversification so when the next recession hits, your retirement portfolio is safe. Buying precious metals when the stock market is up is another popular strategy. Recessions are cyclical and it’s not a question of if the market will crash, but when so there is never a bad time to invest in precious metals. In addition to this, precious metals offer protection against the weakening dollar and in today’s unstable stock market, you can benefit from peace of mind knowing that your portfolio is secure in case of a financial meltdown.
Why Precious Metals?
If you are anywhere near retirement, you will remember the most recent 2008 Great Recession. Many experienced devastating losses and are still recovering from this event. If you are close to retirement and invested in only paper backed assets like stocks and mutual funds, another economic meltdown could wipe out a portion of your retirement savings and possibly delay your retirement by years. In order to have the security against another cyclical recession, it is crucial to have a diverse retirement portfolio. One popular method of diversification is investing in precious metals. Physical precious metals offer a unique stability in volatile economic times in comparison to paper backed assets like stocks and mutual funds. Because paper backed assets are based on the value of money, factors like inflation and interest rates can affect their value. While the US Government continues to print more and more money every day, physical precious metals cannot be printed. There is a finite amount of physical precious metals on Earth so their store of wealth will remain stable, even rising with inflation.
Besides their use as a store of wealth, precious metals have many uses that drive their demand:
Gold – The most popular precious metal. Gold doesn’t corrode and is malleable and conductive which makes it highly desirable for many uses. Other than a store of wealth, over 50% of gold’s demand is from jewelry. Another common use is in electronics due to its conductivity. The exploding demand for smart electronics will continue to drive the price of gold higher and higher in the information era. Learn more about starting a Gold IRA.
Silver – The number one use of silver is in electronics. It’s thermal and electronic conductivity make it an ideal metal for industrial applications that cannot be substituted with cheaper metals. Silver is used in computers, tablets, cell phones, televisions, automotive parts, solar panels, and much more. Learn more about starting a Silver IRA.
Platinum – Platinum is an industrial metal that is primarily used in automotive applications for catalytic converters to help reduce harmful emissions. It is also used in jewelry, and other refining catalysts and some computer applications. It is actually rarer than gold and silver.
Palladium – Palladium is 15 times more rare than platinum and 30 times more rare than gold. It is used in automobile manufacturing, electronics, dentistry, and fuel cell production. Similar to platinum, palladium is primarily used in automotive catalytic converters.
Because physical precious metals all have industrial and commercial uses, their value is not only based on exchange rate, but also supply and demand. With a finite supply and an increasing demand, their value will continue to rise.
Need additional help? Call us at (855) 465-3472 or fill out the form on the right-hand side of the page to have one of our representatives reach out to you offer a free consultation and guidance in getting started. From there:
- Once you are ready, together, we will complete the documents to set up your account and transfer or rollover funds from your existing IRA, 401k, or other employer sponsored plan to open the account. Alternatively, you can make a contribution (according to IRA limits) and open a new IRA that way.
- The next step is to send back your completed paperwork and let Goldco go to work for you.
- We will open your Self-Directed Individual Retirement Account and process the necessary documents to transfer the funds from your existing account without having to worry about paying taxes or early withdrawal penalties. Once your account is open, your representative will then be able to help you make informed decisions regarding the precious metals you should invest in. The entire process usually takes about 2-3 weeks.
- Once you select your metals, they will be ordered and sent to the Delaware Depository, where they will be held in a secure, IRS approved facility.
Which Products Meet the Standards for a Precious Metals IRA?
Although you may be keen to get in touch with precious metals brokers and start investing in products that will bulk up your precious metals IRA, it is essential that you read the IRA standards and guidelines beforehand. The following things may be assessed by the IRS when determining what products meet the precious metals IRA rules:
- Level of Purity – The precious metals in your IRA must meet a minimum fineness as stated by the IRS:
- Gold – .995
- Silver – .999
- Platinum – .9995
- Palladium – .9995
- Place of issue, e.g. Royal U.S. Mint
- The precious metals you place in your IRA must be held in the custody of an IRS approved custodian until you reach retirement age. Once you reach retirement age at 59 1/2, you can begin taking distributions either in the form of physical precious metals or you can sell them back at market price.
Do you still have questions? If so, speak with one of the gold and silver investment experts at Goldco.