A precious metals IRA is a self-directed individual retirement account that invests in precious metals. This type of IRA appeals to an investor who wants a diversified portfolio. Because the prices of precious metals such as gold generally move in the opposite direction as paper assets, a precious metals IRA hedges against inflation.
Precious metals have proven to be a solid investment in volatile markets, so you can safeguard your investment when and if a recession hits. A precious metals IRA also protects against financial meltdowns and a weakening US dollar.
If you’re about to retire, you will likely remember the effects of the 2008 Great Depression. Many people incurred huge losses and are still recovering from the financial impacts of the event. Bearing that in mind, investing in only paper assets like stocks and mutual funds leaves you vulnerable to another economic meltdown that could permanently delay or even wipe out your entire retirement savings.
Precious metals offer a unique stability in volatile economic situations when compared to paper-backed assets. Thus, a precious metals IRA would help you take advantage of the security and stability of precious metals.
Because paper-backed investments depend on the value of money, factors like interest rates and inflation can affect their value. While the US Government can continue to print more money every day, they can’t print precious metals. Precious metals are a limited resource, so their store of wealth remains stable, even with rising inflation.
Besides Being the Most Popular Commodities for Investing, What Drives the Demand for Precious Metals?
In addition to being the most popular precious metal, gold is malleable, conductive, and resistant to corrosion. That makes it highly desirable for a wide range of uses. Other than a store of wealth, more than half of gold’s demand is for making jewelry.
Thanks to its conductivity, gold is also commonly used in electronics. The ever-rising demand for technological gadgets in today’s information era will continue to drive gold’s price higher and higher.
Silver is used primarily in electronics. Its excellent electronic and thermal conductivity makes it ideal for industrial applications where you can’t substitute silver with cheaper metals. Device manufacturers also use silver in computers, solar panels, automotive parts, phones, tablets, televisions, and more.
Platinum finds its primary use in automotive applications such as catalytic converters to help reduce harmful emissions. Various industries also use it for jewelry and other refining catalysts, as well as some computer applications. Platinum has historically been as expensive as gold and is rarer than both gold and silver.
Palladium has applications in the automobile industry, dentistry, fuel cell production, and electronics. It’s 30 times rarer than gold and 15 times rarer than platinum. Like platinum, palladium is a critical component in automotive catalytic converters.
Because precious metals all have commercial and industrial applications, their value depends on more than just their exchange rate or investment demand. Supply and demand play crucial roles in determining their value. With a finite supply and a growing demand, their values keep rising. Therefore, investing in a precious metals IRA is a great opportunity to diversify your investment portfolio.
Any IRA has the legal capacity to purchase precious metals. However, most major custodians don’t offer precious metals as an investment option as they’re typically structured to hold only paper assets as managed funds. Since a precious metals IRA is a self-directed investment, it generally requires a custodian that offers self-directed IRA investments.
If your current custodian doesn’t offer precious metals as an investment option, we can help you initiate a tax-free direct transfer or rollover to a custodian who does.
An IRA transfer is a direct way to transfer your IRA funds from one custodian to another. The funds are sent directly from one custodian to another without any tax consequences. A transfer is more efficient and preferred when moving funds between like accounts, such as from one traditional IRA to another. There’s no limit on the number of transfers you can do in a calendar year.
You generally need to rollover when transferring funds between different accounts, such as from a 401(k) to an IRA. A rollover can be direct, meaning the funds are sent from one custodian to another, or indirect, where the custodian sends the funds to you. Indirect rollovers require you to move the funds within 60-days to another retirement account such as an IRA.
Failing to transfer the funds within the 60-day window will attract a tax charge and possibly an early withdrawal fine. You are only allowed a 60-day rollover once in any 12 months.
First, you have to establish a self-directed IRA (SDIRA) with your new custodian. It’s a short 10 to 15-minute application process that we’ll walk you through. Make sure you have a copy of your driver’s license or state identification, your beneficiary information, as well as a copy of a statement from your current retirement account.
Alternatively, we can complete the application process over the phone and send it to you for review and signing. Once you’ve completed the application and we have it in our office, we’ll process and complete the opening of your new SDIRA. Your new SDIRA should be established within 24 hours.
Next, we’ll contact your current IRA custodian and make arrangements to complete the tax-free/penalty-free rollover of your retirement account funds. Transfers typically take between 3 to 10 business days, depending on how fast your custodian can send the funds. Once the custodian has transferred the funds to your new SDIRA account, we’ll contact you and discuss your precious metals options.
You’ll then decide what combination of gold, silver, platinum, and palladium is best for you. The metals supplier will then ship them to the secured depository, where the metals will be inspected and itemized before being placed into your deposit box.
- Gold – .995
- Silver -.999
- Platinum -.9995
- Palladium -.9995
There is plenty of gold, silver, platinum, and palladium coins and bars that the IRS allows you to purchase in a precious metals IRA. Some of the more popular approved bullion coins are American Gold Eagles, American Silver Eagles, Austrian Philharmonics, and Canadian Maple Leaves.
Do you still have questions regarding precious metals IRAs? Don’t hesitate to contact Century Gold to speak to one of our precious metals investment experts.