Self-Directed IRA Precious Metals Investing: 5 Common Questions Answered
Precious metals investing can be an intriguing option for anyone who’s wary of the stock market or simply looking to diversify their portfolio. The idea of owning gold is especially appealing because it’s a timeless commodity that has consistently held value throughout history.
If you’re wondering how to invest in gold and other precious metals, you have several options. You may already know from brief online research that you can purchase physical gold bullion from a dealer; invest in gold-mining company stocks, exchange-traded funds (ETFs) or mutual funds; or buy gold futures—but there’s one more lesser-known option to learn about before you make your final decision.
A Self-Directed IRA can give you that gold feeling of owning precious metals, with the option of storing metals safely at a dedicated facility. Surely, you have some questions. We can guess what a few of them are, so let us provide the answers upfront.
Can You Own Precious Metals in an IRA?
You can own precious metals in an IRA, but it must be a Self-Directed IRA. While a standard IRA is limited to stocks, bonds and mutual funds, a Self-Directed IRA allows you to hold alternative investments including real estate, promissory notes, precious metals and more—all in a familiar Traditional or Roth IRA managed by a designated Self-Directed IRA custodian like Madison Trust. When used specifically for precious metals investing, a Self-Directed IRA may also be referred to as a Gold IRA.
What Precious Metals Are Allowed in an IRA?
With a Self-Directed IRA like Madison Trust’s Gold IRA, you can hold any combination of gold, silver, platinum and palladium. Metals that are not issued by the government must meet the following IRS requirements for fineness, which is the weight of the metal in proportion to the total weight of the object in parts per thousand:
Metals minted by the U.S. government, such as American Eagle coins, are exempt from fineness requirements since the government can control and confirm the purity in production.
How Does a Gold IRA Work?
Self-Directed IRAs are a little more involved and advanced than standard IRAs. After all, they’re self-directed, requiring some knowledge and know-how. Each Self-Directed IRA custodian will have their own way of doing things, so we can only speak to our process, which we aim to keep as simple as possible.
First, you’ll open and fund your Self-Directed IRA so you can invest outside of the stock market. Then, if Self-Directed IRA precious metals investing is your main interest, you can use your Self-Directed IRA as a Gold IRA by opening an account with FideliTrade, a Delaware Depository company and one of the most trusted names in precious metals investing. You’ll choose your metals and amounts with FideliTrade and fill out paperwork from both FideliTrade and Madison Trust authorizing Madison Trust as your Self-Directed IRA custodian to wire funds to Delaware Depository, which will then store your precious metals in their vault. In any Self-Directed IRA, your custodian handles all transactions on your behalf to avoid any prohibited transactions between you and your IRA.
How to Safely Store Precious Metals
Buying bullion undoubtedly brings a (gold) rush of accomplishment. Who wouldn’t marvel at bars of pure gold like you see in the movies? However, storing it is a different story and may bring more stress than joy. We’ll spare you the cringe-worthy ways gold can be lost or stolen and just say that a reputable precious metals storage and custodial facility like Delaware Depository can provide much-needed peace of mind when owning and investing in precious metals. Safe to say, their advanced security systems, operations, staffing, vaults and additional legal protection are worth a look.
Are Precious Metals a Good Investment?
“Good” and “bad” investments are always subjective and situational. Given its staying power as a tangible, valuable commodity, gold is an attractive investment to many along with other precious metals like silver and platinum. Gold in particular is typically seen as a hedge against inflation, holding its own and even increasing in times when the value of the dollar drops. There will likely always be willing buyers whenever you’re ready to sell, and if nothing else, it can be a relatively stable investment that you can use to diversify your portfolio in case other investments get hit by hard economic times.
The decision to invest is ultimately yours, ideally with some guidance from a financial advisor. If you decide to go forward, we’re here to make precious metals investing simplified and secured with our Self-Directed Gold IRA. Have additional questions? Speak with our team today.