Categorized | Paper Gold

Gold IRA Overview


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In an age in which every other form of investment seems plagued with high unpredictability, gold seems to have become a preferred choice. The market endurance power of this precious metal has been tested by history and the results show that come what may, the value of gold always manages to hit a mark above others. It comes sans the tag of nationality and is unanimously accepted as the unchangeable asset value par excellence. As an investment tool therefore, it’s great, and for your IRA, a boon.

Yes, IRAs can now be furnished with physical gold (and silver too) and considering that the price of gold is on an upward surge in the economy and likely to increase manifold in the future, that your golden retirement years will get the best of ROI can be guaranteed. What’s more, they are excused from all kinds of capital gain taxes and hence, enable the investor to build up a huge savings over a period of time.

Financial experts also recommend the diversification of the retirement portfolio with precious metals as they have confidence in the concept of asset allocation.  Since 1998, IRAs have been associated with physical gold and the results and the returns have always been amazing.  And contrary to what you may think, it’s easy to get started too.

IRAs That Accept Physical Gold

To begin with, not all IRAs will accept physical gold as investment. For one, the IRA must be self-directed. In a conventional form of IRA, all decision making power lies in the hands of the brokers, more so, if you had originally set it up in connection to your job. In that case, most likely, you do not have a clue as to who the broker is or what the investment strategies of the investment company are. Expert estimate shows that till date, almost 96% of IRA investors don’t try to reach beyond what is offered to them on their custodial company platter. It may feel good to sit back and watch the professionals at work but ultimately it can leave you with much less than what you are entitled to. Renovating your traditional IRA and making it a self-directed one therefore is essential – it can help you to diversify the investment portfolio, as also put a part or whole of the retirement corpus into a Gold IRA.

So gear up and enquire with your current broker. Ask if you can put REAL physical gold into your IRA account. Yes or no, it is advisable to shop for deals to see if there is a better rate available. You will be required to pay an annual storage fee (as IRS regulations require that the precious metals in an IRA are to be in the custody of an approved custodian/depositary), and a maintenance fee too. If you are converting your traditional IRA into a gold IRA, you will also need to shell out a one-time conversion fee.

Self –directed IRAs can hold different asset types and that too in any number, but if you are looking for the best ones, there are 2 most reputable and popular precious metal administrators in the field who tender services for individual investors – New Direction IRA and Goldstar IRA. Many of the big names in banks offer metal administration services, yes, but for investors who prefer independent choices and also want to give big fees a miss, these specialized companies are the best.

For your information, Gold Star doles out custody for almost 20,000 IRAs (self-directed) with assets amounting to above $700million.

Goldstar had HSBC as its depository earlier but recently they have tied up with Delaware Depository Service Center or DDSC as their sole depository.

New Direction IRA has multiple franchises working independently all across the country offering self-directed gold IRA services. And it is not tied to a single depository. The investor is free to exercise his choice here, and therefore, at liberty to shop for the best storage rates.

Bullion That Is Eligible For a Gold IRA

American Gold Eagle Coins – this is the approved bullion for a gold IRA. Some other bullion coins that meet the eligibility and fineness standard are also there and these include Canadian Gold Maple Leaf coins, Austrian Philharmonics, Australian Kangaroo Nuggets and Perth Mint’s Lunar Series. These coins are all .999 fine, i.e. 99.9% pure and qualify as legal tender. Fine gold bars with .995 purity, manufactured by refiners approved by the COMEX (The Commodities Exchange) are also acceptable.

Gold coins already held in your possession or coins with 91.67% purity like the Krugerrands as also old American gold coins of 90% purity are not considered as legal investments for gold IRA.

The US mint and many others too, fabricate 2 versions of bullion coins-

1)      Standard Mint State

2)      PROOF version

Buying PROOF versions of the gold coins is a common mistake noticed on the part of the buyers. The PROOF coins are constructed to a superior standard containing specially designed planchets and manifold strikings. They are breathtakingly beautiful, yes, but that adds to the price, ultimately making them costlier than the Mint State Coins, although they are at par in their gold content.

The premium price that you pay for Proof Coin will however not increase the value of your investment and you will end up getting less gold value for the money spent.

Note that for investing in a gold IRA, you just can’t pick up coins from your local coin retailer – for that you have to open a self-directed IRA account and let your administrator do the rest. Now, what does an IRA administrator do? To begin with, they are the ones who handle all the funds. Whether you open a new account and fortify it with an express deposit or rollover funds from your current IRA or some other 401K, they will use this money to pay the coin/bullion dealer for buying physical gold.

Neither you nor your administrator holds/exercises control over the physical gold investments in your account. As mentioned earlier, the IRS rules specify that all bullion assets in a self-directed gold IRA, must be kept in a depository – an approved and insured specially secured zone to stockpile precious metals.

Gold ETFs and IRAs

A Gold ETF is yet another option of investing gold in your IRA, since an IRA is equipped to hold multiple kinds of assets. A good example is SPDR Gold Shares. If you prefer to buy paper gold, the ETF might be your preferred choice as it offers you gold value in the form of exchange traded fund. The 28% tax that an ETF is charged with can also get exempted through this (since ETF contains gold, it is measured as a collectible and also taxed at almost twice the charge of capital gains). This has been enabled by yet another IRS regulation –

“Shares of ETFs in the form of a trust that mirror the price of physical gold and silver do not constitute an acquisition of a collectible if they are acquired in an IRA.”

Therefore, gold ETF in a gold IRA is not slapped with the 28% tax rate that is applicable on collectibles.

However, the advantage of putting physical gold in your IRA account is unique – you can actually hold the physical possession of the gold at the time of your withdrawal, which precisely means that you have the liberty to cash-out your IRA in real gold, when the time of accessing your investments arises.

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