Many individuals are not aware that they can be involved in gold IRA investing. Gold IRA investing occurs when the person purchases physical gold as a part of their IRA. Many people have choose to save funds for retirement in an IRA or 401(k) account.
A 401(k) is usually an employer-sponsored account that accepts contributions from both employers and employees. An IRA account can be opened by an individual and often when someone separates from their job they will roll over the funds into an IRA from their 401(k). An IRA is not an investment in and of itself; it is helpful to think of this type of account as a basket in which money is kept that is placed in different investment vehicles. These commonly include stocks, bonds, treasury securities, and other options that return money over time.
Not all IRAs can hold physical gold. However, it is possible to roll over an existing IRA into a gold IRA. Gold can also be added as a portion of an IRA. Like grandma used to say, never put your eggs in one basket. An IRA basket should always have a range of different investments. Diversification is crucial because of the relationship between various types of investments. Gold can be one of these investments.
Gold has been used as money in many forms since several hundred years before the Common Era. Gold has always been in demand, has always been valuable, and is easy to form into bars, coins, and jewelry. Gold traditionally maintains its value over time. Gold is inversely related to stocks and bonds, as their values lower, the value of gold rises. Therefore, having some gold in an IRA account means that the account holder retains wealth even if the stock market declines.
In early America, banks used the gold standard. This meant that any paper money or coins were backed by the same amount of gold. However, this is no longer the case. In a severe recession or depression, paper money is no longer as valuable, but gold is. Some experts feel that buying gold is like purchasing an insurance policy on a house that never burns down. The owner of the policy may never use it, but if they return home and are greeted by a bevy of firefighters, they are sure glad that they paid those premiums.
Every investor has different levels of risk that they can handle. Traditionally, the closer the person is to retirement or the less money they have, the safer their investments should be. Those with vast amounts of wealth can afford more risk, but the average person does not want to lose their shirt should the market take a dive. Since gold is stable over many years, it does fluctuate a bit, like most things, but on the whole, gold will be there when it is needed.
Other precious metals can also be included in an IRA account. Silver is also a high demand metal, although it does behave slightly differently on the market than gold. Silver has many industrial uses, therefore, if the economy contracts or expands, so does the demand for this metal. However, silver can still be a wise investment as part of a diversified portfolio.
Related to the purchase of physical gold and silver is the acquisition of stocks and bonds for companies that produce these metals. Since the demand is nearly always there, these companies are usually rock solid investment choices. Over the past decade and a half, the Standard and Poor 500 returned 91%, but gold returned over 150% and silver nearly 190%. Whether an investor chooses physical gold and silver, gold and silver futures, or buys stock in gold and silver mining companies, the return rate on these items could outperform the stock market over several decades.
Other metals that can be included in an IRA are palladium and platinum. Palladium is not quite as good of an investment choice as gold or silver because it is not as widely used and is not easily liquidated. Palladium is available in bullion coins and bars. Canada and China both produce coins made of this metal.
Platinum is more scarce than gold and therefore often sells for more. When the economy is stable, platinum is often worth twice the amount that gold is, when the economy is in flux, the price of platinum can fall below that of gold. Platinum is usually made into ingots or coins. This metal is harder to work with than others. Therefore, there are few countries that have platinum coins. The United States and Estonia both offer a platinum coin. The official platinum bullion coin of the US is the American Platinum Eagle. Both investors in an IRA and coin collectors can hold these coins.
Physical gold, silver, and other metals, including palladium, must be stored in an IRS approved format. Usually, a special trustee must handle storage of the coins or bars. A trustee could have an in-house facility for storage or could use a third party storage facility. It was not possible to put gold in an IRA until the late 1990s; this was enabled by the Taxpayer Relief Act of 1997. This act allows for gold, silver, and platinum coins and also includes some gold, silver, platinum, and palladium bullion.
Adding gold and other metals to an IRA has become more popular in the past few years. The recession stemming from the financial crisis in 2008 scared many investors into purchasing precious metals. The process of putting investment funds into a gold or silver IRA is just a bit different than the traditional route. The investor must open a self-directed IRA, which is managed by the investor. This type of IRA allows for the addition of other items such as precious metals. The investor then needs to engage the services of a broker, who buys the gold, and a custodian to create the IRA. The custodian is often a credit union, S & L, or bank that has been approved by the appropriate agencies to store gold.
The bank, or custodian, does not supply brokers to clients. However, they may offer recommendations. Choosing a custodian is an important piece of this puzzle. The investor should do some research before selecting a custodian. It is important to know all of the fees that could be involved and how flexible the company is. The custodian should serve the needs of the customers, not the other way around. The company should also be qualified and have the required insurance and licenses. The investor is allowed to ask for verification of these items. The company should also have references and have a good business rating from a third party. The custodian should not try to pressure the investor, but allow them to make their own decisions.
It is possible to avoid needing a custodian. For those financially savvy investors, it is possible to open what is called a checkbook IRA. Those who have a business checking account and have formed an LLC, or limited liability company, can open this IRA. The investor is then allowed to purchase the US Treasury’s Gold Eagle coin, and they do not need to find third party storage. However, the IRS carefully looks at this IRA, so the investor should proceed cautiously. A financial advisor should be consulted before taking this step.
There is a plethora of advice on investing in gold and gold ira investing online. Many companies offer free guides or courses to lead investors through the process. It is possible, by doing some homework, to avoid mistakes made by beginners. Many of these companies have their own experts that will offer advice if needed. Proceed online with caution; many unscrupulous companies would love to separate an investor from their money. While it may be tempting to buy immediately, selecting the right custodian and broker will save money, time, and heartache in the long run. Harvard Gold and Economy Observer offer the best gold investing training on the web. Sign up for FREE here.
A few other important things to mention are specific gold IRA rules and regulations. The IRA itself will be the owner of the metals, not the holder. The IRA pays any costs associated with transactions, and any gains remain in the account until disbursement is allowed. Unless the investor opens a checkbook IRA, the investor cannot physically possess the metals. Any legal documentation should be in the name of the IRA, not the holder’s name. Also, the metals must meet particular standards. The custodian and broker can guide the investor through this process.
Uncertain economic times can call for different ways of investing. In every case except nuclear annihilation, the possession of precious metals will see an investor through any financial and political crisis. The world economy is not stable these days, and the United States is in great debt to other countries, such as China. Some doomsayers predict dire times ahead while others disagree. It is vital for an investor to protect themselves and their families by not placing all of their faith in the stock markets and placing some in gold IRA investing.
We probably haven’t covered all your questions on Gold IRA Investing. As you would expect there are a lot of factors to take into consideration. Join our FREE Gold IRA Investing training today to learn the 10 most dangerous mistakes investors make when investing in gold and how to avoid them. Fill in the form below and get started with your gold ira investing journey today and get into gold ira investing today!