What are precious metal IRAs?

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Many individuals are concerned about how the outcome of the approaching presidential election may impact the economy. This uncertainty has led more people to think about investing in precious metals like gold, silver, or palladium, as is typical during any time of turbulence.

Investors can purchase precious metals in individual retirement plans (IRAs), but before opening an account, you should consider the particular risks and benefits of doing so.

What is a precious metal IRA? 

The kinds of securities you can invest in with your regular or Roth IRA are restricted. Generally speaking, investments in precious metals and real estate are prohibited, but securities like stocks and bonds are.

An alternative that enables investors to invest in a wider range of assets, such as commodities, real estate, and artwork, is self-directed IRAs. A particular kind of self-directed IRA known as a precious metal IRA allows investors to own Bitcoins as well as certain precious metals including gold, silver, platinum, and palladium.

You are the owner of the coins or bullions kept in a precious metals IRA, as opposed to investing in stocks, where you do not possess a physical asset.

According to Alex Ebkarian, the COO and co-founder of precious metals dealer Allegiance Gold, “[A precious metals IRA] helps to preserve your buying power and protect wealth.”

How do precious metal IRAs work? 

To open a precious metals IRA, there are several further steps you must take. A self-directed IRA custodian, which is a trusted business authorized by the IRS to manage precious metals and alternative assets, is required, as is a precious metals dealer to facilitate the transactions.

Typically, there is a charge to start an IRA with precious metals. You have the option to select which metals to invest in within the IRA once the account is opened. The kinds of precious metals that can be kept in a self-directed IRA are restricted. The current regulations stipulate that metals have to fulfill the following criteria:

  • Gold has to be 99.5% pure.
  • Silver needs to be 99.5% pure.
  • For both palladium and platinum, it needs to be 99.95% pure.

Products like Canadian Maple Leaf coins, Australian Koala bullion coins, and American Eagle bullions are acceptable. Not eligible are other well-known coins, such as rare or collector coins.

It is not possible to keep your precious metals at home. You will be required by IRS regulations to keep your precious metals with an approved depository and to pay storage costs.

Precious metal IRA contribution caps and mandatory minimum distribution requirements are identical to those of regular IRAs, and the caps apply to the total amount of IRAs you own. For instance, the maximum amount you can contribute to any one of your IRAs—Roth, traditional, or precious metals—combined is currently $7,000 annually.

Risks of investing in precious metal IRAs  

Although investing in precious metals carries several dangers, the performance of gold and silver can be quite attractive. You should be mindful of the dangers and drawbacks listed below.

High costs

Generally speaking, fees for precious metal IRAs are higher than for regular or Roth IRAs.

“A standard or Roth IRA can be opened at your preferred brokerage site at no cost,” stated Drew Feutz, a certified financial planner (CFP) affiliated with Migration Wealth Management. “However, there are setup costs, substantial transaction fees, custodial fees, and you’ll have to pay a separate organization to store the physical assets if you choose to open a self-directed or precious metals IRA.”

Does not yield the returns of stocks

The price of gold has risen by 34% in the last ten years. Although that seems incredible, the stock market’s rise greatly surpasses the price adjustment. If you place your money in precious metals by chance, you could lose money on investment because broad-based index funds offer returns that range from 200% to 450% over the same period.


Although they might be unstable, precious metals like gold and silver are traditionally thought of as a hedge against inflation. They are not regulated goods and are instead thought of as speculative ventures. Platinum’s performance shows that prices can decline significantly.

Additionally, they might not be as liquid as other assets. According to Ebkarian, “metals like gold and silver are generally liquid, but it may be difficult to find a buyer at any time during a market selloff.”

The takeaway  

Precious metal If you’re worried about the health of the economy, an IRA may be an attractive option for you. You can invest in precious metals and benefit from the tax advantages associated with IRAs, but there are costs and dangers to take into account. Experts generally advise limiting your exposure to no more than 15% of your total portfolio.

Gold and precious metal exchange-traded funds (ETFs) are alternative investments to precious metals individual retirement accounts (IRAs); these funds invest in precious metals or related businesses, such as mining companies.

“I believe purchasing an ETF backed by actual metals is significantly simpler and most likely less expensive,” Feutz stated.

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