For some investors, gold is an appealing asset for retirement investing. Gold offers an additional source of diversification, and it’s seen as a hedge against inflation and volatility.
While you can get some exposure to gold in a normal retirement account through stocks or funds, you cannot invest in the physical asset. To do that, you need a gold individual retirement account—commonly referred to as a gold IRA. so, yes you can put physical gold in an IRA.
However, there’s more to it and you need ample information as well as cash to achieve this.
If you’re interested in owning gold or investing in its future value, a self-directed gold IRA account might be a good way to do it. These individual retirement accounts let you invest in gold, precious metals, and other assets (including real estate) to help grow your wealth and diversify your portfolio.
As with any retirement account, there are certain requirements you’ll need to meet to start investing.
In some ways, investing in a gold IRA is like investing through a regular IRA. As long as you meet eligibility requirements to invest in a traditional IRA, you can generally open a gold IRA. That means finding a self-directed IRA custodian that you can then fund and make investments through.
If you buy gold, buy silver, or buy other types of precious metals within an eligible IRA, you can generally do so via a precious metals dealer. The process can also involve choosing your depository to hold the physical gold, silver, or other precious metals.
Before going further on how you can put gold in physical IRA, you need to understand what a gold IRA is.
What Is a Gold IRA?
A gold IRA is a type of self-directed individual retirement account (IRA) that lets you own gold bullion. You cannot own physical gold in a regular IRA, although you can invest in a variety of assets with exposure to gold, like the stocks of gold mining companies or gold exchange-traded funds (ETFs).
Opening a self-directed IRA lets you invest in alternative assets like real estate, physical precious metals and cryptocurrencies. Gold IRAs follow the same general rules as conventional IRAs when it comes to tax benefits (traditional or Roth), contribution limits and withdrawal rules. However, the IRS has implemented additional tax reporting and record keeping requirements for self-directed gold IRAs due to the more complicated assets they hold.
How can You Hold Physical Gold In An IRA?
To use an IRA to invest in gold, you’ll need to follow two IRS guidelines. First, you can only invest in IRS-approved gold. Though the list of approved options changes, the IRS says it must be “highly refined bullion.”
Here’s what that generally looks like:
- 99.5% pure gold
- Must be produced by a company that’s nationally accredited
- Must be in complete, original packaging
- Must include the certificate of authenticity
- Coins must be uncirculated and damage-free
- Bars must be manufactured to the exact weight
Second, you can’t hold the gold in your possession. Though you are its owner, the gold must be stored off-site in an IRS-approved depository. Your gold IRA custodian can help recommend a suitable depository for your investments.
People who want exposure to precious metals in a retirement account can invest in stocks of mining companies, mutual funds that hold these stocks or a gold ETF. People who believe physical possession of gold or other precious metals is more secure can get that peace of mind with a gold or silver IRA.
Having ownership of physical precious metals is the key selling point, but storing and insuring precious metals isn’t cheap, nor is having it shipped to you once you reach the age when you have to take required minimum distributions (RMDs).
Gold IRA companies, which are essentially precious metals dealers, will facilitate the creation of an IRA in which you can legally hold gold and other precious metals. Gold IRA companies can steer you towards an appropriate IRS-approved account custodian and depository institution where your gold will be physically stored.
How To Fund A Gold IRA Account
Once you’ve established your account, you can fund it in any of these three ways:
Cash: Invest cash into your IRA by sending a check or wire payment to your custodian.
Rollover: Withdraw funds from an existing retirement account and deposit them into your new IRA. You must do this within 60 days of withdrawing the funds to avoid penalties. To learn how to do this, check out our guide to initiating a gold IRA rollover.
Transfer: Have the administrator on your current retirement account transfer all or a portion of your funds to your new IRA custodian. To learn how to do this, check out our guide to initiating a gold IRA transfer.
Other Ways To Invest In Gold
Before opening a gold IRA, keep in mind that it’s not the only way to invest in gold with your retirement funds. There are simpler ways to save for retirement with assets exposed to gold beyond buying physical bullion itself.
You can invest in gold stocks, like shares of gold mining companies or gold royalty companies, which help finance mines. When the price of gold goes up, these firms are more profitable so their share price should go up as well.
You may also choose to buy a gold ETF or gold mutual funds. These funds buy up a basket of gold-related investments, like stocks in different gold mining companies. There are also funds that directly track the spot price of gold using futures trading strategies.
These investments are available in a normal brokerage IRA, meaning you wouldn’t have to go through the work and the extra costs of setting up a self-directed gold IRA. If you must own the physical metal itself, then you will need a self-directed gold IRA.
Benefits of Precious Metals Investing
Continuous Demand
Precious Metals have long been in demand because of their valuable, collectible, and industrial uses. Still, they are seeing increased demand recently because of turbulent political and economic conditions.
If a nation’s currency is devalued or becomes extremely unstable, people tend to turn to gold and silver as a more stable alternative.
Scarcity
Precious metals are some of the world’s most scarce commodities because they’re subject to natural supply constraints and a limited global supply. This unique scarcity can improve risk/return profiles compared to other investments.
Gold to Silver Ratio
The difference between the two is known as the gold to silver ratio. In times of financial uncertainty, some investors have turned to this measure of value to determine whether it might be time to buy more silver or gold.
Privacy
Compared to other investments, less information about precious metals (including gold) is available in the public domain. Investing in precious metals can give you the peace of mind that comes from knowing your assets are anonymous, safe, and private.
Liquidity
These precious metals assets can be sold for cash at any time for the current market price – its liquidity potential is much higher than many other investments, such as stocks and bonds.
Diversification
Diversification is critical to your investment portfolio. Gold adds a tangible asset known for balancing portfolios and reducing volatility during economic downturns.
Hedge Against Inflation
Silver, gold, platinum, and other precious metals can provide a valuable hedge against inflation, a portfolio diversifier critical to preserving wealth and purchasing power.
Physical precious metals have value, no matter the current state of the economy, so when paper currencies are devalued, which typically occurs during times of high inflation, gold and other tangible assets retain their value.
Hedge Against the Dollar
Precious metals are a crucial option for those looking to build their wealth. It is essential because the dollar’s value has been severely reduced over several years, making it vulnerable to inflation.
Gold and silver preserve purchasing power, allowing you to maintain your standard of living.
Why is Gold Valuable?
Gold is an asset with various intrinsic qualities that make it unique and necessary for investors to hold in their portfolios. If the modern paper-money economy were to collapse, gold may not have immediate use but as panic sets in and people fight for their basic needs—it will eventually.
Gold is the logical choice for this exchange. If disaster strikes, such that paper money and the system that supports it no longer exists, we will revert to gold. Arguably, gold is one of the only substances on earth with all of the qualities for the job, including sustainability.
Bottom line, the metal is abundant enough to create coins but rare enough so that not everyone can produce them. Gold doesn’t corrode, providing a sustainable store of value, and humans are physically and emotionally drawn to it. Societies and economies have placed value on gold, thus perpetuating its worth.
The Bottom Line
Figuring out who can benefit from gold IRA investments can be somewhat subjective, but one reason you might do so is if you want to spread your retirement investments across different asset classes.
Gold has long been seen as an asset to diversify one’s wealth that has been around for most of documented human history.
While some people might look for that diversification within a regular IRA, such as by investing in gold ETFs, others feel more comfortable investing in physical gold through a gold IRA.
Investing in a gold IRA can be a relatively straightforward process. If you want to diversify your retirement portfolio by holding physical gold via a depository, you might decide to open a gold IRA and choose a precious metals dealer.