Gold IRAs: Risks and Considerations of Investing in Precious Metals

Gold individual retirement accounts are self-directed IRAs that invest in physical gold and other IRS-approved precious metals. This type of IRA allows you to hedge against inflation and diversify your assets while growing retirement funds. You’ll need a custodian to help you set up your gold IRA.

  • Written by
    Lindsey Crossmier

    Lindsey Crossmier

    Financial Writer

    Lindsey Crossmier is an accomplished writer with experience working for The Florida Review and Bookstar PR. As a financial writer, she covers Medicare, life insurance and dental insurance topics for RetireGuide. Research-based data drives her work.

    Read More
  • Edited By
    Savannah Pittle
    Savannah Pittle, senior financial editor for RetireGuide

    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is a professional writer and content editor with over 16 years of professional experience across multiple industries. She has ghostwritten for entrepreneurs and industry leaders and been published in mediums such as The Huffington Post, Southern Living and Interior Appeal Magazine.

    Read More
  • Financially Reviewed By
    Stephen Kates, CFP®
    Stephen Kates, Certified Financial Planner™ and personal finance expert

    Stephen Kates, CFP®

    Certified Financial Planner™ Professional and Founder of Clocktower Financial Consulting

    Stephen Kates is a Certified Financial Planner™ professional and personal finance expert with over a decade of experience working with individuals and families who need help with their finances. With experience as a financial advisor for two of the largest financial firms in the country, Stephen has worked with hundreds of clients to build comprehensive financial plans to grow and protect their wealth.

    Read More
  • Published: March 29, 2023
  • Updated: October 6, 2023
  • 6 min read time
  • This page features 11 Cited Research Articles
Fact Checked
Fact Checked

A qualified expert reviewed the content on this page to ensure it is factually accurate, meets current industry standards and helps readers achieve a better understanding of retirement topics.

Cite Us
How to Cite RetireGuide.com's Article

APA Crossmier, L. (2023, October 6). Gold IRAs: Risks and Considerations of Investing in Precious Metals. RetireGuide.com. Retrieved April 15, 2024, from https://www.retireguide.com/retirement-planning/investing/accounts/ira/gold/

MLA Crossmier, Lindsey. "Gold IRAs: Risks and Considerations of Investing in Precious Metals." RetireGuide.com, 6 Oct 2023, https://www.retireguide.com/retirement-planning/investing/accounts/ira/gold/.

Chicago Crossmier, Lindsey. "Gold IRAs: Risks and Considerations of Investing in Precious Metals." RetireGuide.com. Last modified October 6, 2023. https://www.retireguide.com/retirement-planning/investing/accounts/ira/gold/.

Key Takeaways
  • Gold IRAs are self-directed retirement accounts that you can establish as a traditional or Roth IRA.
  • The IRS has rules about which gold and precious metals it approves for a gold IRA.
  • Historically, gold performs well during financial crises and over the long term when compared to stocks and bonds.
  • Gold IRAs can diversify your retirement portfolio as you near retirement.
  • Confirm the credibility of your custodian and gold IRA issuing company to avoid scams.

What Is a Gold IRA?

Run by a gold company, gold IRAs are set up as a traditional IRA or Roth IRA, both of which provide potential tax breaks. They follow the same contribution rules as traditional and Roth IRAs. In 2023, you can contribute up to $6,500 (or $7,500 if you’re over 50 years old) annually to your gold IRA.

Investing in a gold IRA can be a strategy to combat inflation, which stood at 6% as of March 2023, and diversify retirement investments.

What Is an IRA?
Gold IRA Features
  • Allows you to invest in select physical gold or other IRS-approved precious metals
  • Provides tax-sheltered gains because gold IRAs can be set up as traditional or Roth IRAs
  • Requires a custodian to help manage the account
  • Has an annual contribution cap of $6,500 (or $7,500 if you’re over 50)
  • Required minimum distribution (RMD) rules apply to traditional gold IRAs
  • Has higher fees than a traditional or Roth IRA
  • Your physical gold or precious metal must be held at an IRS-approved depository, not your home.

Other metals approved by the IRS include silver, platinum and palladium. The metals must be specific high-quality coins, bars and rounds. Common eligible coins are American Eagle coins and Canadian Maple Leaf coins. Credit Suisse and PAMP Suisse bars are also eligible for inclusion in gold IRAs.

Different Purity Metal Requirements for Gold IRAs
Metal TypePurity Percentage Accepted
Gold99.5%
Silver99.9%
Platinum99.95%
Palladium99.95%
Investing in physical precious metals can act as a beneficial diversification strategy due to gold and other metals performing well in recessions and periods of high inflation. While physical metals are attractive for their permanence, exploring precious metals indexes and ETFs may allow for simpler and easier investment in the space.

Why Invest in a Gold IRA?

Investing in a gold IRA provides a hedge against inflation, protects against an unstable economy and diversifies your investments. According to U.S. News & World Report, gold holds up well during financial crises and keeps its value over the long term. They’ve also been known to outperform stocks and bonds over several years.

Gold is also an internationally recognized commodity, with little to no ties to stock performance. That makes gold’s value unaffected by the ups and downs of major stock market crises. From January 2000 to January 2021, gold generated an annualized return of 9.6%, according to Kiplinger. Stocks had a total annualized return of 6.5%.

The price of gold has already increased in 2023. From November 2022 to Feb. 8, 2023, the price of gold increased by 14%. This could indicate higher values for gold in the future, according to CBS News, warranting consideration for a gold IRA as a component of your retirement plan.

Pros and Cons of Investing in a Gold IRA
  • Gold historically performs well during financial crises
  • Allows you to diversify your investments
  • Can perform well in the long-term compared to stocks and bonds
  • Price of gold could continue to rise in 2023
  • Tax benefits
  • Risks of fraudulent schemes, like fake custodians
  • High fees, including (but not limited to) opening fees, annual account fees, administrative fees and asset-specific fees
  • Doesn’t offer high liquidity compared to other investments
Retirement Tax Strategies
Advertisement

How To Invest in a Gold IRA

A custodian must help you invest in a gold IRA. Find a trustworthy licensed or insured custodian who specializes in gold IRAs before you start the process. Research the issuing company’s online reviews and information from the Better Business Bureau (BBB) rating before investing.

4 Steps To Invest in a Gold IRA
  1. Determine what type of tax benefits you want by choosing a traditional or Roth gold IRA. Ask your licensed custodian to help you decide which option benefits you in the long term.
  2. Confirm the custodian’s initial and annual maintenance fees along with storage costs for your gold and other precious metals. They’ll ensure your assets, like gold bars and coins, are IRS-approved and stored safely.
  3. You can either transfer cash to your account to make physical investments in your gold IRA, or roll funds into an existing retirement IRA or 401(k).
  4. Once your gold IRA has funds invested, you can buy and sell precious metals.
What Are the Best Retirement Accounts?

How To Choose a Reputable Gold IRA Custodian

Verify that the IRS approves of your custodian to minimize risk or potential fraud. After verification, check the rating of the issuing company. You can confirm ratings on the Better Business Bureau website.

According to the U.S. Securities and Exchange Commission, self-directed gold IRA custodians don’t check the accuracy of any financial information provided for investment in the account. Even if a custodian is legitimate, it could still provide incorrect information.

Compare costs and fees from multiple custodians before choosing a reputable custodian. Consult with a licensed financial professional to help guarantee you’re selecting the right investments and verify your prices and asset values.

Pro Tip
Avoid unsolicited investment offers that promise guaranteed returns. These offers are likely offered by scammers or self-directed gold IRA promoters, who are not licensed investment professionals with regulatory oversight or protection.

Frequently Asked Questions About Gold IRAs

What types of gold and silver coins and bars are eligible for a gold IRA?
Eligible types of gold and silver coins for gold IRAs include American Eagle coins and Canadian Maple Leaf coins. Gold and silver Credit Suisse and PAMP Suisse bars are also eligible for gold IRAs.
What are the tax benefits of investing in a gold IRA?
Your tax benefits with a gold IRA depend on if you have a traditional or Roth gold IRA. If you have a traditional gold IRA and you're within the income limits, your contributions are deductible, but your withdrawals are subject to income tax if you take distributions. With a Roth gold IRA, you won’t face an immediate tax break, but your distributions will be tax free.
What is a gold IRA rollover?
A gold IRA rollover is transferring money from a traditional IRA to a gold IRA. According to the U.S. Money Reserve, the process would convert parts of your retirement portfolio into physical precious metals, like gold or palladium.
Advertisement

Connect With a Financial Advisor Instantly

Our free tool can help you find an advisor who serves your needs. Get matched with a financial advisor who fits your unique criteria. Once you’ve been matched, consult for free with no obligation.

Last Modified: October 6, 2023
Advertisement

11 Cited Research Articles

  1. Brooks, A. & Powell, F. (2023, February 22). What Is a Gold IRA? Retrieved from https://www.usatoday.com/money/blueprint/retirement/gold-ira/
  2. Maxwell, T. (2023, February 16). Will Gold’s Value Increase in 2023? Retrieved from https://www.cbsnews.com/news/will-golds-value-increase-in-2023/
  3. Rothans, J. (2023, February 10). The Complete 401k to Gold IRA Rollover Guide: How You Can Turn Your 401k to Gold Without Penalties. Retrieved from https://www.usmoneyreserve.com/news/executive-insights/what-is-a-gold-ira-rollover/
  4. U.S. Securities and Exchange Commission. (2023, February 7). Investor Alert: Self-Directed IRAs and the Risk of Fraud. Retrieved from https://www.sec.gov/investor/alerts/sdira
  5. Burrows, D. (2023, February 7). Investing in Gold: 10 Facts You Need to Know. Retrieved from https://www.kiplinger.com/slideshow/investing/t026-s001-investing-in-gold-10-facts-you-need-to-know/index.html
  6. Internal Revenue Service. (2023, January 6). Investments in Collectibles in Individually-Directed Qualified Plan Accounts. Retrieved from https://www.irs.gov/retirement-plans/investments-in-collectibles-in-individually-directed-qualified-plan-accounts
  7. Internal Revenue Service. (2023). Retirement Topics - IRA Contribution Limits. Retrieved from https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
  8. U.S. Inflation Calculator. (2023). Current US Inflation Rates: 2000-2023. Retrieved from https://www.usinflationcalculator.com/inflation/current-inflation-rates/
  9. Hartman, R. (2022, August 17). Should You Get a Gold IRA? Retrieved from https://money.usnews.com/money/retirement/iras/articles/should-you-get-a-gold-ira
  10. Scottsdale Bullion & Coin. (n.d.). Eligible Precious Metals for IRA Investing. Retrieved from https://www.sbcgold.com/precious-metals-ira/eligible-precious-metals-for-ira/
  11. Internal Revenue Service. (n.d.). IRA FAQs. Retrieved from https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras#Investments