Gold IRA Pros and Cons

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Gold IRAs are a great way to diversify your retirement investments. They are a form of IRA that lets you invest in Gold, silver, and other precious metals.

Gold IRAs gained popularity as an alternative investment option because, with it, investors could achieve the two-fold goal of minimizing investment risk and maximizing returns. With Gold IRAs and other forms of Self-directed IRAs, investors had the chance to build a robust investment portfolio.

Gold IRAs, as a form of self-directed IRA, are especially popular because they function as a hedge against inflation, and in a country with an increasing inflation rate, having a portfolio that withstands this effect is necessary.

In this article, we look at Gold IRAs from an expert point of view. We also examine the pros and cons to see if they are worth investing in.

How does a Gold IRA Work?

Put simply, a Gold IRA gives retirement investors the option of investing in physical gold. It is not an investment in gold stocks or paper gold but in actual physical gold bars, bullions, and coins.

Gold IRAs also serve as investment vehicles for other precious metals in their physical forms, including platinum, silver, and palladium.

We have broken the process of getting your Gold IRA into the following simple steps:

  • Find a custodian that specializes in self-directed IRA.
  • Fund the Gold IRA and buy approved Gold.
  • Store in an approved depository.
Augusta Precious Metals

Gold IRA Pros

Gold IRA is a great alternative investment vehicle for investors planning for their retirement because of the many benefits they offer. Here are a few benefits you get when you open your own Gold IRA

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1) Hedge against inflation

The value of gold and other precious metals is rarely affected by economic downturns or inflation. This makes gold IRA a valuable part of any investment basket because of its inflation-hedging properties.

There are arguments about how well gold performs during inflation, but historical evidence shows that using gold as an inflation hedge is a good idea.

2) Store of Value

Traditional investment options might depreciate until the value is zero, but the same cannot be said about gold and other precious metals. If you have been in the investment environment long enough, you have probably witnessed the cratering of many stocks and bonds. Even currencies can lose their value when the supply exceeds the demand.

However, it is difficult to increase the supply of gold to the point that its value depreciates, which makes it a great store of value than traditional investment options.

gold bars

3) Diversification

Traditional investment options tend to correlate, meaning an incident with one would most likely affect the other. Gold has close to zero correlation with stocks and bonds. Therefore, adding gold to your portfolio is a great way to add diversity while reducing overall risks. 

4) Tax Advantages

There are several tax advantages to investing in a Gold IRA. You can move assets from your traditional IRA into your Gold IRA without fees or tax implications. And if you liquidate as required, a gold IRA does not impose any tax implications.

Therefore, with a Gold IRA, you can invest in precious metals and let them increase in value without worrying about excessive taxes when you retire.


5) Easy to setup and use

In a world that is becoming increasingly digital, you can easily set up your Gold IRA without leaving your home. All it takes is finding the right Gold IRA broker and calling your plan administrator. We have listed the steps before

Of course, you will have to fill out a few forms, but your administrator and broker will handle most of the paperwork. You don’t have to worry about handling the funds or your assets either.

6) Tangibility

Gold IRA means you are investing in tangible gold. It gives you more control than traditional investment options that are intangible for the most part.

Gold IRA Cons

All the above points sounds great! However, this does not imply that Gold IRAs are without negatives. Here are a few drawbacks of a Gold IRA…

1) Volatile

Gold prices are volatile. It is not rare to see sharp fluctuations in gold prices within a short period. Investing in gold is a good idea, but it should be part of a well-balanced portfolio so your retirement portfolio does not suffer significant changes during these price fluctuations.

2) Costly

Investing in a Gold IRA might be simpler than other investment vehicles, but it is more costly. You need to make financial provisions for insurance and storage. These might eat into your returns and reduce profitability.

3) No dividends or interest

With traditional investment options like stocks, you earn income through dividends and interests. Gold IRAs do not offer this benefit, so investing in one does not imply a regular cash flow.

4) no access to your assets

You might know the repository where your gold is stored, but you cannot access these assets directly. All you have is a piece of paper that serves as evidence and states that you own gold.

5) Not a great quick profit investment

Investing in gold for short-term profit is not a good idea because of the high fees and how difficult they are to liquidate. Investing in a gold IRA should be for the long term. 

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Final Thoughts: Is a Gold IRA Right for You?

We could spend all day discussing the pros and cons of a Gold IRA, and we still wouldn’t be done. However, our goal is to objectively help you decide if a gold IRA is a good investment option.

A Gold IRA offers many benefits, like the opportunity to diversify your portfolio with precious metals and tax advantages that you wouldn’t get from other forms of investment.

Investing in precious metals also means your investment retains its value over time. Some of them, like gold, have the potential to grow in value.

However, a gold IRA is not for someone hoping to make a quick profit. It is also a volatile investment vehicle.

If you understand these risks and are willing to treat it like a long-term investment, a gold IRA is a great way to invest for retirement.

retired couple

Our Gold IRA Company Recommendation

We recommend Augusta Precious Metals as the top Gold IRA company to work with

Augusta Precious Metals has a highly trusted name in the gold investment industry, with an A+ rating from the Better Business Bureau, as well as a AAA rating from the Business Consumer Alliance, and loads of reviews from satisfied customers.

They can help you move an existing registered plan into an IRA, as well as set up a new one. Augusta Precious Metals team members are always there to answer your questions and concerns, and to help you pick the right precious metals that will suit your needs. With your personal financial goals in mind, the Augusta Precious Metals team ensures a smooth and clear transfer process with no additional IRS fees.

Augusta Precious Metals offers a wide variety of precious metals so that you can diversify your portfolio with a selection of gold and silver bars and coins. As you work your way towards retirement, continue to add to your IRA each year to grow your wealth.

We are confident that you’ll choose Augusta Precious Metals as your top pick as well. Visit the Augusta Precious Metals website today and fill out their application form to begin the process in setting up your IRA. You’ll be happy you did!

Augusta Precious Metals

Frequently Asked Questions (FAQ)

A Gold IRA is an example of a Self-Directed IRA. Self-Directed IRA’s were designed to give individuals more freedom in the selection of investments that they could hold in their retirement account. A Gold IRA is unique to precious metals, where the investor/individual has the ability to hold gold, silver, and other precious metals such a platinum and palladium in their account rather than being limited to traditional stocks and bonds.

By holding precious metal investments in a Gold IRA, this gives the ability for individuals to make their portfolio more diverse and prepare themselves for future financial success. Having a diversified portfolio makes for a better chance to survive a stock market crash and still have some of your funds held in other categories, such as gold.

There are various options when it comes to investing in gold. One option is to purchase gold coins or bars from a local retail shop or gold investment company. You may then hold the metals until you are satisfied with their growth, ready for retirement, or need them for another expense. 

Another option to invest in gold is by setting up a Gold IRA. These are a form of a Self-Directed IRA, only your funds can be held in gold rather than stocks and bonds. This is a good way to invest in precious metals without worrying as much about taxes.

The value of a gold coin increases as the value of spot gold increases. The number that is printed on each gold coin (known as the face-value) is not an accurate reflection of its true valuation. In fact, its value is likely much higher than the face-value based on the current price of gold today.

Depending on your age, current financial position, and personal preferences, the answer to this question will vary per person. If you are coming up on retirement, you’ll want to take fewer investment risks and may not want a large portion of your money in gold. If you’re still young and have more time to take greater investment risks, you may want a larger percentage of your portfolio invested into gold. 

Like many investments, it is optimal to buy at a low value. Generally speaking, when the stock market is over-performing, the value of gold is at a much lower amount. Gold also follows some trends such as a decrease in certain months of the year, including January, March, and April.

It is always a good idea to seek out a financial advisor to help discuss the best options for your current situation. This way you can shift your investments based on what makes the most sense for your financial goals, and the current economy.

Your current plan may not give you the option to invest in gold, but there are numerous other plans that allow gold investments. Keep in mind that there are specific rules set out by the IRS regarding how gold can be bought and stored. Because of these rules, it’s important to find a reputable company to work with.

You are legally allowed to do a 401(k) rollover and avoid paying taxes and penalties, but to do this you must follow the correct process. Start by contacting your current 401(k) plan and explain your situation. The rollover may take several weeks or months to complete, so it’s best to begin as soon as possible.

Traditional 401(k) plans and IRA’s are tax-deferred savings accounts, meaning you do not need to pay any taxes on your contributions. Once you retire and eventually withdraw your funds, you will pay taxes on those withdrawals. You will not get any tax breaks if you purchase gold for personal ownership. Right now, the only way to avoid paying taxes on gold is by purchasing it through your 401(k) plan or IRA.

Although this process is a bit tricky, you absolutely can purchase physical gold in your 401(k) plan. Since your IRA cannot be the seller and holder of the gold, they will need to store the physical gold with a third party. You are also not personally allowed to hold the gold. You may only keep gold and silver in a plan of this type if someone else is storing it, according to the IRS. While you will not be allowed to have physical control over the gold, you may still be allowed to access the storage facility.

Yes, any gains made on the gold held in a Gold IRA are subject to capital gains taxes. Additionally, if you take a distribution from the Gold IRA before you reach the age of 59 and a half, you may be subject to income taxes and a 10% early withdrawal penalty. Things may differ depending on whether you have a traditional IRA or Roth IRA.

No. You are not allowed to take physical possession of the gold or other precious metals held in an IRA account

No. Home storage is not allowed and could have serious tax implications if you are found to be taking physical possession of the gold held in your IRA. You must store the gold with an IRS-approved custodian. Any company that promotes home storage is not providing sound advice and should be avoided. 

No. The IRS does not allow precious metals to be stored in a safe deposit box. The custodian/depository must always maintain possession of the gold.

This is a tricky question. 

Mostly, no. For most folks, it’s impossible to take physical possession of their gold without paying severe fees.

There is however a workaround for very (VERY) few individuals. 

A “Checkbook IRA” allows the IRA owner to have more control over their investments. They can use an LLC to make investment decisions and hold assets on behalf of the IRA. The LLC is owned by the IRA and managed by the IRA owner or someone else. The assets, including precious metals, can be stored in a place chosen by the LLC, like a storage facility or the IRA owner’s home as long as it’s secure and insured. Though, the IRS has strict rules for using a Checkbook IRA and storing IRA-owned assets. 

Some of these rules include:

  • A minimum net worth of $250,000.
  • Must have a corporate legal counsel.
  • Ownership must be shared among multiple individuals.
  • And much more

Keep in mind that this loophole is not recommended. There is a possibility that you will be penalized and even possibly disallowed from future investments. It’s not worth the risk, even if you do meet all these requirements. 

Remember that your specific situation and goals should always be discussed with your tax advisor.