With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks in mining companies or mutual funds that hold those stocks. Another alternative is a gold ETF, an exchange-traded fund that tracks the performance of gold as an asset. A gold IRA is a type of self-managed individual retirement account (IRA) that allows you to own gold bars. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as stocks of gold mining companies or exchange-traded gold funds (ETFs).
Gold has become popular due to its ability to diversify portfolios and hedge inflation. As the US hits a new 40-year inflation high, hedging against inflation has become even more important, and we can expect gold IRAs to become more popular in the future. Investors can also convert their 401 (k) or traditional IRA to a gold IRA. All Gold IRA rollovers follow the same rules as converting to a traditional IRA or a Roth IRA.
For example, pre-tax funds included in a Roth IRA are taxed before they are converted to a Roth IRA, while post-tax funds are not taxed. On the other hand, pre-tax funds that go into a traditional IRA aren’t taxed until they’re withdrawn. The IRS has strict rules for physical gold and other precious metals. For example, to be IRS-eligible, gold bars must have a purity of 99.5%, silver a purity of 99.9%, and platinum and palladium a purity of 99.95%.
Gold IRA rules require that you store eligible precious metals with a national depositary, bank, or IRS-approved trustee. Thankfully, Gold IRA companies make it easy to meet these requirements and add precious metals to your retirement plan. If you’re interested in turning your traditional IRA’s funds into physical precious metals, you’ll need to decide how you want to store them before you fund a self-directed IRA. For gold IRAs, government regulations specify what type of gold can be kept in the account and where it should be stored.
So if your portfolio consists of both gold and paper investments, a loss on the gold side is offset by the gain in other assets. A Roth IRA also offers flexibility in the type of investments it can hold, but not all assets are easily accessible via IRAs. For a gold IRA, you need a broker to buy the gold and a custodian to create and manage the account. These investments are available in a normal brokerage IRA, which means you don’t have to go through the work and additional costs of setting up a self-directed gold IRA.
A self-directed IRA gives inventors access to many of the securities they can’t buy in a standard IRA. Physical gold is considered an alternative investment, which is not allowed in a regular IRA. To do this, you’ll need an individual gold retirement account, commonly referred to as a Gold IRA, although this account has its own additional rules and fees. Even if you open a Gold IRA, it’s important to note that you can’t fund your account directly with gold bars or coins that you own.
Gold IRAs are usually defined as “alternative investments,” meaning that they are not traded on a public stock exchange and require specialized expertise to value them.