addition to owning physical metals, investors can also access mining company stocks through the derivatives market, metal ETFs and investment funds, as well as shares in mining companies. Exchange-traded precious metals funds (ETFs) are a popular way to invest in these metals, either through a physical or futuristic exposure. ETFs can offer a more liquid and easier approach to investing in precious metals than buying futures contracts, buying gold bars, or buying stocks from publicly traded companies involved in the exploration or production of those metals. However, investments in gold and other precious metals, particularly physical precious metals, involve risks, including the risk of loss.
While gold is often seen as a safe investment, gold and other metals are not immune to price declines.. Learn about the risks associated with trading these types of products. Access the largest knowledge base for self-directed IRAs. Develop your investor knowledge with articles, white papers, practical guides, and countless other educational resources.
For 40 years, The Entrust Group has provided account management services for self-managed retirement plans and tax-advantaged plans. Entrust can help you buy alternative investments with your pension funds and manage the purchase and sale of assets that aren’t generally available through banks and brokerage firms. Investors have long used precious metals as a way to diversify their retirement portfolio against inflation or the erosion of major currencies.. In recent decades, the price of gold and silver has risen in response to events that have led to a fall in the value of paper money..
But it is only in recent years that precious metals have been made easily available to the masses via investment instruments known as exchanges.. Investors now have two different options when it comes to diversifying a retirement portfolio into precious metals.. Retirement plans can hold precious metals in physical form (bars or coins) or through electronically traded funds, better known as Exchange Traded Funds (ETFs).. It’s important to understand the differences between these two options to determine which method is best for your self-directed IRA or 401 (k)..
Precious metals ETFs such as GLD and SLV are relatively new investment instruments and have only been available to investors for 14 years. Precious metals ETFs were created to reflect the price of gold or silver. The “paper option” of holding precious metals ETFs is attractive to investors because stock trading is easy, which is very similar to buying stocks or mutual funds.. One of the main drawbacks of ETFs is that an investor doesn’t actually buy physical metal..
Instead, an investor owns shares in a fund that is based on the prices of a particular metal or commodity.. For those who prefer to own physical gold or silver, with the option of one day taking possession of their actual metal, buying physical gold bars is the preferred choice. Unlike ETFs, the physical coins, bars, or rounds are purchased through a precious metals dealer of the IRA holder’s choice. The assets are then kept in segregated accounts with a nationally recognized and regulated depositary by the self-managed IRA custodian.
Knowing the difference between holding precious metals in physical or paper form is helpful in deciding which of these two options is best for your retirement portfolio.. Your case for diversifying into precious metals, however, is almost as important — if not more important — than the buying method itself.. In the past, ETFs were generally the investment vehicle of choice for those who wanted to “invest in gold or silver.”. They offer the easy way to trade stocks rather than buying and holding physical bars or coins.
These instruments offer investors an easy way to add a precious metal component to their retirement portfolios, particularly in the form of 401 (k) and other plans sponsored by the company.. In recent months, online trading portals have also become popular, which allow investors to buy physical bars or coins via their computer.. Recent pressure on gold and silver prices has only reinforced this theory of two different buyers of precious metals.. Those who “invested in precious metals have fled from leveraged gold and silver ETFs, which has caused the prices of both assets to fall by more than 30% in recent months..
However, in the midst of this fall in prices, demand for physical metals has reached an all-time high. Mint announced that it would suspend sales of certain American Eagle gold coins due to increased demand and depleted government inventory.. At the same time, most retailers now have a delivery period of 3-4 weeks for all new silver orders, as silver bars have experienced a similar supply crisis. When choosing the best option for adding precious metals to your retirement plan, it’s important to understand the difference between the two methods of buying..
However, it is arguably just as important to identify the reasons for your purchase right from the start.. What is the best option? That depends on whether you are an investor in precious metals or a protector of your wealth.. Entrust doesn’t offer ETFs. For more information on holding physical gold bars within a self-directed IRA, visit our precious metals center today.