Convert IRA to Gold
When you think about converting your IRA to Gold it is likely that you have these questions in mind:
1. Does it make sense?
2. How do I do it?
The IRA conversion process is straightforward so let's focus on the first question.
In my opinion, converting your IRA to Gold makes sense because all of the other assets you can hold in a tax-advantaged Retirement account are declining in value. These are the assets you have to choose from: Stocks, Bonds, Mutual funds, ETFs, Real Estate, Precious metals, or cash.
To begin with, we'll look at Stocks, Bonds, and cash since those are the three assets you can hold in your current IRA. (Mutual funds and ETFs are just derivatives of Stocks and Bonds.)
Next, we'll talk about self-directed IRAs, Real Estate, and Precious metals.
Finally, we'll summarize everything we've talked about and draw some conclusions.
The NASDAQ index of tech Stocks peaked in Nov 2021 and has been in a persistent downtrend since. Even after a substantial rally in July the index is down more than 27% as of 09/04/22, placing it firmly in bear market territory (a 20% decline).
The S&P 500 and Dow Jones Industrial Average indexes peaked in January of 2022 and, like the NASDAQ, have been heading steadily lower. The Dow has managed to stay above the official level of a bear market but the S&P 500 has dipped into bear territory twice so far in 2022. After the July rally and subsequent decline, the Dow is down 15% from its peak and the S&P 500 is down 18%.
The outlook for the Stock markets is not good, to say the least. Both the United States and Europe are heading into recessions and corporate earnings are falling. Quantitative tightening from the US Federal Reserve is placing additional downward pressure on equity markets.
Until recently, Bond markets were enjoying a 40-year bull market that started in 1981. Long-term, buy-and-hold investors have done very well on their Investments in debt instruments.
Unfortunately, this long-lasting bull market ended in March 2022 and it appears that we have entered a new era of persistently rising interest rates (Bond prices fall as interest rates rise). The last bear market in Bonds lasted 18 years (1963 to 1981) so it is reasonable to expect that Bond prices will be declining for years to come.
Cash (the US Dollar)
Most people don't think of cash as an Investment because it doesn't pay dividends and its value doesn't increase. It's important, however, to talk about cash because it is one of the few assets you can hold in your existing IRA. If you get tired of watching your Stocks and Bonds drop in price you have the option of selling those assets and sitting in cash.
Unfortunately, Inflation is causing cash to rapidly lose its value. Think about your experience at the gas station and grocery store this year. How much value has your cash lost?
According to the BLS (Bureau of Labor and Statistics) Inflation is only 8.5% but if we use gasoline or food as a guide, Inflation is far higher than that. If you let your tax-advantaged retirement savings sit in cash you are locking in a loss of at least 8.5% per year.
So now we've looked at the assets you can hold in your existing IRA account: Stocks, Bonds, and cash. All of them are currently in downtrends that are likely to continue for the next few years at least.
What are the alternatives? If traditional Investments don't make sense right now, where else can you put your hard-earned money?
The most common alternative Investments are Real Estate and Precious metals. Fortunately, these assets can be purchased and held using a self-directed IRA.
The IRS allows you to transfer money from one Retirement account to another without paying any taxes or penalties so one of your current options is to transfer some or all of your existing IRA funds into a self-directed IRA. Once the transfer is complete you can then invest in Real Estate or Precious metals (or other assets like mortgages and private equity which are not recommended unless you possess specialized knowledge in those fields).
Real Estate is a time-tested Investment. Many middle-class Americans have grown wealthy by purchasing Real Estate and renting it to others. If you live in an area where Real Estate isn't currently in a bubble you might want to investigate this option. If, however, you live in an area where Real Estate prices have risen substantially in recent years, be careful. Mortgage rates are rising dramatically and there are signs that the current Real Estate bubble is popping.
If you decide to invest in rental Real Estate only purchase property that is close to where you live. Being a long-distance landlord is a recipe for financial disaster. If you can’t drive to the property in less than 4 hours (preferably 2), don’t buy it.
Precious metals are not an ideal Investment because they don’t pay interest or dividends. They do, however, act as a store of value and their prices tend to rise as the Purchasing power of cash declines.
We saw this happen in the 1970s when Inflation and Stagflation ruled the economic world. In that environment Gold rose from $35 an ounce to $850 an ounce and Silver rose from $2 to $48 per ounce.
Is it possible that we will see this kind of performance again? Perhaps. Inflation is currently at 40-year highs and the US is heading into a recession.
On top of these conditions we have central banks around the World accumulating physical Gold while the BRICS nations talk about creating a new reserve currency to compete with the US Dollar. There is a definite trend underway towards a multipolar World where the US Dollar is no longer King.
As the rest of the World turns away from the US Dollar and seeks alternatives, physical Gold or a Gold-backed currency is likely to be the first choice. Gold has been the premier form of money since 600 BC when both Europe and China issued the first Gold currencies.
If Gold becomes part of a new reserve currency the value (and price in US Dollars) of Gold will rise. If Gold merely maintains its current role, it will continue to hold value and rise in price as the US Dollar loses value. That seems like a win-win situation.
Because Gold acts as a store of value it is probably a better Investment than any of the other options we have looked at. Stocks, Bonds, and cash are all losing value and the Real Estate bubble shows signs of popping. Gold, on the other hand, has always acted as a store of value and there is a real possibility that the yellow metal is about to reestablish its role as the World’s premier money.
We can now return to the question we started with, “Does it make sense to convert your existing IRA to Gold?”
The question answers itself if you can answer this question: “Do you want to be invested in paper assets that are losing value or do you want to be invested in tangible assets with a 2600-year track record as a store of value?”
After considering the alternatives, an Investment in Gold makes a lot of sense. The only decision to make is how much of your Investment Portfolio you want to place in Precious metals.
If a self-directed Precious metals IRA seems like an Investment alternative you would be interested in, reach out to one of the companies that facilitate these vehicles. Augusta Precious Metals is the best overall Gold IRA company if you have $50,000 or more to invest. If you are investing between $25,000 and $50,000 then Goldco is your best option. For an Investment of $10,000 to $25,000 choose Birch Gold Group.
If you have questions you would like answered, you are welcome to reach out to me (use the Contact form). I can’t give you financial advice but I would be happy to answer your questions about Precious metals and self-directed IRAs.
In the rest of this webpage we'll answer the second question, “How do I convert my existing IRA to Gold?” We'll also provide some background information on self-directed Precious metals IRAs and give some tips on how to find the best Gold IRA Investment.
Use the jump links to navigate to the section you are interested in or just keep reading.
- Two options for converting your IRA to Gold
- How does a Gold IRA work?
- Gold IRA tax rules
- Gold IRA fees
- Benefits of Gold IRA
- How to convert your IRA to a Gold IRA
- Which Precious metals products should you invest in?
- Purchase the most metal for the least amount of money
- Best Gold IRA
- Gold IRA reviews
- Gold IRA companies
Gold IRA vs physical Gold
When you decide to convert your IRA to physical Gold you have two options
Option 1: Close IRA - Pay taxes & penalties
Obviously, you could liquidate your IRA and purchase Precious metals with the proceeds.
That’s an easy solution but it has significant tax consequences.
If you are under age 59 1/2 you will pay a 10% early-withdrawal penalty and then pay income taxes on the distributed funds.
Also, the distributed money may push you into a higher tax bracket where the overall cost of liquidating your IRA will increase.
Option 2: Move IRA funds into Gold IRA
The IRS made this option possible in 1997 when the Taxpayer Relief Act was passed.
This revision to the tax laws makes it possible for you to purchase physical Precious metals inside a self-directed IRA.
You are also permitted to move tax-advantaged funds from one account to another so the Taxpayer Relief Act lets you convert your IRA to Gold without facing any penalties or tax consequences.
Obviously, it is quite expensive to completely remove money from your existing IRA until you are at least age 59 1/2. Prior to that major milestone the money in your IRA is essentially stuck.
Converting your IRA to a Gold IRA lets you protect and preserve these 'stuck' funds until you reach retirement age.
How does a Gold IRA work
Let’s understand that “Gold IRA” is a generic term.
“Gold IRA”, “Silver IRA”, “Precious metals IRA” – all of these terms refer to the self-directed Individual Retirement Accounts (IRAs) established by the Taxpayer Relief Act of 1997.
You can hold Gold, Silver, Platinum, and Palladium in your “Gold IRA”.
After you setup one of these self-directed IRAs you can then move some or all of the funds from your regular IRA into your Precious metals IRA.
In fact, most Retirement accounts can be transferred into a Gold IRA. If you have a 403b, 457, TSP, Annuity, Pension plan, or eligible 401(k), you can move those funds into your Precious metals IRA.
Once your Gold IRA is funded, you get to pick which Precious metals you will hold and what form you want those metals to be in.
In general you can choose Bullion bars and Coins produced by IRS-approved refineries along with Coins produced by government mints.
When it is time to take distributions from the Gold IRA you can choose to sell your metal and receive cash, or you can distribute the physical metal and have it securely mailed to you (or go pick it up in person).
Gold IRA tax rules
The Taxpayer Relief Act defines the parameters for holding physical Precious metals in a self-directed IRA.
In general, the metal must be of Bullion quality (99.95% pure) or better and come from an IRS-approved source like a government mint or third-party refinery.
Coins and bars meeting these specifications receive the same tax treatment in a Gold IRA that stocks and bond receive in a regular IRA.
That means when it is time to take a distribution from your Gold IRA any capital gains will be taxed as ordinary income just like a stock or bond.
Distributions from the Gold IRA can be taken as cash or physical metal.
Gold IRA fees
There are fees in a Gold IRA that don't exist in a regular IRA.
The extra fees occur because you are investing in physical Precious metals instead of paper stocks and bonds.
To purchase or sell physical metal you have to use a licensed Broker and that professional charges a fee.
The Broker fee occurs whether you buy Gold for your IRA or Gold to bury in the garden.
The other Gold IRA fee to be aware of is a storage fee.
Because the IRS requires third-party storage for the Precious metals in your IRA, you have to pay a Custodian to securely store and insure that metal.
Benefits of Gold IRA
The primary benefit of a Gold IRA is that it provides you with a way to own physical Precious metals inside a tax-advantaged retirement plan.
You get all the same tax benefits from a Gold IRA as you do from a traditional IRA holding stocks and bonds.
In a Gold IRA, however, you can choose to distribute and take possession of your physical metals if you want.
At that point the shiny stuff is in your hot little hands to do with as you please (while abiding by all IRS rules, of course).
You can sell the Gold at the local Coin or pawn shop, bury it in the garden, give it to the grandkids, or 'lose it in a boat accident'.
Transferring wealth through the ages is what Gold is all about. It is inherently recognized by all humans as something of value.
While its price per ounce may vary over the years when measured in the fiat currency of the day, Gold is never worth zero in any currency – ever.
Gold IRAs provide a unique way to combine the wealth preservation aspects of physical Precious metals with the tax benefits of a self-directed IRA.
How to convert your IRA to a Gold IRA
Whether you have an IRA or other Retirement account, you will follow the same steps to convert your paper Stocks and Bonds to physical Precious metals.
Choose a Gold IRA company
Open an account
Initiate a distribution or rollover from your existing Retirement account
Fund the Gold IRA account
Select the Precious metals to hold in the Gold IRA
Selecting specific Precious metals products is where the rubber meets the road in the process of converting an existing 401K or IRA into a physical Gold IRA.
The selections you make at this point can dramatically affect the value of your Gold IRA in both the immediate future and over the lifespan of the IRA. If you look at negative customer reviews regarding Gold IRAs you will find that, in most cases, the investor made a less-than-optimal choice when they selected their Precious metals products.
Which Precious metals products should you invest in?
When you are selecting the metals to hold in your Gold IRA you have two decisions to make:
1. Which of the four Precious metals do you want to hold: Silver, Gold, Platinum, or Palladium?
2. What form will those metals be in: bars or Coins?
Silver and Gold
Gold is the hands-down winner as a store-of-value over the ages. It is hard to go wrong owning some Gold.
From a demand perspective, Silver is an interesting metal because it has significant commercial demand while also enjoying Investor demand.
Gold’s commercial demand is quite limited because of its cost. Most of the Gold that has ever been mined is sitting above ground in museums, vaults, and jewelry boxes.
Silver on the other hand gets used in very small quantities in all kinds of electronic devices where it isn’t economically viable to recover the Silver.
In other words, commercially-used Silver is thrown away when the commercial device reaches end-of-life.
Commercial demand for Silver is growing because Green energy (solar panels and wind turbines), electric vehicles, and 5G technology are all highly dependent on the reflective and conductive properties of Silver.
Because of the two-pronged demand for Silver, including at least some of the white metal in your Gold IRA makes sense.
Platinum and Palladium
The primary commercial demand for Platinum and Palladium is for catalysts in automotive catalytic convertors.
These metals enjoy some amount of Investment demand. The simple fact that the IRS allows the metals inside self-directed IRAs creates investor interest.
Whether there is significant Investment demand for the two metals is debatable. They certainly can’t compare on historic terms with either Gold or Silver.
Another point against investing in these metals is that the average human can’t tell any difference between Silver, Platinum, or Palladium. If they held Coins made of each metal they would be unable to determine which Coin was made from which metal.
Silver is under $25 an ounce currently, Platinum is almost $1000, and Palladium is around $2000 (May 14, 2022).
So we have three Precious metals that can't be distinguished from one another and one of them is significantly less expensive than the other two.
It is very hard to justify why an investor should purchase the more expensive metals as long as Silver is available.
Purchase the most metal for the least amount of money
Regardless of which Precious metals you choose to hold in your Gold IRA you always want to get the most metal possible for each Investment you make.
By following this simple guideline you can avoid one of the primary risks with a Gold IRA and that is paying a premium for collectible Coins.
Beauty is in the eye of the beholder
The only time it makes sense to pay for Numismatic quality Coins is when we want to appreciate them as timeless pieces of beautiful artwork. Some of the pre-1933 Gold Coins are absolutely stunning.
As art collectors we understand that beauty is in the eye of the beholder so the value of our collectible Coins could fluctuate dramatically over time - both up and down.
As conservative Investors we aren’t buying artwork, we are buying physical Gold.
Every time we invest money in our Gold IRA we want to get the most ounces of metal we possibly can for every penny we invest.
That means we aren’t interested in proof Coins, boxed Coins, certificates of authenticity, or any other fancy-schmancy stuff.
Just remember that we're investing in Precious metals not art.
Best Gold IRA
The best Gold IRA is likely to be different for each investor depending on the factors that are most important to them personally.
Some will prioritize their selection based on the location of the Gold IRA depository. An investor in Texas, for example, may limit their candidate Gold IRA companies to the ones that work with depositories in Texas.
Investors with limited funds will focus on the Gold IRA companies with the lowest minimum Investment.
Regardless of which factors you choose to prioritize, the best Gold IRAs will have these factors in common:
Gold IRA company reviews
One of the best ways to research candidate Gold IRA companies is to read the online customer reviews posted on these sites:
Recognize that these reviews are written by investors who interacted with the company in question and felt compelled enough by their experience to provide feedback. The most valuable reviews are actually the negative ones because they let us see how the company responds to unhappy customers.
The negative reviews are OK as long as the company responds to the complaint and makes an attempt to resolve the matter.
When you read the negative reviews pay attention to the focus of the complaint. In most cases, the customer's dissatisfaction occurs because they purchased overpriced proof Coins and then lost money when they liquidated their account.
You can avoid these potential problems by simply avoiding proof Coins. They are not a good Investment choice for most investors.
Gold IRA companies
In the mini reviews below we have listed some candidate Gold IRA companies for you to consider.
You can use these reviews to compare Gold IRA companies and focus on the factors that matter the most for your particular circumstances.
Low minimum Investment
This factor will be important to investors with limited funds. Minimum Investments are $2000 to $25,000.
Most companies offer perks like free Silver or waived fees on larger Investments.
These fancy Coins are a poor choice for most investors. The fact that a Gold IRA company offers these Coins shows that they are willing to let investors make less than optimum choices.
Negative reviews about Gold IRAs usually involve these high-priced Coins. Companies who aggressively push these Coins are prioritizing their profits over helping investors.
Ask a loaded question
When you get to the point of calling Gold IRA companies ask the representatives if they recommend Bullion products or if there are better options.
The response to this loaded question may help you find the company that you will be most comfortable working with.
If a company gets pushy about 'Investment quality' Coins (proof Coins, boxed Coins, or Coins with certificates of authenticity) or mentions a lack of liquidity when it comes time to sell, immediately cross that company off the candidate list and keep shopping.
There are lots of Gold IRA companies to choose from so don't let pushy salespeople influence your Investment decisions.
No proof or special edition Coins offered
Years in business:
Although Fidelity has a low BBB rating, the company has a very low minimum Investment level which makes it easy to start and add to a Gold IRA. Fidelity is also very conservative in its approach to Precious metals, warning investors about the volatility and risk of this asset class. What we like best about Fidelity is that the company does not sell proof or special edition Coins so there is zero risk of investors purchasing these overpriced products.
Birch Gold Group
Extensive educational resources
Years in business:
Birch Gold Group has extensive educational resources on their website which indicates that the company is serious about educating Precious metals investors, not just pushing them into a Gold IRA. One of the unique resources is a Portfolio calculator that shows you how the traditional 60/40 Portfolio of Stocks and Bonds performs when it has a small allocation towards Gold. Birch waives first year fees for investors depositing $50,000 or more.
Excellent Customer Support
Years in business:
Goldco has been helping investors move their tax-advantaged retirement savings into the security of Precious metals for 16 years. More than 1,000 of those customers have given the company 5-star reviews and Goldco is also highly rated by BBB, Business Consumer Alliance, and TrustPilot. Goldco provides educational resources on their website and has more in-depth materials available via email after you speak with one of their Precious metals specialists. When new clients invest $100,000 or more with Goldco they will receive $10,00 or more in free Silver.
Augusta Precious Metals
Exceptional focus on education
Years in business:
Augusta Precious Metals offers more educational resources on their website than any other Gold IRA company. Current topics affecting your retirement savings are covered in the regularly updated video library and you will also find a series of videos on basic economics. Augusta's blog regularly publishes articles addressing current economic matters. The Inflation and Retirement calculator shows you how Inflation will affect your retirement lifestyle. Investors with $100,000 or more to invest can schedule a 15-minute 1-on-1 teleconference with Devlyn Steele, Augusta's director of education. Augusta Precious Metals is clearly committed to helping you understand Precious metals and how you can benefit from a Gold IRA Investment.
Patriot Gold Group
Fast IRA setup
Years in business:
Patriot Gold Group is one of the newer Gold IRA companies but they are highly rated by BBB and TrustPilot. Patriot Gold differentiates itself from other Gold IRA companies in two ways. First, they will setup your Gold IRA within 24 hours so you can quickly initiate the rollover or transfer process with your existing Retirement account. Second, they offer a 'no fees for life' IRA for investors with $250,000 or more to invest.
Excellent educational materials
Years in business:
Noble Gold is a relatively new Gold IRA company but they offer a wealth of educational material on their website and they are highly rated by BBB, Business Consumer Alliance, and Trustlink. With a low minimum Investment level Noble Gold makes it easy for anyone to add Precious metals to their retirement savings plan. Texans will appreciate the Noble Gold IRA because they can store their Precious metals in either Dallas or Delaware.
Precious metals IRA company
- Founded: 1946
- BBB rating: C-
- Proof Coins: No
- Minimum Investment: $1,000
Patriot Gold Group
- Founded: 1990
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $15,000
- Founded: 2003
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $10,000
- Founded: 2006
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $25,000
- Founded: 2010
- BBB rating: unrated
- Proof Coins: Yes
- Minimum Investment: $10,000
- Founded: 2017
- BBB rating: A-
- Proof Coins: Yes
- Minimum Investment: $2,000
In this article we've looked at how to convert your IRA to physical Gold.
We started by considering each of the assets that you can hold in your current IRA (Stocks, Bonds, cash) and then compared those assets against Real Estate and Precious metals.
Based on the comparison we arrived at the conclusion that it definitely makes sense to convert at least part of your existing IRA to physical Gold.
We then addressed some background information about self-directed Precious metals IRAs and provided some tips on how to make the best Gold IRA Investment.
A key point we covered is how to avoid overpaying for the metal inside your Gold IRA by staying away from proof Coins, boxed Coins, and any other premium Coins.
For other questions about how to convert your IRA to Gold, or whether an existing Retirement account is eligible for transfer, you can reach out to one of the Gold IRA companies. All of the reputable companies have knowledgeable representatives available to help you.
You are also welcome to reach out to me. I love to educate people about Precious metals - that's why I created this website. Use the Contact form to drop me a line or send me an email: firstname.lastname@example.org
About Satori Traders
Hi, my name is Bryan Post and I love the shiny stuff - Silver and Gold.
I've been investing in the Precious metals and mining stocks since 2002 when I realized that Gold is the only real money on the planet.
Here on SatoriTraders.com I share everything I've learned about the metals, Financials markets, trading, Technical analysis, and the numerous games that central banks play with fiat currencies.