Is Gold IRA a good Investment

To determine whether a Gold IRA is a good Investment or not we have to first set the context for our discussion.

Every Investor has a unique Investment Portfolio based on their specific preferences, time horizons, and tolerance for risk.

Because there are too many variables in the ‘Good Investment or not’ question let’s assume that you have a tax advantaged Retirement account and you want to move some of those funds into physical Precious metals.

If you are like most investors, you are probably thinking about these reasons for moving money into a Precious metals IRA:

  • Rapidly rising Inflation
  • Monetary debasement by global central banks
  • A potential Global Economic Reset
  • Financial bubbles in equity and debt markets
  • Gold is the only asset with zero counter-party risk

Once the decision has been made to add Precious metals to your Investment Portfolio, the only question is how to do so.

The ideal Silver and Gold Portfolio begins with physical metal that you have easy access to. This metal could be stored in a local vaulting facility (in bigger cities), a home safe, or a hole dug in the back yard. These personally-held Precious metals form the foundation of your ideal Portfolio and they are purchased with after-tax income outside any Retirement account.

After you take personal possession of some physical Silver and Gold you can then build the rest of your Precious metals Portfolio using tax-advantaged money.

A self-directed Precious metals IRA allows you to purchase and hold physical metal using money from your existing Retirement accounts.

What is a Gold IRA

Wall Street and the central banks want you to believe that Gold is a 'barbarous relic' that has no place in the modern world, much less in your Investment Portfolio. They want you to leave your hard-earned money in the paper products that they create and control. If you move your money into physical Gold they lose their source of income.

Because Gold is not a mainstream asset class, most investors have limited knowledge about how to invest in it, and some investors even question whether Gold is a legal and legitimate Investment for Americans. Rest assured that Gold is an IRS-approved asset class and that a Gold IRA let's you use your tax-advantaged retirement savings to invest in physical Gold.

IRAs and self-directed IRAs (SDIRA) were created in 1974 via the Employee Retirement Income Security Act (ERISA). This tax law gave investors new ways to save for retirement but it didn't specify which asset classes could be held in an SDIRA. ERISA only specified that insurance contracts and collectible items could not be held in an SDIRA. Investors who took advantage of self-directed IRAs used them primarily to hold Real Estate.

In 1997 the Taxpayer Relief Act provided the clarity that was missing in ERISA. For the first time the IRS made it clear that Gold and Silver were allowed asset classes in self-directed IRAs. In 1998 the law was expanded to include Platinum and Palladium as acceptable assets.

Even with this new guidance from the IRS, there were only a few companies that offered investors Gold IRAs as an option. It wasn't until 2008 in the aftermath of the Great Financial Crisis that the Gold IRA industry really took off as companies rushed to bring alternative Investment products to the market.

The term "Gold IRA" is used generically to refer to any self-directed IRA holding Precious metals. When you see references to "Silver IRA" or "Precious metal IRA", understand that they are the same thing as a Gold IRA. These IRAs can hold any of the Precious metals, or a mix of the four IRS-approved metals.

Roth Gold IRA vs. Traditional Gold IRA

Investors can fund a Precious metals IRA with either pre-tax or after-tax funds.

After-tax income is used for Gold Roth IRAs while pre-tax income is used to fund traditional Gold IRAs.

Investors typically use a Roth IRA when they think their taxes will be higher in retirement than today.

A Roth IRA may also make sense if the retirement funds could be needed before age 59 ½. The money in a Roth Gold IRA has already been taxed so distributions can be taken at any time without penalties.

A Traditional Precious metals IRA appeals to Investors who expect their tax rate to be lower during retirement. They set aside pre-tax income today for distribution at a (hopefully) lower tax rate in the future.

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But...If you would like to continue exploring an Investment in Gold IRAs feel free to continue reading below.

Benefits of Gold IRA

There are three key benefits gained from an Investment in a Gold IRA.

First, it is the only way to purchase physical Precious metals inside a tax-advantaged Retirement account.

Second, moving existing retirement money into Gold provides diversification for the traditional Portfolio of Stocks, Bonds, and Mutual funds.

And third, Gold acts as a hedge against Inflation, currency debasement, and economic turmoil.

Gold IRA pros and cons

All Investments have positive and negative aspects including Gold IRAs.

The ideal way to own Precious metals is to purchase them outside of any Retirement account and take personal possession. Although this is ideal, you still need a way to protect the money in your tax-advantaged accounts - that's where a Gold IRA shines.

Because it lets you put your retirement savings into alternative assets, the positive side of the Gold IRA pros and cons outweighs the negative side.

Pros
  • The only way to own physical Precious metals using tax-deferred and tax-exempt money.
  • Diversification away from Stocks, Bonds, and Mutual funds.
  • Acts as a hedge against Inflation.
  • The metal in the account can be taken as a distribution after retirement. The metal can also be sold for cash distributions.
Cons
  • The metal has to be stored with a third-party Custodian to satisfy IRS requirements.
  • Metal that you already own cannot be moved into the IRA. The IRS requires that all metal is purchased inside the account.
  • There are transaction fees each time you buy or sell Precious metals.
  • There are annual fees to securely store and insure the metal.

What is a Gold IRA rollover

There are two ways you can move retirement funds into a Gold IRA.

The first is to contribute directly to a Traditional or Roth Gold IRA up to the IRS-allowed $6,000 annual limit ($7,000 over age 50).

The second is to do an IRA rollover or transfer where existing retirement funds are moved into a Precious metals IRA.

There are no tax consequences for performing an IRA rollover as long as the account types are maintained. Funds from a Roth IRA can only fund a Gold Roth IRA and funds from a Traditional IRA can only fund a Traditional Gold IRA.

Account rollovers and account transfers accomplish the same objective but there is a key difference between the two transactions.

Rollover

In a rollover you never take personal possession of your retirement funds. The money is wired directly from one account Trustee to another.

Transfer

When you take a distribution from a Retirement account and personally receive the money, that transaction starts a 60-day window. If you redeposit the money into another IRS-approved account within 60 days there will be no tax consequences.

Any funds that aren’t redeposited within 60 days will be taxed as normal income by the IRS and early withdrawal fees will be assessed on the distribution if you are under the age of 59 ½.

Gold IRA vs physical Gold

Investing in a Gold IRA versus physical Gold is an important question to consider.

At Satori Traders we encourage our clients to begin their Precious metals Portfolio with a purchase of physical Gold outside their Retirement accounts.

Once this solid foundation has been laid, tax-advantaged funds can be moved from existing Retirement accounts into a Gold IRA.

This strategy adds the security of Gold to an Investment Portfolio while also diversifying away from the traditional 60/40 Retirement account holding Stocks, Bonds, and Mutual funds.

Gold IRA tax rules

Here’s are some key Gold IRA tax rules to keep in mind. They will help explain how a Gold IRA works.

  • Short-term and long-term capital gains are treated the same.
  • Distributions from the IRA are treated as ordinary income at the Investor's current tax rate.
  • Investors have 60 days to complete a transfer of funds from an existing Retirement account into a Precious metals IRA.
  • Investors have 60 days to complete a transfer of funds from an existing Retirement account into a Precious metals IRA.
  • Investors can have more than one Traditional Gold IRA or Gold Roth IRA but the combined annual contribution to these accounts is limited to $6,000 ($7,000 over age 50).
  • Investors can split their annual IRA contributions between Precious metals IRAs and other IRAs but the overall contribution amount is limited to $6,000 ($7,000 over age 50).
  • Only IRS-approved forms of Gold, Silver, Platinum, and Palladium can be held in a Precious metals IRA. In general this means Bullion bars and Coins of a specified fineness, along with Coins from government mints. Numismatic Coins are not allowed.
  • Investor-owned metal cannot be transferred into a Gold IRA. The IRS requires that all metal be purchased inside the IRA.
  • Investors may take distributions from their IRAs in the form of cash or physical metal.
  • Capital gains on Precious metals distributed from a Gold or Silver IRA are taxed as normal income instead of being taxed at the 28% rate for collectibles.

Gold IRA fees

Holding physical metal in an IRA is different than holding Mutual funds or Stocks because the Precious metals have to be securely stored and insured. These expenses are paid by the investor in the form of annual fees.

Some Gold IRA investors complain that a Gold IRA is more expensive than a traditional IRA, but a realistic comparison shows that the two Investments have about the same cost.

What many investors forget is that Mutual funds have a fee of 0.2% to 2.0% per year. This fee is paid out of the Fund itself instead of being billed to the investor.

If you compare a $50,000 Gold IRA against an IRA holding the same amount of Mutual funds, the overall cost difference is about $100 per year. Unless you use very low cost Mutual funds (0.2%) in the comparison, the traditional IRA is actually more expensive than the Gold IRA.

Let's take a look at the fees involved in a Gold IRA. You can use these fees as a comparison factor when shopping for the best Precious metals IRA.

Types of IRA Fees

  • IRA account setup fee
  • Buy and sell* commissions on physical metal
  • Annual IRA account maintenance fee
  • Metal storage fee

* Sell commission can be avoided by taking a distribution of the physical metal instead of distributing cash

Account setup fee – Buy commission

Some companies offering Gold and Silver IRAs charge an account setup fee, others charge a sales commission on the physical metal purchased for the IRA.

For accounts under $100,000 the overall cost to setup an IRA is likely to be similar regardless of which company you choose.

Above $100,000 the fee structure for account setup should drop noticeably and some Precious metals IRA companies waive these fees altogether for accounts above $250,000.

Promotional offers

Another factor affecting overall account setup cost is the promotional offers available from the IRA companies.

The companies are competing for your retirement funds so they run promotions as part of their growth strategy.

Smart consumers will take advantage of these promotions.

Because the fees charged by the IRA companies are based on the size of the Investment and the promotional offers change periodically, you will have to do a little research to determine your exact account setup cost.

Metal storage fees

Storage fees are an additional cost of participating in a Precious metals IRA.

The IRS requires that an approved Custodian stores the IRA metal in their approved vaulting facility.

There is a cost incurred by the Custodian to store the metal securely and cover it with insurance, so it is reasonable to pay the Custodian for their service.

Segregated vs non-segregated metal storage

An important aspect of Gold and Silver IRAs comes to light when you compare annual storage fees.

Precious metals Custodians make a distinction between segregated (or ‘allocated’) and non-segregated (or ‘unallocated’) metal storage and charge different fees for each service.

In segregated storage specific Coins and Bullion bars are set aside or ‘allocated’ specifically for the Investor.

In non-segregated storage the Custodian makes an accounting entry designating a certain amount of their operating Precious metals inventory as belonging to the Investor. In other words, no actual metal is set aside specifically for the Investor in non-segregated storage.

Always pay the premium for segregated storage. To setup a Precious metals IRA and opt for non-segregated storage is like stopping the winning touchdown run just a few yards short of the goal line.

Always opt for segregated storage and have the winning ball placed in the vault with your name on it.

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Fidelity Gold IRA

Fidelity started business in 1946. Today they have more than 40 million clients and $11.3 trillion in assets under management.

The Fidelity Gold IRA is worth mentioning for two reasons:

1. It has one of the lowest minimum Investment requirements at $2,500. Most Gold IRAs have a $10,000 minimum and some of them require $50,000. Fidelity's low minimum makes it very easy to start a Gold IRA or a Roth Gold IRA.

2. Fidelity doesn't offer any proof or special edition Coins. These Coins carry very high premiums and, for most investors, they are a bad choice. Some Gold IRA companies try to push investors into purchasing the overpriced Coins because they make significantly higher profit. The fact that Fidelity doesn't offer these Coins means you won't get stuck purchasing them.

Although Fidelity has two strong points in its favor, there is a potential red flag with their BBB rating of C-. The Better Business Bureau rating is primarily based on how a company responds to customer complaints. A rating of C- suggests that Fidelity has a poor track record when it comes to handling unsatisfied customers.

Vanguard Gold IRA

Although Vanguard is a well known and respected Investment management company, they offer very little in the way of Precious metals Investments. The company maintains that Precious metals have elevated volatility and risk and are therefore not appropriate for their clients.

An Investor trying to add Silver and Gold to their Retirement accounts at Vanguard may find that their only option is the Global Capital Cycles Fund (VGPMX). This Mutual fund allocates at least 25% of its capital into Precious metals and Mining stocks.

Vanguard Gold IRAs show up in internet searches but the company does not offer this service.

Best Gold IRA companies

There are quite a few Precious metals IRA companies to choose from so having a strategy for making a selection is important.

Because we are talking about having physical Precious metals stored by a third-party, the important selection factors are related to trust. You have to feel comfortable with the IRA company and the company’s Custodian.

Gold IRA reviews from actual customers provide valuable insight into the companies and how trustworthy they are. We recommend BBB and Trustpilot as the best websites for Gold IRA reviews because these companies try to keep paid and fake reviews off their sites.

Customer reviews can be found at the following consumer websites: 

Better Business Bureau (BBB)

Consumer Affairs 

TrustLink 

Trustpilot

In the table below we list several candidate IRA companies and factors that may help you sort through your own candidate list.

Years in business

Years in business is obviously a trust factor. Shady businesses don’t stay around for long, and if they do it becomes harder and harder for them to hide the fact that they are shady. 

BBB

The Better Business Bureau (BBB) is the most widely-known rating company for businesses. Most of the Precious metals IRA companies are listed with the BBB and maintain A+ ratings.

If a company chooses not to list with the BBB or has a rating below A+, we don’t have to cross them off our list. This rating is only one factor in our evaluation.

If the company survives our selection process we can ask the company’s representative to explain their BBB rating.

Proof Coins

An IRA company that doesn’t offer proof Coins can’t try to foist those overpriced Coins onto Investors.

Most of the Precious metals IRA companies offer proof Coins, however, so Investors have to protect themselves from buying overpriced metal.

When you get to the point of contacting Gold IRA companies, ask the company representative a loaded question about proof Coins. If they are looking out for your best interest, they will explain the pros and cons of proof Coins. If they are looking out for their own interest they will tell you tall tales about how proof Coins are your best Investment option.

Minimum Investment

The amount of money you have to invest may affect the Gold IRA companies you can invest with. Fidelity has the lowest minimum at $2,500 and Augusta Precious Metals is on the high end with a $50,000 minimum. 

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Fidelity

No proof or special edition Coins offered

BBB rating:

Years in business: 

Minimum Investment:

C-

76

$1,000

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.

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Birch Gold Group

Extensive educational resources

BBB rating:

Years in business: 

Minimum Investment:

A+

19

$10,000

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.

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Goldco

Excellent Customer Support

BBB rating:

Years in business: 

Minimum Investment:

A+

16

$25,000

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.

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Regal Assets

Precious metals & Crypto in the same IRA

BBB rating:

Years in business: 

Minimum Investment:

B+

12

$10,000

With a Regal Assets IRA investors can hold both Precious metals and Crypto in the same IRA. Active Crypto investors can trade the most popular Digital currencies and Stablecoins using tax-advantaged savings and then park their profits in physical Precious metals. Regal has basic educational resources on their website and provides an in-depth investor kit and DVD after you contact them.

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Augusta Precious Metals

Exceptional focus on education

BBB rating:

Years in business: 

Minimum Investment:

A+

10

$50,000

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.

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Patriot Gold Group

Fast IRA setup

BBB rating:

Years in business: 

Minimum Investment:

A+

6

$15,000

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.

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Noble Gold

Excellent educational materials

BBB rating:

Years in business: 

Minimum Investment:

A+

5

$2,000

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.

Grab your FREE 2022 Gold IRA Kit which has helped thousands of Americans just like you.

Best Gold IRA

After you use the factors mentioned above to help you narrow down your choices, look at the educational resources each company offers. The best Gold IRA companies understand that investors have limited knowledge about the Precious metals and they attempt to fill this knowledge gap. 

When you look at a company's website you should find some kind of beginner's guide to Gold IRAs. Ideally you will find a library of videos and articles that you can study. Some companies prefer to talk to you before they provide their educational resources via email or snail mail.

At some point you will reach out to one or more Gold IRA companies and make contact with their representatives. The best Gold IRA companies will attempt to answer your questions and help you make an Investment decision you are comfortable with. They will not pressure you even if this interaction stretches out over several weeks or months.

If you feel pressured to make a purchase decision tell the representative to back off or simply move on to another Gold IRA company. This is your hard-earned money to invest - don't let a slick salesperson push you into a decision you will regret.

Conclusions

We set out in this article to answer the question, "Is a Gold IRA a good Investment?"

Our answer is, "yes", with the caveat that ideally you will also invest in some Precious metals outside your Retirement accounts.

A Gold IRA is the only way you can protect your tax-advantaged retirement savings with physical Precious metals. This unique Investment vehicle provides a hedge against today's raging Inflation while diversifying your Portfolio away from Stocks, Bonds, and Mutual funds.

If you have questions about Precious metals or self-directed IRAs, you can reach out to any of the Gold IRA companies. They have expert representatives who will patiently work with you until all of your questions have been answered. If you prefer, you can use our Contact form and reach out to us. We will do our best to answer any questions you have.

Bryan V Post is a California-registered Investment Advisor Representative specializing in the Precious metals.

He is the founder and CEO of Satori Traders LLC, a California-registered Investment Advisor.

Bryan has worn numerous hats during his life:

Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.

Precious metals IRA company

Fidelity

  • 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

Birch Gold

  • Founded: 2003
  • BBB rating: A+
  • Proof Coins: Yes
  • Minimum Investment: $10,000

Goldco

  • Founded: 2006
  • BBB rating: A+
  • Proof Coins: Yes
  • Minimum Investment: $25,000

Regal Assets

  • Founded: 2010
  • BBB rating: unrated
  • Proof Coins: Yes
  • Minimum Investment: $10,000

Noble Gold

  • Founded: 2017
  • BBB rating: A-
  • Proof Coins: Yes
  • Minimum Investment: $2,000
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