A pile of gold coins

Description automatically generated

Many people, including seasoned investors, are investing in gold for several reasons. Over the years, this metal has proven to be a stable investment capable of yielding great returns when managed the right way. Another reason gold investments have soared is that there are several ways by which one can invest profitably in it.

Although there are risks attached to each method of investment, generally, gold investments are considered much safer than other types of financial investments like stocks and bonds. Thanks to its innate ability to flourish in times of crisis, many investors are using the metal in various ways to diversify their portfolio. Click here to learn more about the benefits of portfolio diversification. 

While there are several ways one can invest in this metal without actually owning it, some investors prefer investing in it physically rather than on paper. They find it much more reassuring to hold an asset capable of offering monetary solution in times of economic downturn and hardship. 

This mindset isn’t out of place as evidence point to the fact that this may be one of the best and safest ways of investing in the asset. You see, gold paper investments are not as safe as physically owning the metal because several factors can affect these types of investments. 

There’s always that counterparty risk and for gold-backed stocks and ETFs, factors like the management of the issuing company and how much profit they turn can affect these investments. But by buying and storing this asset in its tangible form, all these risks can be eliminated. 

The main issue you’ll have with owning this metal or any other precious metal physically is storing it with companies like Goldco. Ensure you’re fully aware of the Goldco fees and that of other companies offering precious metals IRAs before proceeding to invest with them.

What are Precious Metals Individual Retirement Accounts?

Before we explain a precious metals IRA, let us take a quick look at what an IRA is in the first place. An individual retirement account (IRA) is an account with many tax benefits that allows individuals to save and invest for retirement. IRA investments include a wide range of financial products including stocks, bonds, mutual funds, and exchange-traded funds (ETFs).

Individuals looking for access to more investment options like real estate, private placements, and commodities like precious metals can take advantage of a self-directed IRA. In conventional IRAs, these types of investments aren’t accessible, however, self-directed IRAs allow individuals to invest in various precious metals like gold, silver, and platinum, palladium. 

These metals have proven to be solid and stable investments for retirement portfolios. Gold and silver for example, can be regarded as universally accepted currencies which makes them incredibly valuable. Also, depending on demand, these precious metals can be quickly liquidated and traded lucratively with the right strategy. 

Are All Precious Metals Eligible for Investment in a Precious Metals IRA? 

The only metals allowed to be held in an IRA are gold, silver, platinum, and palladium and they must meet the following IRS standards:

  • The purity of gold must be 99.5%
  • The purity of silver must be 99.9%
  • The purity of platinum 99.95%
  • The purity of palladium must be 99.95%. 

For gold, the Australian Koala bullion coins, PAMP Suisse bars, and Canadian Maple Leaf coins are example of product that meet the IRS’s gold specification. Note however that though the American Eagle coins doesn’t meet this specification, it can still be held in an IRA. You can visit https://www.forbes.com/advisor/retirement/precious-metal-ira-gold-silver/ to know about eligible precious metals. 

The Importance of Fees When Opening a Precious Metals IRA

Most of the risks that come with other types of gold investments aren’t present when you physically invest in the metal through a self-directed IRA. Like we mentioned earlier, you’ll find that the only thing you’d have to worry about is the fees you’ll be paying to have your asset stored securely. 

Many companies usually have a minimum investment amount when it comes to these types of accounts. This price can vary anywhere between $25, 000 and $50, 000 depending on the company and its policies. Generally, the fees investors pay to manage their precious metals IRAs are a lot more expensive compared to other financial products like stocks. 

The fees for setting up and maintaining the account can vary significantly from one company to another. Therefore, you should carefully go over what each company is offering before deciding. This way, you can get the best deal possible while keeping your asset safe. That said, if a company’s prices are too good to be true, it’s most likely a scam, so, stay on your toes while you shop around. 

Final Thoughts

Gold has proven itself to be a stable and profitable investment and therefore, many precious metals IRAs only have this asset. Other precious metals are equally profitable and stable making them great assets to invest in as well. To further mitigate risks, it is best to diversify your IRA account with all the approved precious metals.