What are the Gold IRA pros and cons you should consider before using your retirement account to buy physical gold or other precious metals?
With rising inflation, economic uncertainty, and growing concerns about traditional banking systems, many investors are exploring safer ways to protect their retirement savings. A Gold IRA offers a way to diversify your portfolio, hedge against inflation, and own a tangible asset that stands outside the risks of paper investments.
Our guide will walk you through the pros, cons, and practical steps to help you determine if a Gold IRA aligns with your financial goals.
What is a Gold IRA?
A Gold IRA is a retirement account where you can buy and hold gold and other precious metals. It’s a way to use your savings to own a tangible asset that you can sell and “cash out” when you reach retirement age of 59.5.
These accounts keep growing in popularity because many investors want to reduce risks to their savings and hold physical gold as a way to protect their wealth.
You’ll also sometimes hear them referred to as precious metals IRAs or Silver IRAs.
Pros of a Gold IRA
What are the advantages of gold and precious metal IRAs? Here’s the most common reasons why investors want to add these metals to their portfolios:
Diversification
Physical gold is a completely independent asset. It doesn’t rely on any country’s currency for value. And it doesn’t necessarily react in the same way the stock market does.
So this means that if the U.S. dollar is worth less or if the stock market suddenly drops several points, your physical gold may be completely unaffected. In some cases, your gold might even be worth more because people tend to buy gold whenever there’s a crisis or worry about other investment types.
Recent examples include:
- 2024 economic uncertainty: In early 2024, gold prices rose above $2,700 per ounce because of global economic concerns and aggressive central bank buying as investors sought safe-haven assets.
- Stock market volatility in 2023: Throughout late 2023, as the stock market faced declines, gold began an upward trend as a safe investment during market turbulence.
- 2008 Great Recession: During past crises like the 2008 financial crash, gold gained value while stock prices dropped.
Hedge against inflation
In the past few years, we’ve seen higher inflation. It seems everyone’s talking about how much more things cost at the grocery store or the increased rates for various services. Inflation comes about when the government adds more paper money into the overall system, and the value of the dollar decreases.
Compare this to physical precious metals, which are a limited resource. We only have so much gold, silver, and platinum on the earth, and we can’t just make more. So, when you buy physical gold, you own a tangible asset with limited supply.
Over time, the value can appreciate and offset the effects of inflation because your gold is worth more than when you bought it. For example, in the last 24 years, the price of gold grew 863% and outpaced other assets like homes and the stock market.
Tax advantages
Using a retirement account to hold physical gold gives you the same tax advantages you see with traditional IRAs. These vary depending on your account type:
Traditional Gold IRAs
With traditional IRAs, you fund your savings with pre-tax dollars. Your money then grows tax-deferred until you reach retirement age of 59.5. Then, you only have to pay taxes when you withdraw, which might be when you’re in a lower tax bracket.
Roth Gold IRAs
With a Roth IRA, you invest money with after-tax dollars. Your investments grow tax-free. Since you already paid taxes on this money, you can withdraw the amount of your contributions at any time. Then, you can withdraw at retirement age, and as long as you’ve had the account for 5 years, you don’t pay taxes on any of your investments.
Potential for high returns
Gold and other precious metals do not earn interest or income, but you can potentially see high returns if you buy low and sell high. Gold can be more stable than other metals like silver and platinum because a large driver of its demand is for investment and safety.
Silver and platinum are different because they have more industrial uses, which can go up and down in demand. The benefit is you might see higher returns but you could also see more losses with these metals.
Physical asset ownership
What really makes a Gold IRA stand out is that you actually own physical precious metals. This is very different from a traditional IRA, where you invest in paper assets.
Owning a tangible asset like gold means you don’t have third-party risk. For example, it doesn’t matter if a bank goes out of business or there’s a cyber attack. You still own your gold. The value of your asset doesn’t suddenly disappear because of another party’s failure to meet their end of a contract.
Cons of a Gold IRA
Like all investments, there are drawbacks to Gold IRAs to consider as part of your evaluation:
Fees
If you invest in paper assets through the stock market, you have management and administration fees. The same is true for your Gold IRA. You’ll choose a Gold IRA custodian who manages the account on your behalf, which means you’ll have fees for the services they provide. These custodian account fees include:
- Setup fee $50-$300: This is a one-time fee to set up your account.
- Annual fee $75-$300: Cost for your Gold IRA custodian to manage your account and report to the IRS each year.
- Annual storage fee $100-$500: The IRS doesn’t allow you to take possession of your gold and other precious metals until you reach retirement age. So, your custodian arranges to securely store your metals in a third-party depository.
Gold IRA Fee Summary
| Fee type | Description |
| Account setup | One-time fee to set your account. |
| Annual maintenance fee | Recurring annual fee for account administration. |
| Segregated storage | Annual fee for storing your metals separately from others. |
| Non-segregated storage | Annual fee for storing your metals with other investors. |
| Buy, sell, exchange | Fee for buying, selling, or exchanging metals within your account. |
| Cashier’s check or wire transfer | Fees for funding logistics. |
| Various other fees like late fees, paper statements, termination fee, etc. | Various fees. |
Contribution limits
Once you’ve set up your account and want to add more gold coins or bars to your precious metal IRA, the IRS has annual contribution limits, so you can’t just add as much as you want. In 2024 and 2025, you can contribute up to $7,000 if you’re under 50 and $8,000 if you are 50 and older.
These limits apply across all of your IRAs, so if you have a traditional, Roth, or Gold IRA, your max is $7,000 or $8,000 total. In some cases, you might also be able to deduct your contributions. Check the IRS website or with your financial advisor to confirm.
No income
Precious metals do not generate income or cash flow. That’s why most investors consider this investment as an “insurance policy” and a way to reduce the risk in their portfolios. Still, you need to balance the opportunity cost of not earning income with the safety and diversification owning precious metals can give you.
Investment risk
Like any investment, there’s some risk involved. Gold prices can go up and down, so it’s best to approach this as a long-term investment. When interest rates rise, for example, other investments offering higher returns can cause gold prices to drop. Keeping this in mind can help you see gold as part of a balanced strategy rather than the whole picture.
Also, be sure to work with a reputable gold dealer so you don’t run the risk of fraud from counterfeit gold or misleading products that could cost you more in fees or deliver lower-quality metals than promised.
Is a Gold IRA right for you?
With over 40 years of experience guiding investors, we’ve seen how Gold IRAs can help people protect their savings and secure their financial future. If you’re looking for stability and peace of mind, here are some situations where a Gold IRA might be the right fit:
- You value safety: As you approach retirement, protecting your hard-earned savings becomes more important. Gold IRAs offer a way to protect your portfolio from market volatility and inflation.
- You take a long-term view: If you don’t need immediate access to your funds, a Gold IRA lets you grow your investment over time, providing stability and diversification for the years ahead.
- You’re planning for your family’s future: You may want to minimize taxes for your heirs or leave behind a legacy. Gold IRAs offer estate planning benefits that help protect wealth for the next generation.
Investing in a Gold IRA gives you the peace of mind that comes with knowing you’re protecting your financial future, no matter what challenges arise.
Gold IRA investing steps
The key steps to set up Gold IRAs include:
Choose a custodian
Shop around and choose an IRA custodian to handle your retirement accounts. If you don’t already have one in mind, the Swiss America team can recommend a few options.
Buy your metals
Work with a precious metals dealer to buy gold, silver, and platinum coins or bars for your IRA. You can’t just buy any metals you want because the IRS has rules about which metals qualify for retirement accounts. These rules include:
- Metal purity: 99.5% for gold, 99.9% for silver, and 99.95% for both platinum and palladium.
- Manufacturer: Produced by an accredited refiner or government mint.
- Forms: Bullion bars or coins. Collectible coins are not eligible.
Store your precious metals
When you’re ready to purchase gold, you’ll direct your custodian on what to buy on your behalf. Your precious metals dealer ships the metals to them, and they’ll place your metals in an IRS-approved depository. This satisfies the IRS tax regulations and keeps your gold secure until you reach retirement age.
Types of Gold IRAs
Just like traditional IRAs that invest in stocks and bonds, you can also have different types of self-directed gold or precious metals IRAs:
Traditional Gold IRA
Traditional IRAs allow you to invest pre-tax money that grows tax-deferred. Each year, you can contribute $7,000 if you’re under 50 or $8,000 if you’re 50 and over. Then, when you reach the retirement age of 59.5, you can start making withdrawals and pay income taxes.
The IRS also requires minimum distributions starting at age 73.
Roth Gold IRA
The money in a Roth Gold IRA is already after taxes, and your investments grow tax-free. You can withdraw your contributions at any time since you already paid taxes on them. Once you reach retirement, as long as you’ve had the account for five years, withdrawals on your gains are also tax-free.
A big benefit of Roth Gold IRAs is that you don’t need to take required minimum distributions, and you can pass on your metals to your heirs tax-free.
Gold IRA investing final thoughts
Converting a portion of your retirement accounts to a Gold IRA can help you diversify, reduce risks, and own a physical asset while getting all the tax advantages. Looking at the pros and cons can help you decide if this type of account is right for you and your situation.
To learn more about Gold IRA investing, check out our free Gold IRA kit which gives you all the details you need to make decisions about this retirement option.
Gold IRA pros and cons: FAQs
Can I put gold in my IRA?
Yes, you can add physical gold to your IRA by setting up a self-directed IRA account. A custodian manages this account for you and buys or sells gold and other precious metals on your behalf.
How is gold taxed in an IRA?
The IRS taxes gold depending on your account type. With a traditional Gold IRA, you’ll pay income taxes when you go to withdraw your gold at age 59.5 or older. If you have a Roth Gold IRA, you won’t pay any taxes on your physical gold at retirement age as long as you’ve had the account for five years.
What is the best precious metal in IRA?
The best precious metal depends on your goals. People usually hold physical gold in their Gold IRA account because it’s a safe-haven asset. Some investors may add silver or platinum because they want an opportunity for larger growth that comes with these more volatile metals.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
