You don’t have to be an Olympian to hold gold. In fact, some heavy hitting and well-known investors are confidently snapping up the precious metal as a hedge against a tough geopolitical environment that they don’t see calming soon. From global politics to worldwide economic struggles, low interest rates, Brexit, and even the United States’ upcoming presidential election—savvy investors are citing different reasons they are fortifying their portfolios with gold assets in anticipation of its cost continuing to rise.
How can an IRA invest in gold?
In the wake of the Brexit vote in June, gold rose to just above $1,300 a troy ounce. Just this week it was trading for over $1,360 an ounce, and a growing number of experts predict gold assets to continue their upswing. And, while predictions are never set in stone, there is no denying the fact that gold is considered by these investors as a solid and tangible asset, built to weather the negative yields produced by storms on Wall Street.
There are several different ways your self-directed IRA can invest in gold assets without having to compete in the Olympic games to score the actual “medal.” Perhaps the most well-known and easiest way is to invest in the precious metal itself, as different types of gold coins and small bullion bars can be purchased with self-directed IRA funds.
Before diving in, we recommend you seek the advice of experts who understand what options are permissible in your IRA. There are clear specifications regarding weight and other factors that apply when investing in precious metals. For example, typically, most coins are considered collectibles and as such are prohibited assets in IRAs. However, the IRS allows some types of coins as investments. Per IRS Publication 590-A: Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury Department. It can also invest in certain platinum coins as well as particular types of gold, silver, palladium, and platinum bullion.
Additionally, unlike our Olympic winners, you are unable to take personal possession of the gold owned by your IRA. Not that you’d want to walk around with a gold bar hanging around your neck, but, incase you do—you must clearly understand that physical gold investments purchased by your IRA are required to be housed in a depository until such time that you choose to liquidate them.
If you’re not interested in the physical gold itself, your self-directed IRA can also acquire gold mining shares. If mines can produce gold at a decent cost, the gains as the price of gold rise could be potentially significant. Investing in mining shares may involve a bit more risk, but the right choice can also prove fruitful. Due diligence here is critical, but can help ensure positive returns if you’re familiar with the changing pace of the markets.
All in all, a successful retirement portfolio depends not only on the diversity of investments it holds, but also on the returns of those investments. In any case, your IRA is certainly gold-medal worthy and now might just be the time for to explore the possibilities that are available in your IRAs.