- Two places to get started
- What you can and can’t buy
- Why I don’t think you should buy physical silver and gold in your IRA
After my last article about my predictions for the price of silver I’ve received dozens of emails asking about buying precious metals in a variety of tax-sheltered accounts.
Most questions were about IRAs.
And while I AM NOT a tax accountant, or even a regular accountant, or even especially well versed in the labyrinthine intricacies of tax-law, I did some research, and I think I have a helpful answer.
But you might not like what you have to hear.
First – I advise you to speak to a tax attorney before making any big decisions regarding your IRA.
The first thing you need to know about adding gold or silver to your IRA is that not all IRA custodians are set up to do so.
The second thing you should know is that it’s my understanding that you can buy precious metals in ALL types of IRAs including regular old IRA plans, Roth plans, Simplified Incentive Match Plans for Employees (SIMPLEs) and Simplified Employee Pension plans (SEPs).
But before you get started, you’ll need to open a new plan with an IRA custodian who has specific expertise and licensing to offer precious metal investments.
Two places to consider:
These aren’t the only two firms that offer precious metal IRAs, but whichever firm you decide to go with, I can’t emphasize enough: do your research and know the ins and outs of any firm before making a change. We’re talking about your retirement funds here, so you need to be an expert on any firm that you’d trust with these funds.
Once you set up an IRA account with one of these specialized custodians, you will be able to deposit funds and direct the custodian to buy whatever bullion product you want – with some restrictions.
For instance, you can’t add coins that you already own to the IRA. You also can’t purchase collector coins in your IRA.
Also, the bars and coins you buy with your IRA have to be at least .995 fine, which means you can’t purchase Krugerrands or British Sovereigns.
Gold and silver eagles are allowed, and so are gold and silver miners like Barrick Gold (NYSE: ABX) andSilver Wheaton (NYSE:SLW) as well as most precious metals ETFs like SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV).
I have no problem with using IRAs as a tax sheltered way to buy shares of gold or silver stocks.
But I don’t see the point of holding gold and silver in an IRA, and here are two small reasons and one huge reason why:
1. Some precious metal IRA custodians WILL NOT ever let you take physical delivery of your silver or gold. They simply cash you out.
2. The point of owning physical gold and silver is to protect your bottom dollar in the event of a currency crisis. Keeping them in a vault twice removed from convenient access won’t do you any good if we experience a serious currency crisis. Do you think your custodian will be sitting in their office waiting for your call if there’s rioting in the streets?
3.Which brings me to the big reason: there’s no telling what will happen to IRA holdings in the death throes of the dollar. The Government might completely reverse course on tax sheltered accounts. They might freeze all such accounts, or even worse: seize all physical gold and silver held in IRAs. Keeping your currency insurance in an account overseen by the Federal Government – aka the very folks instrumental in the meltdown of said currency – isn’t a very good strategy.
As I’ve always said: you want your currency insurance close by, in a safe place that only you and your spouse or another trusted person knows about.
So, my recommendation is to take physical delivery.
As you may know, there’s been huge demand for this coin, in part because of an effort to bankrupt JP Morgan by forcing them to cover their short side bets on silver.
Silver is also up 50% since the beginning of the year, and that’s been bolstering interest and demand.
Buy Gold for $400 an Ounce
Most gold miners are lucky to get their gold out of the ground for less than $1000 an ounce – which is great if gold is $1400 or more…But we found a specialized gold company that can buy gold for $400 an ounce. It’s a unique story – a safe way to benefit from high gold prices, with lots of downside protection. Click here for the full write-up.