Many individual investors are looking for ways to diversify their portfolio with precious metals. The prices of metals such as gold and silver have risen to new highs, making these very attractive for long term growth. The market for gold and silver is liquid, but investors should keep in mind that it can be very volatile. Two methods for investors to add gold and silver to their portfolio are by buying the physical metals and by investing in Exchange Traded Funds (ETFs) for their retirement accounts.
How to Buy Physical Precious Metals for an IRA
Investors need to set up a Self Directed IRA in order to add physical gold and silver assets such as coins and bullion to a retirement account. The account can be established through a custodian company that specializes in precious metal IRAs or with an investment or online broker. The account holder also has to choose a depository company that will keep the assets physical custody. Once the account is opened, investors then need to find precious metal dealers offering IRA-eligible gold and silver assets for sale.
Gold and Silver Physical Assets Eligible for IRA
American Gold and Silver Eagles were the only precious metals allowed in IRAs before 1997. The government changed this requirement to include gold, silver and other metals bullion, bars and coins to afford investors greater diversification. The Tax Relief Act of 1997, section 304 expanded the original list of eligible IRS precious metal assets. These are the current requirements for IRA-eligible gold and silver coins:
- Gold Coins/Bars/Bullion – 99.5% purity, the coins must be legal tender, bullion and bars must be refined by an authorized NYMEX or COMEX refiner.
- Silver Coins/Bars/Bullion – 99.99% purity, the coins must be legal tender, bullion and bars must be refined by an authorized COMEX refiner.
Examples of Eligible Coins Include:
- Canadian Gold Maple Leaf
- American Gold Eagles
- Some of the Perth Mint’s gold coins
- Australian Kangaroo Nuggets
- American Silver Eagle
- Canadian Silver Maple Leaf
Precious Metals Exchanged Traded Funds (ETFs) for IRA
Precious metals and gold ETFs are similar to mutual funds that hold many securities in their pool. Securities are mainly precious metal mines and metal service companies. ETF prices can be obtained at any given time during a trading day, making them very liquid. Some investors prefer ETFs to purchasing the physical precious metals because of the convenience. These are some of the more popular precious metals and gold ETFs in the market:
- SPDR Gold Trust
- iShares Comex Gold
- iShares Silver
- Power Shares DB Precious Metals
Tips
- Investors looking to diversify their retirement accounts with gold or silver should consider the risks. These assets’ prices generally move with the underlying metal prices and they can be very volatile at times. Precious metals should only be part of an overall retirement portfolio.
- The maximum annual contribution limits for IRA are currently $5,000; and $6,000 for people over 50 years of age. These maximums include all of an individual’s IRA accounts combined.
- Income tax liability for buying and selling precious metals assets for retirement accounts may be higher than for stocks or bonds depending on individual’s tax situation.
- Other precious metals assets that may be eligible for IRAs include Platinum and Palladium.
Precious Metals Related Articles:
Resources:
Public information available at the IRS website – Publication 590, current as of March 2, 2010.
Sylvia Cruz - Sylvia holds Bachelor and Master degrees in Business Administration with majors in Finance and Accounting. She is also a CIA - Certified ...
