Description of Physical Precious Metals IRAs
Physical Precious Metals IRAs are upgraded IRA accounts which contain actual physical gold or other forms of bullion within the account holdings instead of typical paper securities and types of investments. This physical asset holding is what makes these types of IRAs unique, as the majority of IRAs only contain bonds, stocks, mutual funds, and other typically dollar denominated and paper assets. The problem with such standard forms of IRAs and their investments is that these dollar-based assets can easily decline in value based on the fluctuating value of the dollar and not simply because the stocks, bonds, or mutual funds themselves inherently decline in value. The paper dollar is all too often a victim of the whim of money policy planners and their inflated supplies of dollars on the markets as well as real and perceived inflation. With physical gold in your IRA, no one is able to inflate away the gold itself nor to artfully create additional supplies of it from thin air and scratch. Whatever happens with the dollar’s ultimate value, you can count on selling your personal physical gold holdings at the actual market value of gold. If the dollar’s value declines appreciably, then you will simply receive a greater number of dollars in exchange for your gold when your time comes to sell the yellow metal holdings.
Process of Setting Up A Physical Precious Metals IRAs
The good news is that the requirements to set up a Physical Precious Metals IRA are as simple as those needed to establish any other type of IRA. The main difference revolves around what the Physical Precious Metals IRA is established to contain, which is physical gold and other precious metals securely inventoried and stored according to the IRS’ stringent rules and regulations. Because not every type of IRA is allowed to contain physical gold, it is critically important to query the administrator of the IRA as well as their securities custodian to be certain that they allow such an option. Those that do not provide it will direct you to another IRA administrator and custodian who are able to work with such assets so that you are able to roll over your present IRA into a Physical Precious Metals IRA. Alternatively, you could keep your old IRA at the current administrator and simply open a new Physical Precious Metals IRA at the new administrator shop.
For rollovers, you first have to create a new IRA account with a Physical Precious Metals IRA administrator. Once this has been established, you are then able to select which kinds of gold, silver, platinum, and palladium bars and coins you want to deposit within your new IRA account. It is important to be aware of the fact that not every type of precious metals coin is allowed by IRS rules. This is why you will want to consult with an experienced, practiced, and imminently knowledgeable expert in gold before you begin purchasing coins and bars for your new IRA account. Once your new Physical Precious Metals IRA account is created and funded with physical gold holdings, the IRA administrator will deliver routine reports to you, all the while a special custodian who focuses on the warehousing and safeguarding of precious metals will securely maintain your gold stocks and help your administrator with any shipping, additional deposits, or withdrawal demands as they are presented by you from time to time.
Rules of Physical Precious Metals IRAs
The two main rules for these Physical Precious Metals IRAs surround the types of coins that may be held and the storage facility scenarios which are permissible. Only 22 Karat to 24 Karat gold coins, and 24 Karat silver, platinum, and palladium coins and bars may be contained within these special types of IRAs. This means American Gold Eagles, Canadian Maple Leafs. Austrian Philharmonics, and a select few others qualify per the IRS rules. Be sure to look into which coins are expressly permitted before going on a gold, silver, platinum, or palladium coin or bullion buying spending spree only to discover when the metals actually reach the administrator and custodian that they are rejected as not permissible.
Storage of the physical gold is another critical point with these types of accounts. It is not so simple a matter as to install a safe in your own home. IRS rules stipulate that a third party custodian must vault these types of IRA precious metals holdings. There is confusion regarding what has increasingly become known by its nickname of Home Gold IRAs. Many companies are promoting these based on the idea that you can simply establish your own Precious Metals IRA custodian company and vault your own precious metals either in your local bank safe deposit box and bank vault or in a home-based safe. This is championed as a loop hole or gray area within IRS rules and regulations. While the IRS has not yet specifically addressed this controversial method of storage for these types of IRAs, it is difficult to recommend what clearly violates the spirit of their law, if not yet the outright letter of it.
Regarding who is able to invest in a Physical Precious Metals IRA, the requirements are easier. It only requires some basic minimum income requirements to open and invest in such an IRA account type with the benefit of pre-tax based dollars. Most interested individuals will qualify.
Pros of Physical Precious Metals IRAs
• Diversification – Physical Precious Metals IRAs offer you effective means to diversity your assets and portfolio. They do this by acting as the world’s most effective and famed hedge against the ravages of inflation. More and more investors are turning to gold holdings to safeguard themselves against major economic risks such as the ongoing war on the dollar and attempts to devalue it, as well as the risks of U.S. government bankruptcy and its catastrophic levels of government debts finally exploding.
• Non-Currency Asset
A Physical Precious Metals IRA has the advantages of not being a hostage to interest rates, inflation, and/or currency exchanges. All of these dangers in waiting can take away from the dollar based assets values. Should the dollar value decline on an absolute term, then selling your gold will simply net you a greater number of dollars for your gold. This is how it safeguards its holders from outside assaults on their real wealth value.
• Physical Gold Distributions
Perhaps the greatest and most desireable advantage to these Precious Metals IRAs is that the owners of such accounts are able to make withdrawals not only by liquidating their gold holdings at actual market prices and requesting a check, but also by putting in a request for disbursements in physical gold sent to your home. Only from such IRA accounts as these are savers for retirement allowed to receive literal tangible precious metals to hold for safekeeping against their future retirement or for spending purposes.
Cons of Physical Precious Metals IRAs
• Difficulty in Selling
It is not as quick and easy to sell physical precious metals as with paper forms of gold that can be liquidated with less than a phone call (as electronically it is down to a mouse click) nowadays.
• Difficulties in Physically Transferring
Physical bullion must be transferred from the custodian storage facility to the buyer while paper gold is electronically transferred on computer screens anymore.
• Higher Commissions for Physical Gold Transactions
There is a higher commission cost involved in selling and buying physical gold, silver, platinum, and palladium than with paper precious metals in the majority of cases.
Gold is the Godfather of the precious metals complex, though it is neither the rarest, most heavily in demand, or most valuable of the four metals. These honors belong to its little brothers. Yet as the go-to choice now and throughout all of human history for safeguarding, protecting, hiding, and transporting wealth in times good and bad alike, there is no rival to the yellow metal anywhere on earth. Central Banks hold gold in their vaults, not silver, platinum, or palladium. This speaks volumes.
Silver is the most heavily in demand precious metal and the one of choice for literally thousands of industrial uses throughout the world today. While it is also the lowest valued of the big four precious metals, it is also the most volatile. Silver is the one most likely to make major gains percentage-wise when the complex as a whole or big brother gold moves.
Platinum is actually rarer than gold, though not quite the rarest precious metal in existence. All of the Platinum ever uncovered in the entire history of the world combined would fit in a small office building. Compare this to the discovered and mined gold that would fill at least a whole football field. Platinum also maintains the distinction of jockeying back and forth with gold over the decades for being the most valuable and highly priced precious metal most of the time, with gold presently ahead in the race.
Beloved in jewelry for its lustrous silvery appearance that is combined with big brother gold in a marriage made in heaven to produce white gold, Palladium is the rarest of the precious metals by far. As an incredibly scarce metal, the only American Palladium mine is found in Stillwater Mine, Montana, while Canada, Russia the world’s largest producer, and South Africa contain the only other known Palladium mines in existence anywhere. Palladium also has the distinction of being the newest of the known precious metals, as it was only finally discovered in 1803. It has important industrial uses in the manufacturing of catalytic converters and fuel cells. Despite these unique uses in both jewelry and industry, palladium’s popularity has not yet caught on quite enough to boost its price per ounce into the $1,000’s.