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What is a Gold and Silver IRA

When you research Gold IRAs you may see several different names being used for this Investment vehicle and wonder how they differ from one another.

“Gold IRA” is the most common term but you’ve probably seen references to Silver IRAs, Precious metals IRAs, and even Platinum or Palladium IRAs. If you are asking yourself, “What is a Gold and Silver IRA?”, that is certainly understandable.

Let’s end the confusion about names so we can focus on more important topics.

All of these different names are referring to a self-directed IRA that holds any of the four Precious metals, or a mix of the four metals. There is absolutely no difference between a Gold IRA and a Platinum IRA or any of the other names you may see online.

A Gold and Silver IRA would hold Silver and Gold, but it could also hold Platinum and Palladium.

Gold IRA

If you are new to Precious metals investing you may be wondering what a Gold IRA is and if it is fully approved by the IRS. We can answer both of those questions by taking a quick look at the history of these unique Investment vehicles.

ERISA

In 1974 Congress passed the Employee Retirement Income Security Act (ERISA) to protect retirement savings from mismanagement and abuse. This sweeping tax law introduced numerous changes including IRAs, Roth IRAs, and self-directed IRAs.

IRAs gave investors newfound options for saving towards retirement but the law didn’t specify which asset classes could be held in a self-directed IRA (SDIRA). Instead, ERISA named two assets that could not be held in an SDIRA: insurance contracts and collectible items.

In practice, IRA investors were limited to the asset classes that Investment management companies offered and this meant primarily Stocks, Bonds, and Mutual funds. Investors who took advantage of self-directed IRAs used them mostly to hold Real Estate.

TRA

The Taxpayer Relief Act (TRA) of 1997 made sweeping tax reductions and introduced several new tax credits. This tax law also provided an itemized list of the asset classes that could be held in a self-directed IRA.

For the first time ever, the IRS allowed investors to hold physical Gold and Silver in their tax-advantaged Retirement accounts. The law was amended in 1998 and Platinum and Palladium were added to the list of permissible assets.

Hopefully this brief history makes two things clear:

Precious metal IRAs are fully approved by the IRS. Self-directed IRAs were enacted by ERISA in 1974 and the Taxpayer Relief Act of 1997 / 1998 explicitly stated that Gold, Silver, Platinum, and Palladium can be held in self-directed IRAs.

All of the names for a Gold IRA refer to the same thing: a self-directed IRA that holds any of the four Precious metals, or a mix of the metals.

Silver vs Gold Investment

At Gold Well Live we recommend that investors structure their Precious metals Portfolio with 40 to 60% Silver and the rest in Gold. We prefer Silver over Gold and heavily overweight our own Portfolios in that direction.

In our opinion, Silver is the most undervalued Investment asset on the planet. We expect Silver to greatly outperform Gold on a percentage basis and we invest accordingly.

Silver has two significant sources of demand – commercial and Investment.

Commercial demand for Silver

The white metal is used commercially for electronics, appliances, electric vehicles, solar panels, medical devices, military weapons, etc. Silver is the most conductive metal in the element table and it is also the most reflective. Without Silver our high-tech society wouldn’t exist.

Because Silver is relatively inexpensive and there is only a small amount of Silver used in any single item, the Silver is not recovered when the item reaches its end of life. That means Silver is continually being thrown away instead of being recycled.

Investment demand for Silver

Investment demand for Silver exceeds the demand for Gold for two reasons:

Silver is the poor man’s Gold. Everyone can afford to invest in a few ounces of Silver while Gold is out of reach for many.

When Precious metals are rising in price, Silver tends to outperform Gold on a percentage basis.

Demand for Gold

In contrast to Silver, the main sources of demand for Gold are jewelry and Investment. Because Gold is expensive, its commercial demand is quite limited and it gets recovered after use. Unlike Silver, essentially all of the Gold that has ever been mined is still available.

Benefits of Gold IRA

The key benefit of a Gold IRA is that it gives you a way to move your tax-advantaged savings out of paper assets (Stocks, Bonds, and Mutual funds) and into physical assets (Precious metals).

Unless you are willing to cash out your Retirement accounts and face the tax consequences, your tax-advantaged savings are essentially stuck in some kind of IRS-approved Investment vehicle until you reach age 59 ½.

Inflation and rising interest rates are currently causing both Stocks and Bonds to lose value. Leaving your retirement savings in these paper assets is a risky proposition.

You could sell your Stocks and Bonds and just hold cash in your Retirement accounts. That would reduce the market risk you are facing but cash is quickly losing its Purchasing power due to Inflation and monetary debasement.

Unfortunately, whether you hold risk assets (Stocks, Bonds, and Mutual funds) or hold cash, your retirement savings are rapidly losing the value that you are hoping will support your lifestyle in retirement.

As an alternative to paper assets which are steadily losing value, a Gold IRA lets you hold your retirement savings in assets that tend to hold their value or even increase in value when Inflation and Stagflation are the predominant market conditions.

Today’s Inflation rate is the highest we have seen for 40+ years and the economy is heading into recession, regardless of the White House’s attempt to pretend otherwise. These economic conditions are very similar to what Americans faced during the 1970s.

Silver and Gold in the 1970s

In 1970 you could buy an ounce of Silver for less than $2 and an ounce of Gold for less than $40. In early 1980, only 10 years later, Gold reached $850 an ounce and Silver reached $48 an ounce.

While Inflation dramatically increased the cost of living and the economy experienced several recessions, the price of Gold increased 21x (2100%) and the price of Silver increased 24x (2400%).

Gold IRA pros and cons

When you decide that you want to move your tax-advantaged savings into the security of physical Gold and Silver, there is only one way to do that - a Precious metals IRA. It is certainly worthwhile to consider Gold IRA pros and cons but keep in mind that the overarching "pro" is getting your hard-earned money out of paper assets (Stocks, Bonds, Mutual funds) and into physical assets.

Pros
  • The only way to protect tax-advantaged savings with physical Precious metals.
  • Diversifies an Investment Portfolio away from Stocks, Bonds, and Mutual funds.
  • Hedges against Inflation.
  • Immune to central bank currency debasement. 
Cons
  • The IRS requires that a third-party Custodian has to hold the Precious metals.
  • Already owned metal cannot be transferred into the IRA. All metal has to be purchased within the account.
  • There is no regulating authority for the Gold IRA industry so shady businesses and individuals are not uncommon.
  • Fees are likely to be higher than on a traditional IRA because the metals have to be securely stored and insured.
  • Proof and special edition Coins are sold to uninformed investors. These Coins carry very high premiums and, for most people, they are a poor Investment.
Conclusion

The pros for a Gold IRA definitely outweigh the cons, and again, a Gold IRA is the only way to purchase and hold physical Precious metals using tax-advantaged funds.

Two of the cons you are able to control. You can avoid the shady businesses and individuals by paying attention to customer reviews on websites like BBB and TrustPilot. You can avoid being taken advantage of by simply staying away from proof and special edition Coins.

"Gold is honest money that survived the ages

and will live on long after the political fiats of today

have gone the way of all paper." 

~Hans Sennholz

How to open a Precious metals IRA

The process for opening a Gold IRA is simple. Once you have chosen a company to work with you will follow the steps below. All of the Gold IRA companies have specialists who will help you with the process so you don't have to worry about how to open a Precious metals IRA.

Simple process

Step 1

Pick a Gold IRA company and open an account.

Step 2

After opening the Gold IRA account you contact your existing Retirement account and request a rollover or transfer. In a rollover, funds are wired directly from your existing account to the Gold IRA account. In a transfer, funds from your existing account are sent to you and then you forward some or all of that money to the Gold IRA account.

Step 3

The Gold IRA account receives funds from the rollover or transfer.

Step 4

You choose the Gold and Silver products you want to hold in the IRA.

Tax rules to be aware of

  • The IRS allows you to move funds from one Retirement account to another without incurring any taxes or penalties, but you can only make one move per tax year.
  • Transfers must be completed within 60 days or the funds withdrawn from your existing Retirement account will be treated as a distribution. You will have to pay taxes and penalties on any funds that aren't deposited in an IRS-approved account within the 60-day period.
  • There is no limit on the number of IRA accounts you have open. Opening a Gold IRA does not affect your other IRA accounts.

IRA approved Gold

The IRS has regulations about the types of Gold products that can be held in a Gold IRA and they also regulate where those products can be manufactured. Both bars and Coins are allowed as long as they are produced by IRS-approved mints and refineries.

In general, all IRA approved Gold has to be Bullion quality or better which means it is at least 99.5% pure. An exception is made for American Gold Eagle Coins because they are only 91.67% pure (the balance is copper which makes the Coins harder and more scratch-resistant).

Gold IRA companies are only going to offer you IRA-approved Gold products so you don't need to worry about purchasing products that aren't eligible for your Gold IRA Investment.

Mexican Gold Libertad

American Gold Eagle

Canadian Gold Maple Leaf

Austrian Philharmonic

IRA approved Silver

Like Gold, IRA approved Silver bars and Coins have to be at least 99.5% pure with the exception of Silver American Eagles (91.67% pure). Silver products must be sourced from IRS-approved mints and refineries.

American Silver Eagle

Australian Silver Kookaburra

Canadian Silver Maple Leaf

Austrian Silver Philharmonic

Premium

"Premium" is the difference between the quoted price for an ounce of Gold or Silver and the price you pay for a one ounce bar or Coin. 

The prices you see online for Silver and Gold are called "spot prices" and they only apply to 400-ounce bars of Gold and 1000-ounce bars of Silver. Mints and refineries buy these large bars and produce the smaller products that investors typically prefer. These manufacturers have to cover their costs and make a profit so they charge a premium over the spot price of the metal.

Gold

Premiums on Gold products are 3 to 5% for Bullion bars and 7% or more for Coins. Coin premiums vary quite a bit depending on supply and demand factors. South African Krugerrands are widely available so they tend to have the lowest premiums. American Eagles have high demand and limited supply so they tend to have the highest premiums (10% or more).

Silver

Silver premiums are very elevated currently (August 2022) and that has been the case for about 18 months. There are two factors affecting Silver premiums:

1. Investor demand for physical Silver is overwhelming available supply.

2. The price of Silver is so low that manufacturers are forced to charge high premiums to cover their costs and profit margin.

Premiums on 100-ounce Silver bars are around 7%, 10-ounce bars will have a premium of 9% or more, 1-ounce rounds (generic Coins) have 15% premiums, and Silver American Eagles have a premium of 67 to 75%.

At Gold Well Live we always recommend that investors purchase the products with the lowest premiums. In general that means bars instead of Coins. When you are ready to purchase Silver and Gold products for your IRA ask the representative which products have the lowest premiums over spot price.

Proof and special edition Coins

The premiums on proof and special edition Coins are just plain silly. Yes, they are pretty Coins, but who cares? Are you making an Investment or purchasing art work?

Gold is Gold whether it comes out of the scratch-and-dent bin or comes in a fancy box with a certificate of authenticity. The same is true for Silver.

If you read enough customer reviews about Gold IRAs it will become obvious that the most common complaint comes from people who purchased proof Coins and then lost money when they tried to sell those Coins. It is easy to avoid this problem by not purchasing these overpriced Coins in the first place.

Salespeople make more money if they can sell you these high premium Coins instead of Bullion bars and Coins. The most common story they will tell you is that the proof Coins have greater investor demand when it is time to sell, but that is pure BS. Informed investors would never pay these outrageous premiums and couldn't care less about fancy boxes or certificates of authenticity.

As always, when you are spending money "caveat emptor" is the rule. If a Gold IRA representative tries to push you into proof Coins take your business to another company.

"Gold is money.

Everything else is credit."

~J.P. Morgan

Gold IRA reviews

There are two types of Gold IRA reviews you will find online: reviews posted by customers and reviews posted by affiliate marketers.

Affiliate marketer reviews

If you search the web for "best Gold IRA" or "Birch Gold IRA review" every result you will find is going to be posted by an affiliate marketer who gets paid for sending customers to Gold IRA companies. There is nothing inherently wrong with this but understand that these internet marketers have a definite bias. They are going to direct you to the companies that pay them the largest commissions whether those companies are actually "best" or not.

Also understand that most of these affiliate marketers have zero knowledge about the Precious metals or tax-advantaged Investments. They have no idea what "premium" means and they couldn't explain the difference between a Roth IRA and a regular IRA. Again, there is nothing wrong with this lack of knowledge but you need to understand the source of the information you are relying upon to make a decision.

Customer reviews

The second, and more valuable, type of reviews you will find online come from actual customers of the Gold IRA companies you are interested in. These people have dealt with the companies and were motivated enough by their experience, good or bad, to write about it.

There are several rating agencies that evaluate businesses and collect customer reviews.

Better Business Bureau (BBB)

TrustPilot

Business Consumer Alliance

Consumer Affairs

TrustLink

At Gold Well Live we rely primarily on the Better Business Bureau (BBB) and TrustPilot. Both of these companies make an effort to filter out fake and paid reviews. The BBB only publishes 62% of the reviews it receives because the rest can't be verified as being legitimate.

If you read enough customer reviews you will notice that there are a few complaints that get mentioned consistently:

  • Customer was pressured into making a purchase decision
  • Customer purchased proof Coins and then discovered that they had overpaid for their metal or they lost money when they tried to sell
  • Weeks passed before purchased metal was delivered to the account Depository

When you are comparing Gold IRA companies you want to avoid the companies that receive these types of complaints. Instead, look for customer reviews that mention these positive factors:

  • The company provided education about Precious metals and Gold IRAs
  • The company was patient and never pressured the customer to make a purchase decision
  • You can use affiliate marketer reviews to build a list of candidate Gold IRA companies and then use customer reviews as one of the factors when you are comparing those companies. 

    Best Gold IRA companies of 2022 Planning your retirement

    If you search the web for "best Gold IRA companies of 2022" you can quickly put together a list of at least 15 different Gold IRA companies. If you pay attention you may notice that six or seven companies show up repeatedly in these "best" lists:

    American Hartford Gold

    Augusta Precious Metals

    Birch Gold Group

    Goldco

    Noble Gold

    Patriot Gold Group

    Regal Assets

    After you have a list of candidate Gold IRA companies, you can compare the companies using the criteria below. It is likely that this process will help you identify the company that is best for you specifically.

    Minimum Investment

    All of the Gold IRA companies have a minimum Investment requirement. On the low end is Fidelity at $1,000. Augusta Precious Metals is on the high end with a $50,000 minimum.

    Depending on how much you have to invest, this criteria may help you narrow down your list of candidate companies.

    Years in business

    Having a long business history doesn't ensure that a company is reputable, but disreputable companies tend to go out of business fairly quickly. More years in business also means the company will have more customer reviews for you to evaluate them on.

    BBB rating

    The BBB has been evaluating businesses since 1926. They rank companies based on their transparency, honesty, and how they handle customer complaints. When they give a company an A+ rating they believe that is the kind of experience you will have with the company.

    There are actually two BBB ratings. First is the letter grade A through F and second is the star rating which is based on a scale of 0 to 5. The star rating is based entirely on the ratings provided by the company's customers.

    Educational resources

    The best Gold IRA companies recognize that investors have limited knowledge about Precious metals and self-directed IRAs so they do everything they can to educate their prospective customers. This education process starts on the company's website and continues when you contact the company and speak with their representatives.

    At a minimum, a company should provide some kind of Gold IRA guide on their website. Ideally they will also have videos and articles that you can investigate. Some companies provide their educational materials via mail or email after you have contacted them.

    Customer reviews

    Customer reviews provide insight into how a company interacts with its customers. Take the time to read some customer reviews about the Gold IRA companies you are interested in. Start with the BBB and TrustPilot - if there aren't enough reviews on those sites check the other rating agencies listed above.

    Depository

    Your Precious metals will be stored in a secure Depository. You may prefer that this depository is located as close to your home as possible, or that it is located in a particular state.

    For example, if you live in California you might prefer to use a Depository in Los Angeles instead of a Depository in Delaware. Texas investors might want their metal stored at the state-administered Texas Bullion Depository.

    All of the Gold IRA companies have relationships with Depositories that they recommend, but they will work with any Depository you specify.

    Fees

    You are going to pay annual fees to have a Precious metals IRA. The metal in your account requires secure storage and insurance and those costs are going to be passed on to you.

    Where the Gold IRA companies differ is on setup fees, IRA management fees, Custodian fees, and transaction fees. You can use these fees as a way to compare the companies you are interested in.

    Pay attention to the IRA management fee in particular. After your Gold IRA is established, the Gold IRA company isn't going to do much for you unless you need to buy or sell metal. The best companies have zero IRA management fees or they waive this fee based on account size.

    When you contact a Gold IRA company request a written fee schedule. If they push back on your request, cross them off your list and move on.

    Incentives

    Most of the Gold IRA companies offer promotions and incentives for new investors. You may get some free Silver or have your account fees waived for the first year. Incentives usually depend on account size so you'll have to ask your account representative for details when you start contacting Gold IRA companies.

    At some point you will narrow your candidate list down to just a few companies and then it is time to make contact. When you reach out to a company pay attention to how they treat you. The best Gold IRA companies will be patient with you and work with you until you are comfortable making an Investment in Precious metals. If you feel pressured at any point, cross that company off your candidate list an move on - there are lots of Gold IRA companies to work with.

    The Gold Well Live team has evaluated the Gold IRA companies below. You are welcome to use them as a starting point for your candidate list.

    Augusta Precious Metals

    Year founded

    BBB rating

    Minimum Investment

    2012

    A+

    $50,000

    Augusta Precious Metals is committed to educating their customers. The company provides extensive educational materials on its website and investors with $100,000 or more to invest can schedule a 1-on-1 teleconference with Devlyn Steele, the company's Harvard-trained director of education. Many of Augusta's customers state that the company worked with them patiently until they were comfortable making an Investment in Precious metals. Augusta minimizes the fees you will pay for a Gold IRA and they never charge an IRA maintenance fee.

    Birch Gold

    Year founded

    BBB rating

    Minimum Investment

    2003

    A+

    $10,000

    Conservative politician Ron Paul chose Birch Gold Group as his Gold IRA company. Dr. Paul has been an advocate of real money and sensible economic principles for decades so his endorsement of Birch Gold is significant. Birch offers extensive educational resources on its website including a calculator that shows how performance on a 60/40 Portfolio of Stocks and Bonds improves when it is diversified with a small amount of Gold. First year fees are waived with an Investment of $50,000 or more.

    Goldco

    Year founded

    BBB rating

    Minimum Investment

    2006

    A+

    $25,000

    Goldco has a 16-year track record of helping investors protect their tax-advantaged savings with the security of Precious metals. Goldco is highly rated by the BBB, TrustPilot, and the Business Consumer Alliance. Based on more than 1,000 5-star reviews, Goldco is also well liked by its customers. Goldco publishes educational materials on their website and has additional resources available via email after you speak with one of their Precious metals specialists. Investors with $100,000 or more to invest receive $10,000 or more in free Silver.

    Regal Assets

    Year founded

    BBB rating

    Minimum Investment

    2010

    B+

    $10,000

    With a self-directed IRA at Regal Assets you can invest in Precious metals, Crypto currencies, and Stablecoins all in the same account. This unique Investment vehicle lets you trade that major digital assets and then park your profits in physical Precious metals. Regal provides basic educational material on their website then mails you an in-depth investor kit and DVD after you speak with one of their IRA specialists.

    Patriot Gold IRA

    Patriot Gold Group is one of the newer Gold IRA companies with a founding date of 2016. There’s nothing wrong with being a young company, but it gives us less evidence to evaluate them on.

    For example, Patriot has 5 customer reviews on the BBB website while Goldco, after 15 years in business, has 329 BBB reviews. Although both companies have A+ ratings from the BBB, we can gain much greater insight into how a company operates when there are more reviews to evaluate.

    Like all of the Gold IRA companies, Patriot Gold Group claims to be the best. They have two differentiating features that they use to back up their claim.

    Fast IRA setup

    Patriot will setup a Gold IRA within 24 hours. That means you can establish your Precious metals IRA on Monday and then on Tuesday you can initiate the rollover or transfer process with your existing Retirement account. With other Gold IRA companies you may have to wait a few days before starting a rollover or transfer.

    No Fees for Life IRA

    One of the common complaints about Gold IRAs is the amount of fees involved. There are setup fees, IRA management fees, Custodian fees, Depository fees, and transaction fees. While “no fees for life” sounds enticing, it is important to understand that this promise only applies to the fees that Patriot charges: setup fees, IRA management fees, and transaction fees. You will still pay Custodian and Depository fees.

    At Gold Well Live we are neutral on Patriot Gold Group. We include this brief review because Patriot is one of the main Gold IRA companies you are likely to find in your research and we want to help you gain insight into the industry. In general, we prefer to recommend companies with at least 10 years of business history.

    Conclusions

    We've covered a lot of information in this brief article about Gold and Silver IRAs. Hopefully we made these points clear:

    • Self-directed IRAs can hold any of the four Precious metals and they are fully approved by the IRS.
    • A Gold IRA is the only way to purchase and hold Precious metals using tax-advantaged retirement savings.
    • Silver should be part of every investor's Portfolio because the white metal has two sources of demand (commercial and investor) and the amount of Silver above ground is constantly being depleted.
    • Proof and special edition Coins are not a good choice for most investors.
    • There are a lot of Gold IRA companies to choose from but only six or seven that consistently make the "best" lists.
    • Comparing the Gold IRA companies can help you find the one that is best for you.

    If you have questions about establishing a Gold and Silver IRA you can reach out to one of the Gold IRA companies. They all have Precious metals specialists available to patiently answer your questions. If you would prefer, you are welcome to ask the Gold Well Live team any questions you have. Use our Contact form and ask us anything - we will do our best to help you.

    About Me.

    After the dot com bubble popped I started researching Financial bubbles - how they evolve, how they pop, etc. I quickly realized that Gold is the only real money on planet Earth and in 2002 I bought my first Gold Coin. I've been investing in the shiny stuff ever since - both physical Precious metals and the Mining stocks. I've also studied the Financial markets, trading, Technical analysis, and the endless games that central banks play with fiat currencies. I do my best to share what I've learned with others - that's what you'll find here on Gold Well Live.

    Love the shiny stuff? Join my newsletter.

    I'm just a good ol' boy from Texas, but I love to talk about the Precious metals. I share my ramblings with subscribers on a regular basis.

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