A gold IRA is any Individual Retirement Account that includes gold in its portfolio. Investing in gold is always a good idea, say the experts, and gold should always be included in any well-balanced retirement portfolio. They maintain that adding precious metals, especially gold, to your IRA investment portfolio will produce three positive results:
1. Gold reduces your portfolio’s volatility. This is a reasonable assumption, proven out over the decades. In the past, the value of gold has increased when the value of mutual funds, stocks, and bonds fell. According to Blanchard Online, a respected online division of Blanchard and Company, Inc., adding gold to your retirement portfolio can help “protect assets from high inflation and economic uncertainty.”
2. Gold provides an instant, consistent hedge. Investments in gold and other precious metals gives the investor one of the best possible hedges against uncertain economical times. Any financial portfolio that includes gold automatically has a hedge against high inflation and sensitive dollar-based investments. Gold can even act as a hedge against the weakening of the U.S. dollar.
3. Gold is money, and will always have value. Financial advisors agree that there is no stronger diversifier than gold. Its value tends to move opposite to the value of other assets, making it a good thing to own, in both positive and negative times.
Getting the Goods
The government regulates ownership of precious metals. According to “Smart Money,” for example, although IRAs may legally own some types of bullion and coins, it is not legal to arrange for your IRA to purchase certain bullion or gold coins and simply bury them in your back yard.
Though self-directed IRAs do exist, those in the know suggest that IRAs that include precious metals such as gold among their assets should be set up by a trustee who can facilitate the necessary transactions and transfers between the investor and the dealer. The physical gold itself, in the form of bullion or coins, will normally be stored in the IRA investor’s name at Delaware Depository Company in Delaware.
At this writing, Smart Money lists the following brokers/trustees as some of the more viable sources for this important go-between:
– Sterling Trust Company
– GoldStar Trust Company
– The Entrust Group
– American Estate & Trust, LLC
Owning Gold Indirectly
The IRA investor need not own physical gold, wherever it is stored. In fact, gold bullion or coins make up less than 5% of today’s IRAs, according to experts who follow such statistics.
Two possibilities the IRA investor can consider for holding gold indirectly are:
1. Buying into an ETF, or exchange traded fund. These precious metals shares were ruled acceptable for IRA portfolios in 2007.
2. Arranging for the purchase of mining stocks for your IRA. This option is free from tax entanglements.
Gold IRA investments can be tricky, which is why gold brokers exist. As with every important personal choice of this kind, a little research, and the guidance of a professional, can help the amateur investor avoid some nasty pitfalls along the golden path.
Blanchard Online: http://www.blanchardonline.com/gold_as_investment/ira_gold.php
Smart Money: http://www.smartmoney.com/taxes/estate/gold-for-your-ira-1309886856846/