How to choose a gold/silver IRA company
Needless to say, investing in a precious metal self-directed IRA, or 401(k) rollover, is likely to be one of the largest financial commitments that you ever make. It is absolutely imperative that you choose the best available to deal with your investment.
We are going to run through the basics of the best way of researching and finding such a company.
The first thing to consider is how they approach the fact that you want to investigate the ins-and-outs of starting a self-directed IRA. The last thing you need at the initial stages of finding out the facts, is pushy salesmen just wanting a sale. Always bear in mind that at each stage of the process, someone, somewhere is going to make some money off of your investment.
There is nothing wrong with this – it is how the industry works. What you need to be sure of is that the company you use is not charging too much – or too little – for their services. Too little – and they may be cutting corners somewhere – too much and they may be overcharging.
All the initial consultations as to whether you qualify for a self-directed IRA or 401(k) rollover are usually free. These days most investors have done most of their homework and research on the internet before they even approach a precious metals company.
There are lots of forums and review sites out there – many of which have a system of grading or ratings which are submitted by clients who have used the company. As you may already know, clients post their experiences – good and bad – of dealing with the company – and leave a satisfaction rating for others to see.
Of course, nothing beats personal recommendation. If you have friends or relatives, business associates or somebody that you know or trust the opinion of, it is worth listening to their experiences and views as to the companies that they have used and the way in which they have been treated by them. CPAs and attorneys are also a good source of recommendations. Getting involved with something as complicated as a self-directed IRA demands professionalism from the people dealing with it – because of this we would highly recommend that you, yourself, read all you can about the subject and get to know it well – so that you can ask the kind of questions that are important.
The thing to bear in mind throughout all of your dealings with gold companies, brokers, financial advisers and others in regard to your investments, is that everybody’s circumstances are different. There is no one size fits all solution, you need to be aware of this and on guard to the possibility of the wrong decision being made on your behalf.
Believe it or not, one of the best sources of information, is the IRS itself. They can be very helpful in answering questions – and you can be sure that their answers on the subject are objective and accurate – more to the point, the advice is free! You can find a list of the contact details for the IRS here.
Now for the company itself
Having found a company it is now time to ask them some questions.
One of the first and most important things to ask when dealing with any precious metals company is what their policies regarding gold buy-back. One of the keys to success in financial management is always having an exit policy in place. Anyone can sign on the dotted line and open something – that is easy – the difficult part comes at the other end of the transaction when you suddenly realize that you are unable to sell the precious metal back and realize your gains – or that the company does not give a good deal. By then, it is too late to do anything about it.
Any company that you deal with must be willing to offer you a fair market value for your gold assets. Some companies have extortionate commission fees which eat into the capital that the gold purchase was designed to accrue. Just a simple check, before you dive in and commit to a particular company could save you a fortune.
Contact the company – and others to compare – and drill down the details so that you are absolutely certain that you are getting the best deal. Of course, there may be circumstances where the deal is not quite as good, but you like the company and the way they do business. Some companies just gel with clients – others don’t – go with what you are comfortable with.
What a lot of people do not realise with gold IRAs is that the proceeds do not have to be taken in cash. You can ask that your gold be shipped to you at the end of the qualifying period. It is vital that you have the confidence in the chosen trustee, that they will be able to honour the deal and have your gold to hand when you need it.
Another important aspect in dealing with any precious metals dealer is finding out exactly what type of gold or precious metal they deal with. Some simply deal with numismatic coins. These are coins which attain their value based on their rarity, mis-casting, or other anomaly which makes them valuable – not because of their gold or silver content. These types of metal are not eligible for IRAs. There are unscrupulous dealers and brokers around who will try to tell you that they are and encourage you to buy them. One of the common lines used, is to tell you that’s the returns that you can make on such coins is far higher than that of bullion coins.
One option that we would recommend is to diversify within your portfolio by buying silver, platinum and palladium as well as gold. This gives you a range of metals in different markets and enables you to have a spread of risk averse investments.
The precious metals IRA custodian that you choose should have, at their disposal, access to storage facilities that comply with the IRS rules covering the secure “warehousing” of your precious metal. These type of facilities are few and far between. Most are based in and around the New York area because this was the historical financial center of the United States. Many private banks such as JP Morgan Chase, Brinks, and HSBC have secure depository vaults attached to their operations. Most of these are reserved for private clients and institutional investors. Most states either use these facilities or the gold bullion depository at Fort Knox for their storage.
This leaves a few options for the private investor. Ask the precious metal company that you choose what kind of arrangements they have for storing your gold. Check the details of this out independently. It is important to be absolutely sure that the facilities that you are told of are actually the ones that your metal will be going to.
Our recommended company gives you access to one of the New York area based depositories, as well as an offshore facility in Toronto, Canada. They have also recently added a new facility – the first of its kind in the south – a brand-new gold bullion depository in Dallas, Texas, to which they have exclusive access.
None of these services come free. Research the charges that the company make for administration and insurance. One of the most important things to check is that the gold is not stored as a deposit which is exposed to any creditors of the storage facility. Should your gold go missing or be stolen there may be a problem. Your gold should be stored “in custody” – in other words, completely independently of the facility itself, in terms of its financial association with it.
Ideally, the company you deal with should charge an annual flat fee, regardless of the amount of precious metal you are storing. Many companies charge based on a percentage of the value of the gold stored. This type of arrangement is called “tiered” charging – and if your precious metals skyrocket in value – you will find your storage charges skyrocketing along with them.
High cover insurance is usually inclusive within the storage charges. The insurance is comprehensive and covers floods, theft, fire, and other damage.
Most of the gold bullion depository vaults have high-tech security systems which embrace laser, vibration, motion, and sound detection – along with 24-hour surveillance, timed locks and armed guards round-the-clock. Local police services will have a hotlink alarm alerting them of any incidents at such vaults – this facilitates a speedy and efficient response to any call out to the facilities.
As with all things involving large amounts of money – you can never do enough due diligence on the people dealing with your assets and your business.
The usual caveats apply – check, check, and double check any company that you deal with. Read through any disclaimers which come with emails, letters, or any other communications – and if you don’t like what you see – question it.
Your retirement should be comfortable, stress free and relaxing – the last thing you need is to be worrying about the security and soundness of your investments.
Next steps: Read “9 Areas to Consider When Choosing a Gold or Silver IRA Company.”