Since the beginning of recorded history, gold and silver have been recognized as valuable. And even today, precious metals investments have their place in a savvy investor’s portfolio.
But which precious metal is best for investment purposes? And why are they so volatile?
If you’re just getting started in precious metals, read on to learn more about how they work and how you can invest in them.
There are many ways to buy into precious metals for precious metals investment like gold, silver, platinum, palladium and a host of good reasons why you should give in to the treasure hunt.
All That Glitters Is Gold
We’ll start with the grand-daddy of them all: gold. Gold is unique for its durability (it doesn’t rust or otherwise corrode), malleability and its ability to conduct both heat and electricity. It has some industrial applications in dentistry and electronics, but we know it principally as a base for jewelry and as a form of currency.
The value of gold for precious metals investment is determined by the market 24 hours a day, nearly seven days a week.
Gold trades predominantly as a function of sentiment; its price is less affected by the laws of supply and demand. This is because new mine supply is vastly outweighed by the sheer size of above-ground, hoarded gold. To put it simply, when the hoarders feel like selling, the price drops. When they want to buy, new supply is quickly absorbed and the gold prices are driven higher.
Several factors for precious metals investment account for an increased desire to hoard the yellow metal:
- Systemic Financial Concerns: When banks and money are perceived as unstable and/or political stability is questionable, gold has often been sought as a safe store of value.
- Inflation: When real rates of return in the equity, bond or real estate markets are negative, people regularly flock to gold as an asset that will maintain its value.
- War or Political Crises: War and political upheaval have always sent people into gold-hoarding mode. An entire lifetime’s worth of savings can be made portable and stored until it needs to be traded for foodstuffs, shelter or safe passage to a less dangerous destination.
The Silver Bullet
Unlike gold, the price of silver swings between its perceived role as a store of value and its very tangible role as an industrial metal.
For this reason, price fluctuations in the silver market are more volatile than gold.
Partner Links
So, while silver will trade roughly in line with gold as an item to be hoarded (investment demand), the industrial supply/demand equation for the metal exerts an equally strong influence on price. That equation has always fluctuated with new innovations, including:
- Silver’s use in batteries,
- superconductor applications,
- and microcircuit markets.
It’s unclear whether (or to what extent) these developments will affect overall noninvestment demand for silver. One fact remains; silver’s price is affected by its applications and is not just used in fashion or as a store of value.
Platinum Bombshell for Precious Metals Investment
Like gold and silver, platinum is traded around the clock on global commodities markets. It tends to fetch a higher price than gold during routine periods of market and political stability, simply because it’s much rarer; far less of the metal is actually pulled from the ground annually.
Like silver, platinum is considered an industrial metal.
The greatest demand for platinum comes from automotive catalysts, which are used to reduce the harmfulness of emissions. After this, jewelry accounts for the majority of demand. Because of the auto industry’s heavy reliance on the metal, platinum prices are determined in large part by auto sales and production numbers. “Clean air” legislation could require automakers to install more catalytic converters, increasing demand. In 2009, however, American and Japanese car makers started turning to recycled auto catalysts or using more of platinum’s reliable (and usually less expensive) sister group metal, palladium.
Platinum mines are heavily concentrated in only two countries: South Africa and Russia. This creates greater potential for cartel-like action that would support or even artificially raise platinum prices. Investors should consider that all of the above factors serve to make platinum the most volatile of the precious metals.
Filling Up Your Treasure Chest for Precious Metals Investment
Let’s take a look at the options available to those who want to invest in precious metals.
- Commodity ETF’s: Exchange traded funds exist for all three precious metals. ETFs are a convenient and liquid means of purchasing and selling gold, silver or platinum.
- Common Stocks and Mutual Funds: Shares of precious metals miners are leveraged to price movements in the precious metals. Unless you’re aware of how mining stocks are valued, it may be wiser to stick to funds with managers with solid performance records.
- Futures and Options: The futures and options markets for precious metals investment offer liquidity and leverage to investors who want to make big bets on metals. The greatest potential profits – and losses – can be had with derivative products.
- Bullion: Coins and bars are strictly for those who have a place to put them. Certainly, for those who are expecting the worst, bullion is the only option, but for investors with a time horizon, bullion is illiquid and downright bothersome to hold.
- Certificates: Certificates offer investors all the benefits of physical gold ownership minus the hassle of transportation and storage. That said, if you’re looking for insurance in a real disaster, certificates are just paper. Don’t expect anyone to take them in exchange for anything of value.
Will Precious Metals Shine for You?
Precious metals for precious metals investment offer unique inflationary protection – they have intrinsic value, they carry no credit risk and they themselves cannot be inflated (you can’t print more of them). They also offer genuine “upheaval insurance”, against financial or political/military upheavals.
From an investment theory standpoint, precious metals also provide low or negative correlation to other asset classes like stocks and bonds. This means that even a small percentage of precious metals in a portfolio will reduce both volatility and risk.
Assessing Your Options
There is a wide range of precious metal investment options, from safe and conservative to aggressive and speculative. Metals can be a vehicle for growth or income, and investors can take physical possession of their bullion or purchase a unit of value on paper.
Choosing the most suitable instrument in light of your age, other investments, and current economic situation can be a challenge. The risk tolerance of someone saving for retirement may be different than a person looking to turn a short term profit.
What Are Precious Metals?
Precious metals for precious metals investment are metals such as gold, silver, platinum and palladium that are primarily valued as units of exchange. These metals all have some kind of industrial value (for example, silver is used in many industries), but people purchase them primarily because they have some economic value. These metals are rare–and the rarer they are, the more they are generally worth. Many of these metals are featured in jewelry and historically were used as currency.
- Gold – The most highly valued precious metal, gold has a long history as a unit of trade. It has bright yellow color and is frequently featured in jewelry. It is relatively rare and has fewer industrial uses.
- Silver – Often paired with gold investments, silver has the highest electrical conductivity of any element and highest thermal conductivity of any metal, making it highly desirable for many industrial uses. Silver is more available than gold, but its use in industry makes the market and prices more volatile as demand changes.
- Platinum – One of the rarest elements in the Earth’s crust, platinum is also the least reactive metal. It has many industrial uses, and has become valued as an economic investment relatively recently.
- Palladium – The rarity of this metal coupled with its high industrial demand have generated interest in palladium as an investment. The market for this metal is also prone to large price swings.
- Copper – Sometimes considered a “base metal” because of its natural abundance, copper is nevertheless desirable as an accessible investment metal. Copper shares gold’s history as currency and attractive jewelry metal.
- Diamonds – While not a precious metal at all, diamonds have always been valued for their shine and natural beauty. Recently, diamonds have grown in popularity as an investment, and are similarly desirable for their rarity, intrinsic value and as a symbol of luxury.
Why Invest in Precious Metals?
Diversification and careful management of risk are important keys to investing success. This means you want to have many types of investments, so that if one investment doesn’t do well, you will be protected.
Generally, it is recommended that precious metals make up about 5 to 15 percent of your complete investment portfolio. Gold and other commodity metals historically maintain an intrinsic value (in other words, they are never worth $0) and tend to move opposite the dollar. In a diversified portfolio, this will mean you see some positive no matter which way the overall economy shifts (if the dollar is worth less, your gold will be worth more, and vice versa).
However, gold, silver and other precious metals are different from other investments in that they do not earn interest. These possessions are more like “wealth insurance,” a way to guarantee that, no matter what happens in the economy as a whole, you will always have funds available to you. Because of this, people looking to precious metals as a long-term investment do not often sell or trade.
Types of Investments
There are many ways to invest in precious metals.
Choose the right variety for your investment strategy:
- Bullion – Bullion is physical precious metal, often sold as a round, coin or bar. It can be produced in a sovereign (or country’s) mint or in a privately owned mint. Bullion investors are collecting a physical asset, either in their personal possession or stored for safekeeping at a third-party location. Bullion is judged by its fineness, purity and weight. The price of bullion is tied to the “spot price” of the precious metal.
- Coin vs. Round – A coin is bullion issued by a sovereign mint to be used as legal currency. A round can look just like a coin, but does not have any currency denomination and can not be used as legal tender. Coins used as bullion are generally worth more than their face value because of the precious metal content (for example, a $20 Liberty Gold Double Eagle has a “face value” of $20, but was worth $1,412.89 in July 2013 because of the price of the gold it contained.)
- Numismatic or rare coins – These are coins that are valuable not just because of their precious metals content but also because of their age and rarity. Collectors appreciate these coins because of unique designs, mistakes in their creation, and other reasons not directly related to the precious metal content. The price of numismatic coins may be related to the price of the metal, but is not directly tied to that price.
- ETF’s – An ETF or “exchange traded fund” is a group of assets sold together on the stock market. The value of an ETF will change every day, and can change every 60 seconds, as the stock market as a whole changes.
- For example, a gold ETF such as Streettracks Gold Shares (which use the acronym GLD on the New York Stock Exchange) tracks the price of gold overall, and the gold ETF allows you to own gold–kept by the ETF creator in a secure facility–without physically possessing the metal.
- Investing in an ETF is ideal for consumers looking for a shorter-term investment or for an investor with a conventional portfolio not interested in managing a physical asset. ETF’s have an annual administration fee of between 0.4 and 0.5% and can be bought through a stockbroker.
- In this way, a precious metal ETF for precious metals investment acts like other stocks or commodities but has the physical backing that other stock may lack.
- For example, a gold ETF such as Streettracks Gold Shares (which use the acronym GLD on the New York Stock Exchange) tracks the price of gold overall, and the gold ETF allows you to own gold–kept by the ETF creator in a secure facility–without physically possessing the metal.
- Stocks – A stock is not an investment in a precious metal asset directly, but is a way to buy a part of a company. For example, a gold stock does not buy any gold, but gives you a “share” of a company that mines or processes gold for example. The price of this stock may be related to the precious metal but can also be affected by various outside factors.
Can I Use Precious Metals Investments to Save for Retirement?
Precious metals can be used to save for retirement! Only those bullion certified as meeting set investment standards can be included in an IRA. Some kinds of gold, silver, platinum, palladium, and collector’s coins are acceptable to add to your IRA.
What Does Investing in Precious Metals Cost?
There are products available to investors at every price and risk level, from smaller or less valuable bullion rounds to highly valuable and/or heavy bars. Bullion is sold at a set amount (premium) above what is known as the “spot price.” The spot price is the price at which the physical metal can be sold or bought at a specified time and place. You can look at the right column of our website to see the prices of each precious metal and see the changes in price for up to the past three years.
Numismatic coins tend to have a higher premium, as they are valued for more than their precious metal content. Bullion rounds and medals are generally less expensive, meaning they are sold closer to the spot price.
How Do I Buy Precious Metals?
Precious metals bullion can be bought from a local dealer or online (view our List of Top 10 Gold IRA Custodians) such as with our most recommended company, Regal Assets. An online dealer will have greater selection and transparent pricing.
Often, an investor will try to buy bullion when the price is low and sell it when prices are high, however, these kinds of changes are very hard to predict and should depend on your personal investment strategy.
Precious metals are generally considered a long-term investment or way to pass wealth on to the next generation!
How Do I Sell My Precious Metals Investments?
Precious metals can be sold to a local coin dealer or to an online dealer like Regal Assets. Be sure you sell your bullion to a reputable dealer that you can trust to provide a reasonable sale price tied to the current spot price.
Why is Gold Valuable?
So why is the yellow metal so expensive and sought after? In ancient times, gold’s malleability and luster led to its use in jewelry and early coins. It was also a lot harder to dig gold out of the ground before modern mining methods were created, so gold hasn’t always been as “easy” to get as it is today — and the more difficult something is to obtain, the higher it is valued.
This is an obvious simplification of a far more complex history. However, in some ways, it was only natural that early humans would begin using the precious metal as a way to facilitate trade and accumulate and store wealth. In fact, early paper currencies were generally backed by gold, with every printed bill corresponding to an amount of gold held in a vault somewhere for which it could, technically, be exchanged (this rarely happened). This approach to paper money lasted well into the 20th century. That said, modern currencies are largely fiat currencies, so the link between gold and paper money has long been broken.
However, people still love the yellow metal. Clearly, a big part of demand comes from the jewelry industry — we all like nice baubles and trinkets. But a notable amount of demand comes from entities that want to own gold in its physical form via coins, bullion, and bars. That stems largely from the economic history of gold and the resulting view of the metal as a safe-haven investment.
One of the most logical options is gold, since that was the role it played before fiat currencies ruled the day. This is one of the reasons that investors tend to push up the price of gold when financial markets are volatile.
Bottom Line
Precious Metals Investments provide a useful and effective means of diversifying a portfolio. The trick to achieving success with them is to know your goals and risk profile before jumping in. The volatility of the precious metals can be harnessed to accumulate wealth – but left unchecked, it can also lead to ruin.
Each option comes with trade-offs. That said, the best all-around choice is probably investing in streaming and royalty companies. However, that’s just one piece of the puzzle. There are other factors that you need to consider. The timing on your gold purchase is a bit more complicated, since you will pay more for gold and gold-related stocks when gold prices are high. That doesn’t diminish the diversification benefit over the long term, but high gold prices can mean lackluster returns over the near term. Trying to time your entry point, however, leads to market timing judgment calls that are best avoided by most, if not all, investors.
If you wish to invest in gold, it probably makes the most sense to pick a percentage of your portfolio that you want to allocate to gold and then dollar-cost average into the position by buying small amounts over time. There’s no harm in leaving the money that you plan to invest in cash while you are building the position, either, since cash is a safe-haven investment, too. Yes, you’ll miss the opportunity from rising gold prices, but you’ll still get the protection of holding cash. And it will stop you from investing the money in other assets while you wait to build out your gold position.
For both the beginner or the precious metals investment veteran, we recommend purchasing or rolling over your retirement plan to one that can hold your physical gold, silver, platinum or palladium coins or bullion in an SDIRA (self-directed individual retirement account) with one of our most trusted IRA custodians.
Do you have any further questions before your launch your venture into Precious Metals Investments? Ask below!
Well done site. It is very informative and accurate to say the least. I think now is the time to start looking at alternative currency investments as the value of our fiat currency becomes more and more diluted everyday. I am curious about palladium and will continue watching your site to find out more about it. Do you have any information about the upcoming Amazon coin? Not the ones for use on their site only but the Amazon Coin that amazon may be releasing in order to compete with Bitcoin? Off topic, I know, but I believe that it may influence my investment in gold etc. in the near future. I enjoyed visiting your site. Thank you for the valuable information!
Hey Thanks Mike,
Amazon Coins are a digital currency that you can use to buy games and apps from Amazon. Like an iTunes gift card or Microsoft Points, Amazon Coins are purchased with real currency for use within the Amazon Appstore in purchasing apps and games, such as Star Wars: Knights of the Old Republic or Grand Theft Auto: San Andreas. You can also use the coins to make in-app purchases.
Amazon Coins are valued at 100 coins per $1, making conversion rates easy enough to calculate. Plus, Coins can be purchased almost anywhere you can access your Amazon account — on the Web, on a Fire Tablet, or on Android phones and tablets using the Amazon Appstore. No matter where you buy your Coins, it’s a good deal if you buy a lot of paid games and apps. Buying Coins in bulk can lead to a discount of up to 15 percent on the digital currency (for example, you pay $23 for 2,500 coins, a savings of 8 percent). Buying in-app purchases can also score you promotional Coins; Amazon has a list of games that will give you 30 percent of your Coins back when you make an in-app purchase.
Coins that you buy never expire, but promotional Coins that you earn by buying specific things (like a Fire tablet) expire 12 months after you receive them. You should also know that Amazon Coins can only be used to make entire purchases, not portions of a purchase. So if you have only 30 Coins left and the app costs 99 Coins, the transaction will not go through.
Despite the failures of Facebook Credits, Microsoft Points, and the dot-com virtual currency Flooz, Amazon has decided to mint its own money. The ecommerce giant announced today that customers will soon be able to use a new virtual currency called Amazon Coins to buy apps and make in-app purchases in the awkwardly-named Amazon Appstore for Android on Kindle Fire.
Why Amazon is coming with its currency?
Customers tend to dislike, nay abhor, the unnecessary process of transferring between their home currencies and virtual tender — just look at Microsoft, which forces customers to spend $1 to buy 80 Microsoft Points in order to make purchases in the Xbox Live Marketplace. With the Nintendo Points system, customers must buy a different set of points in order to purchase games for the Wii versus the handheld DSi console. Gamers loathe this practice, which at the very least forces them to do math before they can tell how much a rental or purchase truly costs.
So why does Amazon need to have its own proprietary currency, especially since customers will still be able to use their credit cards alongside Coins? For that matter, why does any company need to have its own currency?
AMAZON COINS are for application makers
There’s one group that Amazon is clearly targeting with this move: app developers. Amazon Coins won’t be available until May, but the company announced the initiative today in order to ensure that developers have time to get apps ready for the day that Coins rain upon the land. And they will rain — Amazon has announced it will be giving away “tens of millions” of these Coins, which are each worth one cent, when the program officially starts. That means an injection of hundreds of thousands of dollars into the Kindle Fire ecosystem, 70 percent of which will go to developers.
It’s common knowledge that it’s much tougher to make money on Android apps than iPhone apps. Amazon is trying to promote the Kindle Fire as the exception to the rule. “Developers continue to report higher conversion rates on Amazon compared to other platforms,” said Paul Ryder, Amazon’s vice president of apps and games, said in a press release.
Amazon has been promoting the idea that its platform is a moneymaker for a while. By encouraging developers to support Coins, Amazon is taking another tack. If developers invest time into making an app that dispenses Coins, they’ll be more committed to the platform. However, Amazon says developers won’t have to do anything extra in order to accept Coins for app and in-app purchases.
AMAZON COINS for customers
Amazon’s Kindle Fire users will also supposedly benefit from Amazon’s expected spring Coin dump, although the company declined to elaborate on who will get the Coins and how many. “We will be announcing additional details when Coins launches in May,” a representative said in an email. She did elaborate a bit, though: “Amazon Coins are an easy way for customers to purchase apps, games and in-app items. And customers have the option – those who prefer to use traditional forms of currency can continue to do so.”
It’s unclear what about Amazon Coins will make it easier for customers to purchase anything from Amazon. From here, it seems like adding a new currency would mostly make things harder for customers, who may end up succumbing to the pitfalls that surround gift cards: lost money, locked up in Amazon Coins, which cannot be converted back to dollars. Customers can’t use them to buy subscriptions, either.
Developers can award Coins within their own apps, the rep said, so this is one potential perk for customers. It’s also almost certain that Amazon will use Coins in promotions, rewarding users with extra Coins to spend in exchange for a tweet or a Facebook like. The situation is reminiscent of when Amazon shoehorned its store onto Android phones even when Google’s Android Market was already there by giving away a free app per day. The same may work for Coins: they’re a bit redundant, but the incentives may make it worthwhile.
AMAZON COINS: They are for Amazon
Amazon isn’t the first company to introduce its own currency, and it won’t be the last. That’s because proprietary currencies have lots of advantages for their issuers, especially when the issuer is attempting to build a proprietary economy. Amazon’s move is still a bold one, though, because not many companies have been able to pull this off. Facebook abandoned Facebook Credits, Microsoft is giving up on Microsoft Points for PC apps, and many standalone virtual currencies such as Flooz and Beenz, two archetypal dot-com travesties, flopped miserably.
One place where proprietary currencies have taken off is in video game economies. Yanis Varoufakis is the in-game economist for Valve, which makes Team Fortress 2 and other games where commerce thrives. He pointed out that proprietary currencies have many advantages for game makers, and many of those advantages would also accrue to Amazon if the company can get Coins to catch on.
Three things: loyalty, an easy way to reward customers without simply giving away free money, and flexibility on their balance sheets. So in the future, will every company have its own branded currency? Varoufakis said that’s doubtful, because creating a currency is hard, contains hidden costs, and is rarely worth it for a company to bother with the intricacies of designing their own.
“Amazon stands a better chance than anyone else because its customer base uses the company regularly,” he said. “When entering amazon.com, at least for some people, it is a little like going to a foreign country. If this ‘foreign country’ has its own currency and gives you discounts and various goodies provided you change some money into its currency upon entry, you may well do it.”
GOOD AS GOLD?
Amazon is hedging its bets by allowing customers to continue paying for apps via the regular methods. If all goes well with the Appstore rollout, we wouldn’t be surprised to see Amazon push its proprietary currency harder across all its marketplaces. In the immediate, the introduction of Amazon Coins will act like a stimulus package for the Kindle Fire app economy. And just like the American government, Amazon is hoping that this short-term boost will translate into long-term growth.
But, I still feel, investing in bitcoin is a better deal.
For a great return on your precious metals investment, check these crytos.
http://bestiraoptions.com/best-cryptocurrency-ira-options
Hello, and thank you for allowing me to review and comment on your site. I want to first say I think your site is very attractive and appears very professional and well-designed. Your writing is excellent, and your images are perfect.
So here is my only comment, and it relates to my decision to not invest in precious metals. As far as I can tell, you do not mention any of the negatives about this type of investment. I really think you should address these negatives so it doesn’t appear you are trying to hide them. Be up front and transparent and ward off any challenges to your advice before they ever get started.
The negatives I’m thinking of are in no particular order:
Liquidity
Storage
Risk of theft or loss
The fact that the value is totally dependent on the emotion of the market. Unlike the stock market companies, precious metals do not have earnings, or revenue.
And with respect to coins, there is always the risk of fraud or counterfeit.
So my advice is to have a section of your site or article that addresses the risks or “cons” of this type of investment.
Thanks for listening, and good luck.
Hello Steve,
Thanks for the compliment. We will surely be adding the cons too up here. But as far as my experience is concerned, there are more pros than cons.
Individual Retirement Accounts (IRA’s) are one of the most popular retirement vehicles available for savers and the purpose of this article is to give a general idea of how IRA’s work, explain the differences between Traditional and Roth IRA’s, and provide some pros and cons of each. In January 2015, The Investment Company Institute put out a research report with some interesting statistics regarding IRA’s which can be found at the following link, ICI Research Perspective. The article states, “In mid-2014, 41.5 million, or 33.7 percent of U.S. households owned at least one type of IRA”. At first I was slightly shocked and asked myself the following question: “If IRA’s are the most important investment vehicle and source of income for most retirees, how do only one third of U.S. households own one?” Then when I took a step back and considered how money gets deposited into these retirement vehicles this figure begins making more sense.
Yes, a lot of American’s will contribute to IRA’s throughout their lifetime whether it is to save for retirement throughout one’s lifetime or each year when the CPA gives you the tax bill and you ask “What can I do to pay less?” When thinking about IRA’s in this way, one third of American’s owning IRA’s is a scary figure and leads one to believe more than half the country is not saving for retirement. This is not necessarily the case. 401(k) plans and other employer sponsored defined contribution plans have become very popular over the last 20 years and rather than individuals opening their own personal IRA’s, they are saving for retirement through their employer sponsored plan.
Employees with access to these employer plans save throughout their working years and then, when they retire, the money in the company retirement account will be rolled into IRA’s. If the money is rolled directly from the company sponsored plan into an IRA, there is likely no tax or penalty as it is going from one retirement account to another. People roll the balance into IRA’s for a number of reasons. These reasons include the point that there is likely more flexibility with IRA’s regarding distributions compared to the company plan, more investment options available, and the retiree would like the money to be managed by an advisor. The IRA’s allow people to draw on their savings to pay for expenses throughout retirement in a way to supplement income that they are no longer receiving through a paycheck.
The process may seem simple but there are important strategies and decisions involved with IRA’s. One of those items is deciding whether a Traditional, Roth or both types of IRA’s are best for you. In this article we will breakdown Traditional and Roth IRA’s which should illustrate why deciding the appropriate vehicle to use can be a very important piece of retirement planning.
Why are they used?
Both Traditional and Roth IRA’s have multiple uses but the most common for each is retirement savings. People will save throughout their lifetime with the goal of having enough money to last in retirement. These savings are what people are referring to when they ask questions like “What is my number?” Savers will contribute to retirement accounts with the intent to earn money through investing. Tax benefits and potential growth is why people will use retirement accounts over regular savings accounts. Retirees have to cover expenses in retirement which are likely greater than the social security checks they receive. Money is pulled from retirement accounts to cover the expenses above what is covered by social security. People are living longer than they have in the past which means the answer to “What is my number?” is becoming larger since the money must last over a greater period.
How much can I contribute?
For both Traditional and Roth IRA’s, the limit in 2016 for individuals under 50 is $5,500 and those 50 or older $6,500.
Taxation
Traditional (Pre-Tax) IRA: Typically people are more familiar with Traditional IRA’s as they’ve been around longer and allow individuals to take income off the table and lower their tax bill while saving. Each year a person contributes to a Pre-Tax IRA, they deduct the contribution amount from the income they received in that tax year. The IRS allows this because they want to encourage people to save for retirement. Not only are people decreasing their tax bill in the year they make the contribution, the earnings of Pre-Tax IRA’s are not taxed until the money is withdrawn from the account.
This allows the account to earn more as money is not being taken out for taxes during the accumulation phase. For example, if I have $100 in my account and the account earns 10% this year, I will have $10 of earnings. Since that money is not taxed, my account value will be $110. That $110 will increase more in the following year if the account grows another 10% compared to if taxes were taken out of the gain. When the money is used during retirement, the individual will be taxed on the amount distributed at ordinary income tax rates because the money was never taxed before. A person’s tax rate during retirement is likely to be lower than while they are working because total income for the year will most likely be less. If the account owner takes a distribution prior to 59 ½ (normal retirement age), there will be penalties assessed.
Roth (After-Tax) IRA: The Roth IRA was established by the Taxpayer Relief Act of 1997. Unlike the Traditional IRA, contributions to a Roth IRA are made with money that has already been subject to income tax. The money gets placed in these accounts with the intent of earning interest and then when the money is taken during retirement, there is no taxes due as long as the account has met certain requirements (i.e. has been established for at least 5 years). These accounts are very beneficial to people who are younger or will not need the money for a significant number of years because no tax is paid on all the earnings that the account generates. For example, if I contribute $100 to a Roth IRA and the account becomes $200 in 15 years, I will never pay taxes on the $100 gain the account generated. If the account owner takes a distribution prior to 59 ½ (normal retirement age), there will be penalties assessed on the earnings taken.
Eligibility
Traditional IRA: Due to the benefits the IRS allows with Traditional IRA’s, there are restrictions on who can contribute and receive the tax benefit for these accounts. There are also Required Minimum Distributions (RMD’s) associated with Pre-Tax dollars in IRA’s and therefore people cannot contribute to these accounts after the age of 70 ½. Once the account owner turns 70 ½, the IRS forces the individual to start taking distributions each year because the money has never been taxed and the government needs to start receiving revenue from the account. If RMD’s are not taken timely, there will be penalties assessed.
Roth IRA: As long as an individual has earned income, there are only income limitations on who can contribute to Roth IRA’s. There are a number of strategies to get money into Roth IRA’s as a financial planning strategy. This method is explained in our article Backdoor Roth IRA Contribution Strategy.
Investment Strategies
Investment strategies are different for everyone as individuals have different risk tolerances, time horizons, and purposes for these accounts. That being said, Roth IRA’s are often times invested more aggressively because they are likely the last investment someone touches during retirement or passes on to heirs. A longer time horizon allows one to be more aggressive if the circumstances permit. Accounts that are more aggressive will likely generate higher returns over longer periods. Remember, Roth accounts are meant to generate income that will never be taxed, so in most cases that account should be working for the saver as long as possible. If money is passed onto heirs, the Roth accounts are incredibly valuable as the individual who inherits the account can continue earning interest tax free.
Choosing the correct IRA is an important decision and is often times more complex than people think. Even if you are 30 years from retiring, it is important to consider the benefits of each and consult with a professional for advice.
Hi Mr URIAH LLOYD
In my country, people usually accumulate gold under the pillow. and they hope to make a profit by this method. Then the gold prices are falling and the prospects disappear. I’ve never been in gold, silver or anything. But I’ve already heard the methods listed here. The methods here are better than at least collecting gold under the pillow. Thank you for sharing. It’s been pretty informative.
Hi Ali,
Yes indeed. Many people aren’t aware of the fact that there are much better options.
A Gold IRA is an investment vehicle used by individuals to save for retirement by purchasing and holding gold bullion or coins, or other approved precious metals. A Gold IRA is an IRA account that is invested in gold coins or bars instead of stocks, mutual funds, etc. The account can either be set up with pre-tax funds or as a Roth IRA, bought with post-tax money. See Analysis: Should You Get A Gold IRA?
The Internal Revenue Service allows holders of self-directed IRA accounts to purchase bars and coins minted from gold or other approved precious metals such as silver, platinum, or palladium. IRA funds can also be invested in gold-related “paper investments,“ such as Exchange Traded Funds, stock in gold mining companies, precious metals mutual funds, or precious metals commodity futures. However, the term Gold IRA primarily is used to describe a self-directed IRA with funds invested in hard metals.
Unlike other IRAs, these accounts require purchasing and storing the physical asset. As a result, gold IRAs require the use of a custodian, typically a bank, brokerage firm, etc., to manage the account. For more information, see Gold IRA Rollover.
Holding Gold
Is holding gold a good idea for an IRA? For most of recent history, the answer is no. Gold has to be stored, doesn’t pay dividends, and has no earnings. It has industrial and jewelry uses, but by and large most of the yellow metal sits in bank vaults and safety deposit boxes. People believe it’s a safe holder of value when times are tough.
Gold spiked in the early 1980s, then stayed in the $400 to $500 per ounce range until around 2006. In the financial crisis of 2008-2009, gold peaked at over $1,700 per ounce. It has since traded in the $1,100 to $1,300 range. That means for more than 30 years, gold went mostly sideways. Meanwhile, if you had invested in the broad stock market from 1982 to 2006, your IRA would have risen five-fold.
This is not to say that precious metals don’t have a place in your portfolio. But if history is any guide, gold will have to come a long way to match the returns of the overall economy as measured by the broad markets.
Should you get into a Gold IRA?
Imagine turning your retirement nest egg into gold. Literally. That’s what many people are doing, by adding a gold IRA to their investment mix.
Since late 2017, prices of the yellow metal have been climbing pretty steadily and are well over $1,300 per ounce as February 2018. But is putting a gold IRA in your portfolio the right move for you?
A gold IRA is a specie (pun intended) of Investment Retirement Account (IRA) that allows the investor to own physical gold, silver, platinum and palladium, instead of the usual assets (like cash, stocks and bonds) that regular IRAs are limited to. It was created by Congress in 1997, says Edmund C. Moy, chief strategist for Fortress Gold and who, as former United States Mint director, oversaw the largest production of gold and silver coins in the world.
A Growing Trend
Gold IRAs appeal to investors who want a diversified retirement portfolio. “Because gold prices generally move in the opposite direction of paper assets, adding a gold IRA to a retirement portfolio provides an insurance policy against inflation,” says Moy. “This balanced approach smooths out risk, especially over the long term, which makes it a smart choice for retirement investments like IRAs.”
During his tenure as director of the Mint, Moy says there was little demand for gold IRAs because they involve a very complicated transaction that only the most persistent investor was willing to pursue. “You must find a trustee or custodian for the IRA along with an approved depository. Then, you need to buy the approved gold or other precious metal and have it transferred to the depository in a way the custodian can account for it,” he explains.
Since the financial crisis of 2008 and the resulting Great Recession, however, gold IRAs have become significantly more popular. Record gold sales combined with the appearance of many more companies to handle and simplify the transactions have made investing in a gold IRA a one-stop shop. The result: robust gold IRA growth.
Then, of course, there’s the impact of economic and world news. “Strong interest in gold IRAs has continued because of the potential inflationary impact of the Federal Reserve’s stimulus programs and a sharp increase in geopolitical risk,” says Moy.
Golden Rules
“Gold IRAs can be either traditional or Roth options,” says Daniel Sentell, former director of communications at Broad Financial, a Monsey, N.Y.-based financial services company that offers these accounts. Whichever version, a gold IRA can only be invested in actual gold, be it coins or bullion.
According to Brett Gottlieb, an investment advisor representative and founder of Comprehensive Advisor in Carlsbad, Calif., the first thing to consider is whether you want to have a physical investment in your portfolio rather than a gold-company stock, mutual fund or an exchange-traded fund that tracks a gold index.
If you do opt for the actual metal, certain criteria apply to be held in an IRA. “The precious metal coins or bars must meet IRS fineness standards and must be held by the IRA trustee instead of the IRA owner,” says Moy. “The gold must be stored in an IRS-approved depository.” No stashing the bullion or specie in home safes or closets, in other words. “All other rules about IRA contributions, disbursements and taxes apply,” Moy adds.
Finding a Reliable Broker/Custodian
To put IRA funds into gold, you have to establish a self-directed IRA, a kind of IRA that the investor manages and can be invested in a wider range of products than other types. For a gold IRA, you need a broker (to buy the gold) and a custodian to create and administer the account. This company will store or hold your actual bullion, says John Johnson, president of Goldstar Trust, headquartered in Canyon, Texas. Custodians are usually banks, trust companies, credit unions, brokerage firms or savings and loan associations that have been approved by federal and/or state agencies to provide asset-custody services to individual investors and financial advisors.
Custodians do not select metals dealers for their IRA clients. This is the investor’s responsibility. But established custodians have relationships with several hundred dealers throughout the country and may be willing share that list. Or it can work the other way. “Some metal dealers may recommend an IRA custodian,” says Johnson. “However, consumers are always free to search for custodians on their own.”
Choosing which company to use is complicated, as it is a specialized task that major brokerage firms generally don’t offer, according to Moy. “When I did my homework, there were a few criteria that were important to me,” he says. These include:
1. Transparency – Knowing all your costs up front can avoid any nasty surprises, such as hidden fees after you invest.
2. Track record – Look for a company with an outstanding reputation from objective third parties, such as the Better Business Bureau or the Business Consumer Alliance. Moy says it may also be helpful to dig into what customers say about the company, especially the number of complaints filed. He looked for firms that were “educational and not pushing a hard sell.”
3. Flexibility – Each investor’s needs and goals are different, so Moy suggests choosing a company that will cater to you, rather than having a one-size-fits-all approach.
4. Qualifications – You should only deal with a company that has all the appropriate and required licenses, registrations, insurance and bonds to protect your investment. Ask for verification of those licenses and other information.
The IRS is said to be currently scrutinizing this type of IRA, so proceed cautiously with this option.
Gold-Rolled
If you already have an IRA or 401(k), either regular or Roth, you have the option of rolling over some or all of its funds into a gold IRA. The rollover process is the same as for any other retirement fund. You typically fill out an account application (whether online or on paper), and the account is usually established within 24 to 48 hours of completion and receipt of the application.
“Once the signed transfer request is received by all parties, the two custodians will communicate with each other to transfer the funds to the new custodian and fund a new gold IRA,” says Gottlieb. When funds are available in the new IRA account, an account representative will review the current precious-metal options a consumer can purchase. “You advise them as to the exact type you want to purchase and prices are locked up at that time,” adds Gottlieb.
Gold’s Special Risks
All investments come with risks and rewards, gold included.
“In many ways, gold IRAs have the same risks that any investment has,” says Moy. “The price of gold can go up or down and have volatility. No one can accurately predict its future.” But despite the risk, Moy says there is a reason to invest some of your retirement funds in the yellow stuff.
“Gold has a 5,000-year history of being a store of value,” sayd Moy. “Stocks can go to zero [causing havoc to companies] as we’ve seen with Lehman Brothers, bonds can default like in Argentina or get big haircuts like in Greece. The value of the dollar has steadily gone down [at certain periods]. But gold will never be worth zero.”
If the price of gold does dip, Moy says that likely means your paper assets will be doing well. So if your portfolio is balanced with both gold and paper-based investments, a loss on the gold side will be balanced by the gain experienced by other assets.
The Bottom Line
Gold IRAs are normally defined as “alternative investments,” which means they are not traded on a public exchange and require special expertise to value. While gold has the potential of a high return, it’s easy to be blinded by its glitter. Gold can be volatile (see When And Why Do Gold Prices Plummet?). When gold is rising, you also have to decide whether you’d be buying at – or close to – the top of the market if you invest at that point. Waiting could make more sense.
If you’re considering a gold IRA, consult a financial advisor to determine how the metal would fit with the overall goals of your portfolio. In general, it’s never a good idea to put all of your eggs in one asset basket. If gold seems like a solid choice for you, Sentell suggests putting no more than one-third of your retirement funds into a gold IRA.
Gottlieb recommends people have no more than “10% to 15% of a personal total portfolio invested in gold, whether in paper form [note: not permitted in a gold IRA] or the physical holdings.”
Check out this link for details on investment in precious metals.
http://bestiraoptions.com/best-gold-ira-options
Thank you for this very informative article. I didn’t know about EFT’s and it seems like a good way to include precious metals in a portfolio. Your description of dollar cost averaging for gold was also something new to me. It really makes sense to me to invest in metals, especially after reading this.
Hi Suzanne,
Thanks for a thumbs up.
LET’S ASSUME MADAM Marie, your local crystal ball-gazing psychic, decided to set up shop on Wall Street. Laugh if you like, but she might pick ’em just as well with tarot cards as investment gurus do with charts. After all, predicting the future in investment is risky business. Just ask Jim Cramer, whose Mad Money went bad, bad, bad after he went extra-bullish on Bear Stearns hours before it made a spectacular swan dive.
But it’s easy to imagine even the good madam choking on her pickled beets when in 2014, EY made an incredible prediction. In a survey of exchange-traded funds, they noted that the category had experienced “spectacular global growth.” And so, they put their money where the gaping mouths were: ETFs, they prophesied, would hit “annual growth rates of 15 to 30 percent around the globe in the coming five years.”
Really? Come on.
But it turns out EY was right – in fact, more than right. And if ETFs were rock stars, they’d rank right up there with Bruce Springsteen and U2. Worth a total of $2.3 trillion in 2014, total global ETF assets have nearly doubled in three years, to $4.4 trillion as of September. The industry “continues to defy superlatives,” EY says in its 2017 global ETF report. To put things in perspective, $4.4 trillion is more than the gross domestic product of Germany, the world’s fourth largest economy.
Closer to home, “ETF’s are wildly popular because they are cheap and easy – and Americans love that combination,” says Ryan Krueger of Krueger & Catalano Capital Partners in Houston. Cheap and easy, he notes, is now knit into our investor/consumer DNA. “More people have signed up to be Amazon Prime members than voted in the last U.S. election.”
So what are ETFs? In essence, ETFs are securities that track a commodity, asset group (such as an index fund) or a given index (such as the Standard & Poor’s 500). Unlike a mutual fund, its net asset value isn’t calculated every day. Instead, it trades like a stock on an exchange and goes through price changes as ETFs get bought and sold. So if a given index or commodity does well, so does the ETF.
Commission-free ETFs at companies such as Charles Schwab Corp. (ticker: SCHW) and Vanguard are obvious drivers of the expansion, as the fee-free structure of many ETFs makes for many a breathless investor. Meanwhile, “Vanguard is inhaling about a billion dollars a day,” Krueger says. “Investors want to access global capital markets efficiently – that is to say at low cost – with ample liquidity and minimal tax consequences,” says Brian Sterz, portfolio manager at Miracle Mile Advisors in Los Angeles. “ETFs are an effective way to access an array of investment markets, from U.S. equities to emerging markets debt and everything in between, without paying an added layer of management expenses – which may or may not add to performance.”
In fact, at least one Nobel Prize-winning economist maintains that cost-free investments (a category ETFs fall into) compare favorably to using a financial advisor, whose gains over time can be offset by fees and wrong bets. On a recent episode of the public radio show “Freakanomics,” University of Chicago professor Eugene Fama says, “When you look at the world after costs – which is what people eat … well then the whole [investment] industry looks pretty bad.”
Venturing a step further, is there any point in concluding that ETFs offer a better way to beat the market than most investment strategies? “Absolutely none whatsoever,” says Robert Johnson, president and CEO of the American College of Financial Services in the Philadelphia area. “In fact, I’d contend that the way ETFs are utilized – that is, traded throughout the entire day – leads to them underperforming the market.”
The Perils of Leveraged ETFs
These exchange-traded funds amplify risk and are best left to day traders and professional investors. Even smart beta ETFs; that mix active and passive investment methods, can’t claim be-all-and-end-all status. “If the market were to fall a great deal, one of the drawbacks of low-cost beta ETFs would be that they would go down as much as the market,” says Sean O’Hara, president of Pacer ETFs in Paoli, Pennsylvania. “If you wanted to beat the market during a downturn, then you’d need to own an ETF that would move its exposure away from equities during one of these periods.”
Tips
• ETFs are basically index funds (mutual funds that track various stock market indexes) but they trade like stocks.
• ETFs can cost their shareholders less in taxes. Although you can’t avoid capital gains, you don’t pay capital gains on ETF shares until the final sale.
• Because ETFs trade like stocks, buyers must pay a brokerage commission every time they buy or sell shares.
And so it turns out – and so often turns out in the investment milieu – that the truth lies in balance: landing somewhere between no-fee frenzy and appropriate exposure. “Low fees can matter a lot,” says Dave Nadig, managing director of ETF.com. He cites a standard model published by the Securities and Exchange Commission that demonstrates how, over 20 years, a 25 basis point difference in fees adds up to a $10,000 difference on a $100,000 portfolio. “The impact is huge over the long term,” Nadig says. “Does that mean you need to move your portfolio into the cheapest ETF, always? No, of course not, because exposure matters, too. But if you’re comparing apples to apples, lower cost always wins.”
Check out the best crypto companies here:
http://bestiraoptions.com/best-cryptocurrency-ira-options/best-crypto-ira-companies
Uriah,
Wow thank you for creating this beginner’s guide to precious metals. I had no idea about some of the terminology. I heard of Exchange traded funds in the past, but was not sure what that really meant. I really like how you break down the terminology of the different precious metals and their value against the market.
I’ve heard of the value of investing in metals but i don’t have much experience or expertise on who to invest the money with. I would like to invest in more physical gold and possibly roll over some of my 401K. I was wondering if it is possible to roll over my entire 401K to a gold IRA and what would that mean for growth?
I saw on the other link for the Top 10 Gold IRA companies that Gold has outgrown the S&P500; and others. So I’m wondering if it is even worth keeping my money in stocks at all? I know that a large stock collapse is coming as alot of experts are predicting it to come soon in the next year. I’m just not quite sure on what the correct steps are to avoid it.
I really want to take all of my 401K out, but I would be penalized at least 30% if I did that. I’m now wondering if it’s better to just roll all of it to a self-directed IRA and have the majority of it be in gold stocks? Thank you for opening my eyes to all of the different options and making me question the value of the dollar now.
I’ve been wondering what all of the concern was about regarding the dollar. After watching the video, now I have a better understanding. I wish I would have learned more about the stock market in college or finance in general. Thank you for the wealth of information that you have provided. I will definitely look into it.
Hello Daniel,
It’s great to know that you liked the article and I could be of some help for you in clarifying the doubts you had. I will be answering your queries one by one now.
Query 1: Should you roll entire 401k to Gold IRA?
In the current volatile economic landscape, more and more people are searching for different investment instruments, like a gold IRA to protect their retirement savings. In the last few years, a precious metals backed IRA has become increasingly popular. The reason behind this is the fact that historically gold has moved in the opposite direction of mutual funds, stocks and bonds. The technical term is that gold is negatively correlated to stocks.
Today, gold still plays a critical role in the marketplace and is the most appealing precious metal. Gold is still a mark of wealth and prosperity because of its rarity and perceived value. Since 2001, the price of gold has risen more than 4 times in relation the US dollar, reaching a high of $1,913.50 in 2011.
Gold will continue hitting record highs in price for many years to come in case of the following:
• Failure of Currencies
• Failure of the Stock Market
• Higher Unemployment & Foreclosure Rates
• Continued Rising of Inflation & National Debt
Due to the rejuvenated momentum of gold, it is still viewed as a solid investment strategy, when paper currency has proven to be anything but stable. Gold has a reputation for offering protection against devaluation of paper currency and various other negative effects of unsound policies and government overspending. IRA rollovers are gaining popularity among investors offering protection of the retirement accounts or those that would like a more diversified and safe portfolio.
The difference between a transfer and a rollover
The IRS has a very clear distinction between a transfer and a rollover despite many people thinking that any movement of funds is a rollover. With a rollover, the funds first move to you and you then deposit into the other account. When you do a transfer the funds move from one custodian to the other without you seeing the money.
IRA Rollover – The Process
Rolling over your existing account can be a daunting task, but when done correctly, it is cost and tax effective. If you decide to work with Regal Assets (the company we can give our stamp of approval), here is the process:
• First, visit their website here
• Fill out the form
• Let the experts help you along the way
• After receiving your signed paperwork your IRA account will be opened in as little as 24 business hours
• It’s important to do your due diligence and research the top rated companies for your IRA, before making your final decision – you can read more in our review of the best companies and learn more about the most trusted companies.
After you’ve reviewed the companies, it’s important to ensure that they are reliable when protecting your retirement. Our team picked Regal Assets because of their customer service, storage fees, reliability, transparency, flawless run-rate for years and their ability to protect retirement assets.
Query 2: Is it worth keeping money in stocks?
The stock market is a dynamic and vibrant arena for both casual and professional investors alike. Although there are countless stories of riches being made in this marketplace, even stocks that are relatively stable carry risk. As an investor, it is important to understand that the value of a stock is capable of falling to very low levels – even zero. However, they can never reach a negative value. While losing your investment is certainly not a favorable outcome, you will never need to pay additional fees for ownership or declining value.
Stock As Ownership
No matter how complex the stock market may be, stocks simply represent shares of ownership in a company. Whatever investors perceive the value of the company to be, that determines stock price. When investors see the value as being very low, the price will fall, sometimes to $1 or less. Stocks with very low price are known as “penny stocks,” and are particularly volatile. However, a stock can never fall to a negative value. A value of zero indicates that no investor is willing to buy the stock, no matter how low the price – essentially, that the corporation has no value.
Stock Value and Bankruptcy
A company’s stock price is likely to sink to its lowest levels if the company goes through bankruptcy.
In a Chapter 7 bankruptcy, a business immediately ceases operation and their non-exempt property is sold in order to compensate creditors. Stock can no longer be bought or sold at this point. In this situation, stockholders will be last in line to receive compensation behind both secured and unsecured creditors. The possibility of a stockholder receiving zero compensation for the stock they hold is real. If funds are not available to fully pay off creditors, stockholders will receive zero compensation for the shares they hold. Effectively, their stock becomes worthless.
When a publicly owned business declares Chapter 11 bankruptcy, it is possible that their stock can continue to be traded. That being said, this is an extremely risky practice. It is quite common for equity shares to be cancelled when a business reorganizes as part of a Chapter 11 filing. With that in mind, it is very possible for a stock to fall sharply in value during this process.
The primary difference between these two forms of bankruptcy is as follows: Chapter 7 bankruptcy immediately terminates market trading, while Chapter 11 bankruptcy allows for shares to continue to be bought and sold at the risk of the investor.
Defining a Loss
A ‘loss’ in the context of stock investment is a term that should be applied specifically to a scenario in which an investor sells a stock at a price lower than that which they purchased it for. Given the fact that stocks can swing sharply in value as a result of fluctuating investor sentiment, a loss is only realized at the moment shares are sold for a reduced price, not if they temporarily dip below the purchase price while still within the ownership of the investor.
Regardless of the current value of a stock, investors can still reap profits if they sell their shares at a price that is higher than their original purchase price. As mentioned previously, ‘profit’ should only be considered at the moment of sale, not during any price swings occurring during ownership of the stock.
Value to Investors
Stock sold at a loss, or even if its value falls to zero, can still have positive value for investors. This is because losses from stock market investing can be claimed as capital losses for income tax purposes. Capital losses offset capital gains, which are profits from stock and some other investments. Capital losses can be used to ensure that all gains are kept in context and are taxed according to net investment profit rather than merely the earnings from high performing stocks.
Query 3: Benefits of a rollover?
Your 401(k) may be eligible for a rollover – and now might be the perfect time to convert it into an Individual Retirement Account (IRA). The 401(k) is a popular investment option today because it requires very little involvement on the part of the account holder. Many individuals have a 401(k) through their employer – which means that the management of the account is hands off. Payroll deductions can be set up to move money automatically each pay period. But there are drawbacks to a 401(k), and in light of some of these limitations it might make sense to convert your 401(k) to an individual retirement account, or IRA. Here are five reasons to roll yours into a Roth or Gold IRA today:
1. Roth Eligibility: If you meet the income eligibility requirements for a Roth IRA, consider rolling your 401(k) account into a Roth. This can benefit you in a few ways. First, a Roth IRA is funded by after-tax dollars, meaning you can distribute the funds later on in life on a tax-free basis since it has already been taxed. If you think your future tax bracket might be higher than what you’re paying now, consider the Roth. Also, there are no required minimum distributions at age 70 ½ – unlike a traditional IRA.
2. Greater Flexibility: Unlike a 401(k), where there are often just a few investment options available to the account holder, you can invest in virtually anything with your IRA dollars. Individual stocks, gold or other precious metals, mutual funds, REITs, exchange-traded funds (ETFs), and much more. Since you’ll have an easier time diversifying your portfolio, you can more intelligently construct your investment plan to meet your short, medium, and long term goals. Most 401(k)s only allow you to choose from a few mutual funds indexed according to when you want to retire.
3. Standardization: IRAs operate differently than 401(k)s because Individual Retirement Accounts are standardized by the IRS – meaning you can expect the same basic set of rules and principles from one brokerage group to the next. A 401(k) is often regulated, to some degree at least, by the company it is operated within. Instead of working within the confines of a corporation that can change some of the rules anytime it wants, consider an IRA to standardize the process.
4. Broker Favors: It is unlikely that an HR manager at your workplace will call you every day and push you into contributing to a 401(k). Conversely, brokers earn a living by creating investment portfolios for their clients. They want your business, and they might just offer you a range of incentives to attract and retain your business. Free or discounted trades, cash, and more could be coming your way – especially if you have a sizeable amount to invest.
5. Wealth Transfer: While a 401(k) will almost always roll to a surviving spouse upon death, an IRA generally allows the account holder to name one or more beneficiaries (primary, contingent, etc.) and move the money in a more deliberate manner. This can help with the management of income/estate taxes more easily than a 401(k) transfer.
Read more about rolling over your retirement plan to a Gold IRA on our Page on the Best Gold IRA Options, or if you want to get started right away into investing in gold, consider viewing our List of Top 10 Gold IRA Companies or skip to our most recommended company, Regal Assets, to work alongside the best Gold IRA Custodian in the industry.
I feel blessed anytime I pass by this website reviewing investment in precious metals.People are very attentive when it comes to investment because it is not an easy decision to make.
If I had money,I would invest in Gold because it seems that its value is always high compared to other precious metals.
Thank you for sharing this review.
I am actually just learning how to invest and the best ways to do so. This is a very interesting article, investing in metals had never crossed my mind until now! I do love the traditional gold and can see why others fall back to it. This is quite interesting to learn about and gives me areas to branch out when thinking about investing. Thank You!
Hey there Uriah,
thanks for such informative and detailed article, I’ve really enjoyed learning new things today 😉 As far as investing in precious metals go, I was quite shocked to discover that there are so many different types of investments and ways to invest in precious metals, it’s crazy! I really like ”Numismatic or rare coins” type of investment as I think coin collection can not only be an amazing and valuable investment which can lead to some great profit in the end, but I also see collecting coins as a very engaging and captivating hobby. Also, another great benefit of collecting coins is that this activity motivates to start learning some history behind these coins, explore their roots, learn how they were made and by who and all of the other exciting stuff that comes along with them, which honestly can get pretty interesting & exciting (at least for me, haha!).
All in all, thanks for the great article and keep up the good work 😉
I find your review very informative and almost convinced that this a perfect way to make an investment if I have the capacity to do so. I think for now I have to keep it in mind and revisit your site if I’m ready to make such investment to get more info.
However, I will be glad if you could touch on the other side of the coin of this investment. I mean the negative side because your article make it seems like you have nothing to fear once you go into this kind of investment. Thanks
Hi Uriah Lloyd.
Nice information about this topic. i never knew how one can invest in metals. i only knew that of gold.
thanks for putting this article together.
I love the professional look of your site. You have some very long and informative articles here too.
Well, i don’t see investing in gold as a short term goal. i think it’s for people who have achieved some level of financial security and still want to preserve their generational wealth. As there is high level of risk if one is not very articulate when investing.
The topic is very nice. I now know that i can invest in other metals apart from gold and keep them for future use.
But I think i will need a mentor who’s much more experienced to keep me with required knowledge. Looking forward to this post in the near future.
Thank Uriah for you very thorough Beginner´s Guide To Precious Metals Investement.
I was curious by your very limited discussion of diamonds as an investment. Let me tell you what my view is on this precious metal
The use of diamonds as an investment and financial hedging tool has grown rapidly over the last few years to point that there is even an interesting section about it in Wikipedia.
The reason is quite obvious and actually makes lots of sense:
1. Diamonds don’t take up room –
Diamonds have forever been used as an excellent means of transfer. The fact that such a small item can be worth so much money is astounding. You can easily keep a one million dollar diamond in the smallest of safes.
2. A diamond is durable – It doesn’t break or wear off –
As the hardest substance on earth you do not have to worry about anything happening to it. All you have to do is to make sure you do not lose it! (and even that can be insured).
3. Inflation Proof –
This is actually true to most physical commodities. Real estate, gold, silver and diamonds usually appreciate in compliance to inflation. Unlike the others, diamonds are more durable and movable. This is also why even if you do not want to buy diamonds for investment buy just considering an alternative form for putting some money aside diamonds make a good choice.
4. You can enjoy it while you have it –
Since diamonds do not wear off and technically there is no meaning to selling a “second hand” diamond, you can mount it and wear it while you use it for investment purposes.
5. Psychology –
It is physical. You can hold it, look at it and even wear it. It makes you feel safer unlike stocks and other financial items which are rows on a computer screen.
Besides the psychology and physical aspects there are also financial advantages to buying diamonds for investment purposes
Now that I have listed the pros, let me read your cons?
Thanks for taking out time to write this article, It brings to the fore another viable investment option . I have always thought that investing in Gold simply means using your fiat money to buy gold as a store of value and selling later when cash is needed.This notion has now changed as I now have a better understanding of how investing in precious metals works
You mentioned that diamonds are starting to become some sort of store of value, does that mean that it is a good store of wealth in the event of a currency collapse? Also, as an addition to my question, would it be able to be used as a medium of exchange in the event that no one wants to take fiat currency? Like can I buy a loaf of bread and pay for it with diamonds?
Dear Uriah,
Wow, what an extensive guide indeed! I thoroughly appreciate the research you must have done to gather and compile so much information.
I do have came across ads and posts about investing on precious metals. Although I am interested in it I am not sure where to start and how to do it, your guide provided me with great insights.
As per your advice I am planning to invest in gold and I am bookmarking your post for future reference.
Wishing you great Success!
Paul
I am a new investor, I have stocks and mutual funds and I am considering to invest in precious metals too such as gold and silver. However, I’m not sure if it’s a good idea because I hear some people say it is not advisable as they can be more volatile than stocks.
But since I am planning to invest for the long term, I thought why not give it a shot. Like you said, it could be a good way to diversify my assets. I am only interested in gold and while I am not surprised to learn that diamonds are included in the list of precious metals that people can invest in, I was puzzled when you said that they are not actually considered as precious metals. Now, why is that?
I must say that I enjoyed reading your article Uriah. I am truly a beginner and I would like to learn at least the basics. I think that metal investment will become even more popular in the future and it is not bad to know how to work with it. I will share this topic with my cousin who work with metals.
You would think gold would be less in worth than to say something with more of an actual use other than just jewelry and circuit boards like platinum. Do you know why gold is more frequently traded and invested in rather than platinum? I wonder if platinum maybe is more susceptible to corrosion? Either way, I’d definitely invest in probably gold as like you mentioned, the market doesn’t fluctuate as much with it. I feel the US economy is building up to something big and I just know it’s not going to end well for most.
I was just surfing the internet looking for investment opportunities and I stumbled onto this.. This article has given me a wider perspective and now I am about 98% sure I want to invest in Gold and Palladium. I have been going through the contents of your site and I have found very useful informational to help in my endavour. I am very glad to have stumbled upon this… Thank you for this .
Hello Uriah,
The investments in precious metals taking into account everything you explain are very interesting to me.
They should be designed for the long term, with the idea of maintaining or increasing the value of our capital.
In Argentina they are living months with a great annual inflation, very close to 50%.
Given this reality, investing in precious metals would be an excellent option that should be considered.
Any question I will contact you. Thank you!!
Claudio
I love your content man, they say learn something new every day and you’ll continue to grow. Today I’m learning about investing and I love your beginners guide to investing in precious metals. It’s very detailed and I never knew what bullion meant, reminds me of those boilon cubes like for making broth haha. Also, is that legal, owning your own mint? I always thought that was in the hands of the government.
Because gold can have often been sought as a safe store of value as this article states, maybe it’s a good thing to add it to my IRA portfolio. Hopefully, I’ll get some good cash out of this since precious metals have an intrinsic value which I think never fades. I might consider getting the services of a company who will help me get a precious metal IRA portfolio so that I can diversify my investments.
Hello Sariah! I think adding precious metals to your portfolio would be a great idea and you can view our List of Top 10 Gold IRA Companies to choose to work with the best gold IRA custodian. Investing 10-30% of your portfolio in precious metals is the best recommendation. Thank you for dropping by!