Home Money & Finance Gold IRA: A Beginner’s Guide

Gold IRA: A Beginner’s Guide

by Olufisayo
Gold IRA

Inflation is a major issue around the world. Therefore, it is only fair that individuals are seeking ways of maintaining financial stability and protecting their wealth. Over the past centuries, when uncertainties arose, many purchased physical precious metals such as gold, silver, platinum, etc., and kept them as a means of protecting their wealth.

These days, precious metal IRA (commonly known as gold IRA) is one of the ways to invest in these items as a means of securing wealth. If you’re considering this option, then we advise that you carefully go through this gold IRA guide that we’ve crafted just for you. Once you are done reading this piece, you’ll have a good understanding of what this investment is all about.

Gold IRA Explained

A gold IRA (individual retirement account) or precious metal IRA is regarded as a self-directed IRA. Unlike traditional individual retirement accounts, with self-directed IRAs, you can invest in other non-traditional assets. The assets you can invest in include precious metals, real estate, cryptocurrency, and private placement securities.

Therefore, a precious metal IRA is simply a self-directed IRA that allows you to invest in precious metals such as gold, silver, platinum, and palladium. The reason this investment is commonly known as gold IRA is because it is the metal that most folks invest in. This is usually because of how less volatile gold is compared to other precious metals.

Individuals who make this investment do so for several reasons. They might do so as a means to hedge against market fluctuation and inflation, retirement portfolio diversification, and potential tax benefits. Nevertheless, you cannot enjoy these advantages without following the right process.

How It Works

The first thing you need is not these valuable assets but a gold IRA company as well as a self-directed individual retirement account custodian. The IRA company will help you set up your account while the custodian purchases and stores the asset on your behalf. According to the guidelines, individual retirement account commodities cannot be stored by the owner in their homes. Let’s break down the process further…

Once you choose the company, they’ll set up the account. You will then fund the account with money. At this point, you are free to choose your investment assets. You’re free to choose gold, silver, platinum, or palladium. You can seek financial advice from an account manager to help you make the right decision that is best for you.

The next step involves the purchase of the precious metals which is carried out by the custodian. You don’t get to handle the commodity at any point in the process. The custodian will then store it in a secure depository.

Regarding the storage of the commodities, there are two options available. The most common one that most people choose is the segregated account. What this means is that the assets are stored in separate storage from the assets of others in the depository.

The second option is the non-segregated account. In this case, your investments are stored along with others. Although you have the option to choose any of these, it’s advisable to always select a segregated account.

Always ensure that the company, custodian, and depository are IRS-approved. These are checks you need to carry out before hiring any of these services. This will ensure that you don’t get swindled.

There are rules and guidelines set by the Internal Revenue Service (IRS) regarding this type of investment. You can click here to read answers provided by the IRS to a wide range of FAQs regarding gold IRAs. Therefore, by selecting only IRS-approved organizations, you can rest assured that they would not flout any of these guidelines.

Precious Metals You Can Invest

The IRS regulates this industry, and per their rules, you can only invest in gold, silver, palladium, and platinum. Even at that, not all of such items are acceptable. For these metals to be deemed IRS-approved for IRA, they must pass the purity standards.

Therefore, if you choose to invest in gold, it must have a purity standard of 99.5%. Only 99.9% pure silver is accepted. Finally, if it is not 99.95% pure palladium and platinum, it isn’t acceptable. This rule ensures that your investment’s value is maintained while providing you with quality assets.

Examples of products that pass this purity standard are:

  • Gold proof coins or bullion: American Eagle Coins, American Buffalo, Canadian Maple, British Britannia, Australian Kangaroo, Austrian Philharmonic, etc.
  • Silver coins and silver bullion: American Eagle, Austrian Philharmonic, Australian Kookaburra, etc.
  • Platinum bullion and coins: Australian Koala, Canadian Maple Leaf, American Eagle, etc.
  • Palladium coins and bars: Canadian Maple Leaf, etc.

Is Opening a Gold IRA the Best for You?

As the saying goes, “One man’s meat is another man’s poison.” So, as good as this investment might be, it might not be the best for you depending on your situation. Let’s explore this further…

Gold IRAs are perfect if all you want to do is secure your wealth from market downturns and inflation. Another reason it is perfect is if you just want a way to diversify your portfolio. On the flip side, if your intention is to earn a huge profit or return, then you need to look for another investment.

It’s well-known that the value of gold appreciates with time; this makes it great for long-term investment. This price increase is the main advantage this investment provides. However, it can’t be guaranteed that the price will shoot up and lead to passive income for you. If any company promises you this as a means to get you to partner with them, run away, and never return.

Apart from this advantage, you don’t get anything else from a precious metal individual retirement account. You don’t get dividends or anything like that. This is why most experts suggest that you don’t invest above 10 percent of your portfolio in this account.


A gold IRA enables portfolio diversification and wealth protection. In this article, we’ve explained what this investment is, how it works, and the acceptable assets you can invest. We then wrapped it up with information that will help you decide if it’s the right investment plan for you.

Photo by Jingming Pan on Unsplash and Photo by Sabrianna on Unsplash

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