Investing in Precious Metals – Know What You’re Buying

Featured Image

Gold and silver continue to attract collectors, investors, and anyone else looking to fortify their financial spectrums with physical assets. The market has evolved to match consumer demand by allowing individuals to participate in precious metals investing through a variety of diverse avenues. For self-directed investors, it’s important to understand the available options and utilize a strategy that suits individual needs.

Physical Bullion

In this structure, tax-advantaged retirement dollars may be allocated toward gold, silver, platinum, or palladium as long as the items meet minimum purity requirements set forth by the IRS. Once acquired by the IRA, the physical assets are sent to a depository and stored in an account established for the individual plan. The account holder may then direct the sale, exchange, or in-kind distribution of those items at any time.

This transaction model most closely resembles that of a personal, non-retirement purchase. Self-directed retirement investors contact the precious metals dealer of their choosing and agree to terms. However, they must also interact with their IRA custodians when initiating transactions on behalf of their plans. Once the applicable paperwork is in order, the IRA provider will issue the funds and the dealer will ship or transfer the items to the designated storage account at the depository.

Online Platforms

In keeping with a recent shift toward efficient investment execution, precious metals dealers are beginning to develop online trading platforms. On these websites, a client may deposit funds into a cash account and purchase precious metals with a key stroke. This allows buyers to invest at their desired price points by offering purchases at fractional amounts. For instance, if the price of gold is down, investors may use these platforms to purchase small fractions of gold (smaller than grams or quarter-ounces) instead of committing hundreds or thousands of dollars in the hopes the price has bottomed out. If the value continues to drop, investors may continue to make small fractional purchases, mitigate their losses from previous purchases, and raise their chances of buying at the best possible price.

For IRA investing, plan custodians must still be contacted to facilitate the movement of funds into cash accounts and plan-held items must be stored in a depository. The key differences between online trading and more traditional precious metals investing reflect a marked advantage for clients in terms of convenience. Online platforms provide an even greater degree of self-direction by reducing paperwork and synthesizing investment activity to a single dashboard.

Exchange-Traded Fund (ETF)

This system does not involve the ownership of physical items by your retirement plan. Precious metals ETF investors would hold interest in a trust or fund that owns bullion in certificate form. Such investments are perfectly allowable in IRAs or 401(k)s, but, like other publicly traded securities, liquidity may be lower and investors would never have access to physical gold, silver, or other permissible items.

Investing in precious metals has come a long way from visiting a local coin shop to buy American Eagle coins. As enthusiasm for alternative assets in self-directed retirement plans continues to rise, the mechanisms for acquiring these assets have diversified to provide greater access to as many prospective investors as possible. For more information about precious metals investing with a self-directed retirement account, please feel free to give us a call at 877-742-1270 or send us an e-mail at