Since the beginning of the 21st Century, the world has seen a tremendous amount of change and uncertainty: the 9/11 terrorist attacks and the seemingly endless wars that have followed in the Middle East, the Great Recession, the collapse of the Greek economy, and the flood of refugees into Western Europe, are just a few examples which illustrate the extraordinary times we are living in.. This tumult has affected the stock market as well, with a wild array of returns over the last fifteen years. It is not surprising that savvy investors have sought out different instruments to diversify themselves and erect a shield against some of the chaos. One particular investment option that is becoming more popular as people seek a hedge against uncertainty is the precious metal individual retirement account (IRA).
What is a Precious Metal IRA?
A precious metal IRA is an individual retirement account set up with precious metal assets instead of the stocks, mutual funds, bonds, etc. found in traditional retirement accounts; they may also at times contain exchange traded funds (ETFs) in lieu of the precious metals themselves. The four precious metals currently permitted in these types of accounts are gold, silver, platinum, and palladium. These investment vehicles are relatively new, having only been permitted since passage of the Taxpayer Relief Act in 1997. Typically, precious metal IRAs are managed as self-directed accounts, meaning that the investors themselves run them. Most of these IRAs do not allow investors to maintain the precious metals on hand themselves; instead, they must appoint a trustee or custodian of some sorts to maintain their assets through the life of the account. Like other retirement accounts, the Internal Revenue Service Publication 590, Individual Retirement Arrangements, specifies exactly how these precious metal IRAs must be administered.
Precious Metal IRA – Should I Have One?
There are several good reasons for establishing a precious metal IRA. First and foremost, a retirement account that holds tangible assets like gold or silver coins is decidedly different than a typical IRA’s stock, mutual fund, or bond investment portfolio. Owning a stake in precious metals can diversify a portfolio substantially and help shield an investor from risk. Precious metals are of particular value when instability spikes, since people often lose faith in less tangible assets and retreat into gold and other metals, further driving up their prices. Due to this phenomenon, investors also have opportunities to achieve unprecedented returns on their precious metal IRAs at times. For instance, in 2011, the rate of return on gold was 38%, even as the economy continued to climb out of recession. Precious metals also provide investors protection from economic threats like inflation and currency devaluation in ways that other investments cannot. Finally, as a further hedge against uncertainty, precious metals will almost certainly retain some level of value, regardless of the level of economic instability. The same cannot be said for stocks, bonds, or mutual funds, which could become worthless if the companies they represent go bankrupt, or world stability plummets dramatically.
How Do You Establish a Precious Metal IRA?
The Internal Revenue Service has detailed rules guiding precious metal IRA’s, but they are relatively easy to establish and maintain. Many people with these types of accounts run them as self-directed IRAs – that is, an individual retirement account where the account holder makes all of the investment decisions. Fortunately for investors, there are numerous investment firms that can facilitate these types of retirement accounts. Regal Assets, JM Bullion, and Ampex are just a few examples of the many investment firms that can help investors start and manage a precious metal IRA. The additional benefit of a self-directed individual retirement account is that investors have complete control over the types of assets they place in their retirement portfolio. This allows savvy investors to truly diversify to shield themselves against market risk, or to use their innate knowledge of investing to earn a higher rate of return. Thus, while a self-directed IRA may contain stocks, bonds, and mutual funds, it may very well contain the precious metals discussed at length here – gold, silver, platinum or palladium – and even real estate as well. Liberalized rules on individual retirement account holdings means investors have a lot of options to prepare for the future.
Do Your Research – Then Start Your Precious Metal IRA!
Gold and other precious metals are an excellent hedge against uncertainty. And as one looks at the world today – endless war and chaos across the Middle East and Central Asia, increasing tensions with Russia and China, refugees streaming into Europe, high alerts for terror attacks across the West – there are a myriad of reasons for investors to insulate themselves against market risk and instability. Precious metals also provide a means to achieve rapid rates of return when other investments falter. A diversified individual retirement account that includes precious metals can help ensure an investor is prepared for the future, regardless of the economic outlook. However, like any other investment, it is important that investors do the necessary legwork before committing their hard earned money into any investment. Anyone considering a precious metal IRA should familiarize themselves with the Internal Revenue Service’s rules on IRA’s; reading Internal Revenue Service Publication 590, Individual Retirement Arrangements, is a good place to start to understand the regulations governing this type of account. It is also important to shop for a deal before actually establishing one of these accounts. There are numerous firms that handle precious metal individual retirement accounts. Research their requirements, fees and benefits thoroughly, and choose one that is the best value for you. More and more people are choosing precious metal IRAs to prepare for the future.
Do your research, determine which kind of precious metal IRA is right for you, and start preparing for tomorrow now.
The following are some excellent resources for investors considering a precious metal individual retirement account.
• IRS Retirement Account Information. Great government website to research the rules governing individual retirement accounts.
• Bloomberg Business Gold, Silver, and Industrial Metals Price Index. Excellent resource for monitoring precious metal market prices.
• The Entrust Group. An investment firm that offers a wide variety of self-directed accounts, including precious metal IRAs.
• Scottsdale Bullion and Coin. A firm specializing in gold and silver that offers precious metal IRA services, as well as a plethora of information about these metals.
• USA Gold. A gold company that provides excellent information and links to find a precious metal IRA that is right for you.