There are three distinct methods via which an investor can buy gold and put it in an IRA. These methods differ from each other in how the gold is acquired, fees charged, and storage requirements. Let’s look at each one individually, and see which one fits your IRA investing needs.
IRAs and Gold ETPs
A gold ETP (Exchange Traded Product) allows investors to place gold in their IRAs in much the same way that they would place a stock in their IRA. In essence, a gold ETP functions as a stock whose value is correlated with that of current gold prices. Investors can purchase shares of a gold ETP on any of the various stock exchanges, and then sell them in a similar manner. The advantage of a gold ETP is that the investor doesn’t have to be concerned with any storage concerns. The disadvantages of the gold ETP are complexity and fees. Often times the contract is complex and the details of the product itself may be unclear. Additionally, a number of fees are routinely charged, including trading, management, insurance, and storage (when applicable). One final disadvantage for the retirement investor is that the gold is usually not physically owned. The price is correlative but the investor cannot lay claim to physical gold should the need arise. Similarly, when it comes time for RMDs (Required Minimum Distributions), the IRA can cash out but it will not be left with the physical gold itself.
IRAs and Gold Custodians
This product is one of the most heavily advertised vehicles promoting IRA investment in gold. In short, the gold IRA custodian provides the structure for your IRA to purchase physical gold as a retirement asset, and then places the gold in a certified holding facility. The advantage of this kind of gold investing is the fact that it’s relatively easy. The offering company supplies the entire package including the physical gold, the investment framework, and set-up with the depository. The disadvantage of the platform is the economic cost involved. First, the investor takes a hit with the price of the gold itself. The custodian usually charges a significant markup on the gold, and the consumer has no choice in the matter. Secondly, fees are imposed for handling and maintenance, which are added to the ever present holding fees charged by the depository. Finally, if the time comes when an investor chooses to diversify outside of gold, then additional exit fees will be charged. (And that would be in addition to the fees involved in setting up a new retirement account for anticipated alternative assets.)
Self Directed IRAs and Gold Investing
A Self Directed IRA with Checkbook Control provides a gold investing platform that is economical, versatile, and allows for the possibility of actual physical possession. This kind of IRA uses a dedicated LLC as its investing platform. The IRA’s LLC purchases the gold, which in turn automatically renders the gold as an asset of the IRA. With this kind of setup, the IRA account holder (i.e. the investor) can shop gold suppliers and choose the one which best fits the IRA’s needs. (Obviously, economy of price will be a major factor in that decision.) This setup also allows for personal physical possession of gold coins in the form of American Eagles. This avoids the transaction and holding fees which would be associated with a custodian and depository. As an added benefit, this kind of self directed IRA is not limited to gold. If the investor ever wishes to diversify, the LLC format allows him/her to sell the gold and buy a different asset. This can all be done without paperwork or fees as the transactions are being handled in the checking account of the LLC. Broad Financial specializes in Self Directed IRAs with Checkbook Control, and our friendly specialists are always available to answer any questions you may have.