IRA Investing: Gold and Silver for Your Retirement Safety

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(June 2012)

If you have a self-directed IRA (your own or from a rollover), you can include investments in gold, silver, and related stocks in your IRA. These investments can make a huge impact on your ability to preserve your purchasing power in the coming inflationary environment.

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What Investments To Consider?

Exchange Traded Funds (ETFs) can be bought and sold like stocks:

  • GTU – a gold ETF that invests in gold bullion.
  • GLD – a gold ETF that invests in gold bullion.
  • PSLV – a silver ETF that invests in silver bullion.
  • SLV – a silver ETF that invests in silver bullion.
  • CEF – a Canadian closed-end mutual fund that invests 50% in gold bullion and 50% in silver bullion.
  • There are several others that are available.

Direct Investment in Bullion

Yes, it is possible to buy physical gold and silver bars and coins with IRA funds. You must purchase " IRA approved" bars and coins and store your metals in a bonded and insured warehouse, rather than take personal delivery. There is no income tax liability until you withdraw funds from your IRA – the so called "constructive receipt" of your funds.

The advantage of physical bullion in a warehouse is that the bullion is outside the banking system and not in a brokerage account that should be safe, but may not be, in a time of crisis. Remember MF Global and the disappearance of over $1Billion in "segregated" customer accounts.

The obvious disadvantage is that it is less convenient to buy and sell physical metals from a warehouse, compared to "paper" investments from a brokerage account. However, if you are prone to excess trading and occasional bad timing, this inconvenience could actually become an advantage over the long term.

Reputable gold retailers, such as Apmex.com, can recommend bonded and insured warehouses and will assist with the paperwork and legal requirements for setting up your IRA. Of course, they also want to sell you the "IRA approved" bullion and coins and will ship directly to the warehouse you have chosen.

Conclusion

Rather than investing all of your IRA funds in traditional stocks, mutual funds, money markets, and Certificates of Deposit, consider investing some or all of those funds in physical bullion stored in an insured warehouse and the balance in "paper" gold and silver ETFs and "paper" gold and silver stocks. There are many gold and silver stocks (such as GG, SSRI, PAAS, CEF, KGC, SVM), but you may wish to consider three gold and silver ETFs, rather than individual stocks. They are GDX, GDXJ, and SIL. Research them and make a wise choice.

GE Christenson
aka Deviant Investor

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2 Responses to “IRA Investing: Gold and Silver for Your Retirement Safety”

  1. bob says:

    Aren’t you concerned with the gument knowing where your asstes are, especially with the theft going on – MF Global, et al?

    • Yes, I am concerned. But I think there are only relative degrees of safety. My attitude is that physical gold stored in a secure and private (not a big bank) facility is much safer than paper gold (such as an ETF) at my stockbroker. And that paper gold ETF is still safer than most stocks and bonds in an account at my broker. And some of those stocks – say gold miners – are much safer than cash stored in a Certificate of Deposit.

      There are advantages and disadvantages to every choice and there is little financial privacy now and there will be less in the future. You do what you can. I like physical gold and silver – maybe stored in private storage, maybe stored in Singapore or Switzerland, maybe buried in your backyard. What is right for one person is not good for another. Think it through and make the best compromise for your circumstances.

      GE Christenson
      aka Deviant Investor

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