What are the Types of Precious Metals You Can Use for your IRA?
As the pandemic continues to wreak havoc on the supply chain and the economy in general, interest in precious metal IRAs continues to grow.
It makes sense, given that precious metals are an ideal investment during a down economy. They provide a great hedge against inflation, and the rising prices that increase IRA value aren’t a bad lure, either.
But what are the types of precious metals you can hold in your precious metal IRA? Some are familiar, while others will be surprising, so here’s a rundown on these precious metals and some of the particulars about using them for the foundation of your IRA.
Before we get into the individual precious metal, let’s do a broad definition. Specifically, you need to know that IRAs based on precious metals are basically a special form of self-recked IRAs.
But what does that mean, exactly? For many investors, self-directed IRAs are ideal vehicles to get into unconventional assets, with the most common ones being real estate and precious metals. Some investment houses are even starting to offer IRAs based on cryptocurrency, although these are still considered outliers at the moment.
Beyond that, most of the options that come with precious metal IRAs are similar or identical to those of their conventional counterparts. The contribution limits are the same, as are many of the taxation and withdrawal limits.
So why go with precious metals? Simple—in addition to being a great hedge against inflation, they also tend to increase in value over time.
Specific Precious Metals
So what precious metals can you hold in your IRA? Basically, there are four of them — gold, silver, platinum and palladium. Let’s review some of the basics that come with each metal.
If you’ve looked into gold IRAs at all, you probably know that the gold needs to be 99.5 percent pure, and it needs to be up to snuff with the IRS, too.
If you’re going to own the gold as one of the stipulations of your IRA, you need to store it in an IRS-approved facility, and you can’t actually own the physical gold until you cash out the IRA, provided you’re over the age of 59.
The other major questions about gold as an IRA precious metal tend to revolve around gold coins. Yes, they’re allowed, but they, too, must be IRS-approved.
The most popular approved gold coins are American Eagles and Maple Leaf gold coins from Canada. Australian Koala bullion coins are also allowed, as are PAMP Suisse bars. Interestingly enough, American Eagles actually don’t meet that 99.5 purity standard, but they’re generally regarded as a separate coin category in their own right.
Finally, there are restrictions in the coin market. You can’t hold collectible coins in your IRA, regardless of how rare they are, and British Sovereigns, Swiss Francs and German marks are all verboten as part of a self-directed IRA.
Silver IRAs are currently rarer than their gold counterparts, but most of the basic stipulations are the same. The silver in silver IRAs actually has to be purer than the gold investors buy as part of their gold IRAs, with a purity level of 99.9 percent.
Silver bars are allowed, as are silver coins, with most of the coins mirroring your basic choices if you go with gold, i.e., you can get American Silver Eagles, Canadian Silver Maple Leafs, and so on. If you’re looking for something different, the Mexican Silver Liberated is considered an IRS-approved silver coin.
The IRS storage restrictions are the same as well, i.e., you have to store your silver in an IRS-approved facility. Qualified custodians can do this for you, just make sure they’re as qualified in silver as most are when it comes to gold.
Believe it or not, if you already own a gold IRA, you may already have some platinum as part of it, too. Platinum is commonly added to both gold and silver IRAs, and one of the advantages of doing this is that platinum has a very stable, large-scale use in the US auto industry.
Other than that, the rules are the same. If you do go with platinum, it has to be stored in an IRS-approved depository, and the same basic IRA rules apply. Some experts believe that platinum prices will rise in tandem with gold, the theory being that a rising tide tends to lift all boats.
Palladium may be the proverbial red-headed stepchild in the world of precious metal IRAs, but that doesn’t mean it’s not a good investment. The supply is expected to be scarce in the coming years, which suggests a rise or even a surge in prices, so it’s well worth considering as a diversity addition.