While here at BuyBitcoinWorldwide we largely focus on Bitcoin - the 21st century’s digital gold - physical gold has been unrivalled as a store of value for millennia.
A gold IRA offers investors the opportunity to buy gold and benefit from the tax advantages of this type of retirement account.
Gold’s stability is its key attraction: while its price in fiat currency fluctuates, it has never been worth nothing. In fact, some would say that its price never changes, rather the price of other assets change in relation to gold, which is the oldest and most reliable store of value.
Indeed, if we take a look at the Down Jones Industrial Average priced in terms of ounces of gold (rather than in terms of rapidly devaluing US Dollars) we can see the boom and bust cycle becomes immediately apparent.
At the height of the 1929 bubble, it would have cost 17.28 ounces of gold to buy a share of each of the companies on the Dow Jones Industrial Average. An ounce of gold at that time would have set you back $20.67, meaning the value of the Dow was about $357 in 1929 dollars.
As of late July 2020, it would cost 14.62 ounces of gold to buy a share of each of the companies on the Dow. With gold trading at $1886 at the time of writing, this works out to a value of $27,573 in 2020 dollars.
This sounds like a great gain of 7623%, but let’s take another look. The value of the DJI actually dropped in relation to gold since 1929.
Rather than buying in 1929, you would have been better off holding onto your 17.28oz of gold, which in 2020 would allow you to buy 15% more of the Dow than nearly 100 years ago.
Of course, there have been two major peaks in the time since 1929. Following 15 years of steady prosperity, the Dow dropped sharply against gold in the years after Nixon’s removal of the dollar from the gold standard, and the stock markets reached all time highs in 1999, when it would have cost you almost 45 ounces of gold to buy the Dow.
If you can time the tops and bottoms of these cycles then great, you can wave to the rest of us from your yacht in the Caribbean. But if you’re looking for a hedge against inflation and stock market crashes, you can’t go wrong with owning gold, the most time-tested asset on the market.
A Gold Individual Retirement Account (IRA) is a type of retirement account in which you can hold precious metals (PMs), usually gold but also silver, platinum, and palladium.
This type of account is similar to a regular IRA, the difference being that instead of holding paper assets such as equities or bonds you hold physical bullion.
The Internal Revenue Service has a list of approved coins and bars that meet their standards and can be held in a Gold IRA.
The IRS also has strict requirements for the storage of the precious metals in an IRA.
The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.
This effectively rules out self-custody of assets, and mandates storage in a facility which includes security features such as 24/7 monitoring, motion detection systems, and timed-release and re-locking mechanisms.
While many gold investors are wary of another Executive Order 6102 and would prefer to have physical (or offshore) custody of their gold, a Gold IRA is targeted to individuals who want to maximize the tax benefits and convenience of working within the system.
The taxation laws that apply to IRAs allow for tax-free contributions, which will both lower your pre-tax income (potentially pushing you into a lower bracket) and allows your funds to compound over the years from a higher initial starting point.
Upon reaching retirement age (currently 59.5 years) you can begin to withdraw from your IRA. These withdrawals will be taxed as income, which makes an IRA a great investment option if you think your tax bracket at retirement will be lower than your current rate.
The IRS sets contribution limits for 2019 at $6,000 if under 50 years old and $7,000 if over 50 years. Self-employed investors can contribute up to $56,000 annually.
Withdrawals before retirement age will likely incur a 10% penalty.
Setting up a gold IRA is a straightforward process.
Research the different trustees and custodians that offer self-directed IRA accounts. Many will specialize in certain asset classes, such as stocks, bonds, Certificates of Deposit (CDs), annuities, and mutual funds.
Make sure that the provider you choose supports precious metal IRAs.
Fill out the application form. You will need your Social Security Number and an approved form of photo ID.
Next, you’ll need to fund the IRA with (fiat) money. This can be a one-off wire transfer, or a recurring payment scheme.
You can also transfer money from another IRA account.
Finally, you’ll need to purchase the gold that will be held in your IRA.
As self-directed individual retirement accounts are not subject to the same rules as managed funds, the burden of making sure that your investments are appropriate rests on you.
With these considerations in mind, let’s take a look at some of the best Gold IRA options currently on the market.
iTrust Capital is another option for investing in gold through a self-directed IRA.
iTrust Capital also supports a range of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), Ripple (XRP), and EOS (EOS), but in terms of precious metals the only supported asset is gold.
In a move that may appeal to blockchain enthusiasts, iTrust Capital issues and tracks ownership of gold on a distributed ledger. Gold purchased through an IRA with iTrust Capital’s partner SunWest Trust is secured by VaultChain.
Gold is stored at the Royal Canadian Mint. Purchasing gold through iTrust Capital represents legal ownership of the physical commodity and the right to claim delivery, not a derivative, security, futures contract or other financial instrument.
iTrust Capital’s $29.95 monthly account fee includes set-up of your IRA account at SunWest Trust, any contributions and/or rollovers, IRS and tax reporting, and unlimited storage of gold with institutional providers.
iTrust Capital requires a minimum initial investment of $1,000, and each trade must be over $30 in value.
JM Bullion has a great reputation among seasoned buys of PMs. What’s more, they also accept payment in BTC and ETH, and clearly specify which coins are eligible for IRAs. All orders are shipped free of charge, with insurance and tracking provided.
JM Bullion has partnered with New Direction IRA to offer gold and silver IRAs.
If setting up an IRA with New Direction, you’ll work with them to fund the account. Once your money is available, New Direction can send a Buy Direction Letter to JM Bullion, who can then go through the process of purchasing eligible gold to hold in your account.
The physical gold is then shipped to a depository of your choice, as long as it conforms to the IRS standards outlined above.
JM Bullion does not charge any supplemental fees or commissions, the price you see is the price you will pay.
New Direction charges a $30 account opening fee, in addition to a $95 flat fee for precious metal investments under $100,000 in value, and $145 for investments over that figure. The complete fee schedule is available here.
Equity Trust charges a $50 signup fee, and annual maintenance fees on a sliding scale from $205 for portfolios up to $14,999 and $2,050 for portfolios above $1MM.
GoldSilver also supports a number of other custodians, including New Direction - JM Bullion’s preferred partner.
Noble Gold is a proudly Texas-based gold dealer and IRA provider. In addition to gold and silver IRAs, Noble Gold offers investors the opportunity to invest in four digital assets: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP).
Noble Gold charges an annual fee of $80, or $150 if you opt to store your gold at one of their facilities in Texas or Delaware, where it will be held in segregated storage (i.e. not in the same pile as other investors’ gold).
Regal Assets: target=”_blank” } has been around since 2009 and offers their own precious metal and crypto IRAs.
Regal Assets offers a range of coins, from the classic American Eagles and Buffaloes to more exotic options like the Chinese Panda and South African Krugerrand.
There is a flat $250 account fee regardless of portfolio size, though this fee will be waived in the first year of investment.
You must invest at least $5,000 to qualify for the company’s lowest tier offering: the Merchant package.
Many of the gold dealers and IRA providers we went through above have very similar offerings. This is due to the high level of regulation the IRS imposes on Gold IRAs, and ensures that the minimum standard is high.
It comes down to picking the option that best suits your needs. If you want to be able to pay for your gold with Bitcoin or Ether, then JM Bullion would be a great choice. If you want to invest in digital assets inside an IRA, iTrust Capital, Regal Assets, and Noble Gold have got you covered.