In the realm of financial planning, gold-backed IRAs shine as a viable option for those wanting to diversify their retirement savings. As a tangible asset with a history of preserving value, gold offers what many see as a unique hedge against inflation and economic downturns. However, venturing into the golden world of IRAs backed by precious metals requires careful navigation. At 7k Metals, we believe in empowering our customers with knowledge to make informed decisions, including whether to have a gold-backed IRA. Here are seven essential considerations and questions to guide the start of that journey.
Seven Questions Regarding Gold-backed IRAs
Is a gold-backed IRA right for you?
In the United States, gold-backed IRAs are just self-directed Individual Retirement Accounts (IRAs) where you’ve directed your IRA custodian to purchase and hold physical gold and other precious metals on your behalf. These special accounts offer diversification, can be a hedge against inflation, and include the potential for growth for those with a long-term horizon and a moderate risk tolerance. However, it’s crucial to weigh the benefits against the costs and potential risks. Because circumstances vary, it’s important that you consult your own financial advisor to make sure your decisions align with your overall financial strategy and retirement goals.
For young people with discretionary income and time on their side, a gold-backed IRA may make sense as a part of a broader financial strategy. History demonstrates that precious metals can offer stability and inflation protection over the long term. However, if you have a short-term horizon or anticipate needing liquidity in the near future, a precious metals-backed IRA might not be the best option. This is especially true for older people nearing retirement, who may not have time to realize the long-term benefits of the IRA. Remember that it takes time before the liquidation value of your precious metals IRA grows to exceed the original price you paid, plus any carrying costs (e.g., shipping, taxes, custodial, and storage fees). Additionally, the price and demand for precious metals can be volatile and depend on many factors that are simply outside your control, such as market, economic, and political conditions. Ask your own financial advisor about the benefits and risks of owning precious metals in an IRA.
What can be included in a gold-backed IRA?
A gold-backed IRA allows you to include gold or other precious metals in your retirement savings portfolio. Unlike traditional IRAs funded with stocks and bonds, these specialty accounts hold physical gold and silver, providing a comforting sense of security to those wary of market volatility.
Not all gold meets the criteria for IRA inclusion. IRS standards require minimum purity and specific forms. For example, gold coins or bars must be at least 99.5% pure. 7k and its preferred gold-backed IRA provider offer IRA-eligible gold and other precious metals that meet IRS standards.
How are the precious metals stored?
When it comes to the storage of precious metals, safety and security are paramount. Regardless of who you choose to handle your gold-backed IRA, ask about storage facilities and ensure they are IRS-approved. Segregated storage, while sometimes more costly, offers the peace of mind that your gold is individually allocated and not commingled. And while 7k Metals doesn’t recommend or endorse specific depositories, our preferred gold-backed IRA provider uses third-party IRS-approved depositories in Nevada, Massachusetts, Idaho, North Dakota, Delaware, and several international locations. A full list can be found here.
What are the costs involved?
Understanding the IRA fee structure is essential. When considering a gold-backed IRA, always ask about initial setup fees, commissions, annual storage fees, and any hidden charges. It is also imperative to understand the pricing of the metal you will be purchasing to back your new IRA. Transparency in costs is a hallmark of a trustworthy precious metals company. While 7k Metals is not an IRA custodian, we want to make sure that our Members are fully informed and always treated fairly. We are proud to have an unwavering commitment to the highest ethical standards and ensure that our preferred IRA vendors share our values for the well-being of our community. This includes full transparency and education regarding gold-backed IRAs.
How is the gold or silver purchased?
Regardless of where someone sets up their gold-backed IRA, the process of funding the IRA account should be straightforward and transparent. There should be no surprises or ambiguity in the process. At 7k Metals, our members set up their gold-backed IRAs through New Direction Trust Company (NDTCO), a well-established, third-party organization known for its transparency, education tools, and investment technology solutions. Funding a gold-backed IRA is done in one of three ways: (1) Transfers, (2) Rollovers, or (3) Contributions. Details regarding these three funding options can be found here. Once a 7k Metals member sets up an IRA through NDTCO, they can buy metal from any vendor, but 7k is there with competitive pricing on IRA-eligible silver and gold.
7k makes a small margin on the metal sold to IRA custodians, including NDTCO, but 7k and its Associates receive no commission or kickback from NDTCO or any other IRA custodian buying from 7k Metals.
How do I know if the company is ethical?
In a sector as nuanced as precious metals, ethical practices become the gold standard (pardon the pun) that sets reputable organizations apart from the rest. This is especially true in an economic environment where the demand for precious metals is growing, resulting in a surge in businesses promoting gold-backed IRAs. You’ve probably seen the late-night commercials, radio ads, and telemarketing schemes using fear to sell silver and gold with no mention of hidden fees. When in doubt, it’s wise to partner with a company that prioritizes transparency, integrity, and customer education above everything else. 7k Metals emphasizes these values, distinguishing itself from many other companies that have been the subject of criticism for shady business practices, ensuring our practices are transparent and focused on the best interests of our clients.
Why use 7k Metals to fund your gold-backed IRA?
At 7k Metals, we go beyond merely facilitating gold-backed IRAs. Unlike other players in the precious metals world, whose commission structures drive them to aggressively push gold-backed IRAs, 7k Metals takes a measured and tailored approach for our customers. Selling precious metals for IRAs is just one of a variety of services and benefits available to our community. In addition to offering physical bullion, 7k specializes in low mintage, modern collectible coins, jewelry, a retail discount program, travel perqs, and other benefits and opportunities, including a way to generate supplemental income. For example, many customers have no interest in buying gold for their IRA and are more interested in numismatic coin collecting with 7k’s unique and low-mintage collectible coins. No matter what your interest, 7k is happy to help shepherd you through the process seamlessly and successfully.
A gold-backed IRA offers a compelling option for those looking to diversify their retirement savings. By asking the right questions and prioritizing ethical considerations, you can navigate the precious metals path with confidence, including navigating the path of gold-backed IRAs. Don’t be afraid to ask questions. Every question is a good question. There’s no replacement for your own financial advisor, but at 7k Metals, we’re here to help you in your journey, offering clarity, transparency, and a steadfast commitment to your peace of mind and financial well-being.