Gold IRAs – The Pros and Cons

For most people, the best way to secure retirement is by investing in precious metals. A Gold IRA is an individual investment where you get to own and invest in gold, silver, platinum, and palladium.

With this kind of investment, an investor can secure a diverse retirement investment portfolio that hinders the risk of their investment losing value because of economic uncertainty. An IRA retirement investment is likely to increase or maintain its value year after year since precious metals are mostly averse to inflation.

While IRAs are some of the best retirement investment options available today, Gold IRAs are not recommended for all individuals. If you are interested in investing for retirement, it is vital to learn the pros and cons of Gold IRAs before buying any precious metals.

Advantages of Investing in Gold IRAs

Control over your future finances

The most significant benefit of Gold IRA investment is the authority it gives the investor over their future financial standing. With a Gold IRA, you can sleep better at night, knowing your future is secured. Your investment in precious metals is stable and should grow over time, meaning that you are saving adequately for the economy you will retire into.

When you invest your retirement income in a Gold IRA, you do not have to worry about your savings losing value over the years. Gold has repeatedly proven an ideal investment option for anyone looking to avoid losing money to inflation.

For instance, the value of an ounce of gold worth $20 bought 100 years ago has continued to increase. In 2021, the same piece of gold is worth more than $1800; therefore, it has retained its value over the century.

If you invest in a gold IRA, you need to keep it with a depository company authorized to store gold in the USA. This can be in the form of a safe deposit box or a collective storage service offered by an approved institution.

If you want to experience the benefits of investing in gold but are unsure how to go about setting up an IRA, working with a Gold IRA administrator is the best thing to do. They will purchase the precious metals from the dealer on your behalf and deposit them with a regulated depository for safekeeping.

Non-correlated assets

If you go to a financial advisor, you will find that they most likely recommend keeping retirement assets in stocks, bonds, or mutual funds, depending on the asset classes. While this may seem like an ideal option, it only gives your retirement portfolio access to a limited number of correlated asset classes.

Gold and other precious metals are uncorrelated assets, meaning their value does not change with stocks or bonds. It will give your retirement portfolio a powerful hedge against common asset classes, as while stocks and bonds can deplete in value in a quick bad market swing, it is highly unlikely that gold will depreciate.

Tax compliance

Investing in a Gold IRA will give you access to special tax treatment like any other IRA. The contribution you make to an IRA account is tax-deductible. Any gains from your Gold IRA are not taxed as long as the gains remain within your account.

When you own precious metals, you own a tax-efficient investment. When you decide to sell your investment, it is registered as a collectible at 28% tax.

Safe disaster insurance

Gold IRAs protect your future finances from a wide range of unprecedented geopolitical and financial dangers, including market uncertainties, stratospheric government debt levels, political instability, inflation, and economic collapse. When you might have lost money on your other investments, your precious metals should still be worth at least the price you bought them for.

The Disadvantages of Investing in Gold IRAs

Access restrictions

One of the things you will quickly learn when you start investing in Gold IRAs is that you are expected to deposit your investment with a depository. This means that you do not have direct access to your investment, only a contract that shows that you hold precious metals in a depository.

Some depositories allow appointments to view your investments, and this option is ideal for anyone interested in knowing where their gold is held. However, this comes at a fee, which may be unaffordable for some.

Funding restrictions

Once you own precious metals, you cannot transfer them. It is also against Gold IRA regulations to purchase precious metals without a broker and deposit them in the IRA. All transactions need to go through a custodian for it to be legal.

Long-term investment only

If you are investing in gold to make a profit in the short term, it is best to consider investing in ETFs instead of buying and keeping a Gold IRA account. IRA accounts are expensive to set up and even more expensive to maintain, making them unsuitable for short-term investors. The fees associated with buying and selling gold are too high for anyone to profit from moving it soon after buying.

No yields, dividends, or interest

Most people imagine that investing in Gold IRAs is a quick way of earning dividends or interest, as with other asset classes like stocks and shares. Yet, physically held gold does not incur interest, dividends, or yields. The only chance to profit from your gold investment is from an increase in value between the time you invest and the time you want to sell.

For this reason, Gold IRAs are ideal retirement investments as it gives you time to invest over the years while the value increases. Investing in a Gold IRA only pays off after a long time.

Word of caution

Since Gold IRA depositories rarely give investors access to their assets, it is highly advisable to ensure you invest with accredited IRA depositories. This will ensure your investment is protected from bankruptcy or security breaches.

Credited Gold IRA depository institutions in the U.S. include:

  • HSBC Bank USA
  • Delaware Depository
  • Brinks Security
  • Scotia Mocatta
  • JPMorgan Chase Bank North America
  • CNT Depository

Whether a Gold IRA is right for you or not probably comes down to how long you plan on holding on to your investment. If you’re looking to make money quickly, a Gold IRA is not the best way to go due to the costs involved in setting one up and the lack of fluctuation in the price of precious metals.

However, if you are looking to protect or grow your money in the long term, a Gold IRA is a great option if you want to invest in something stable. You can receive tax benefits and have peace of mind knowing that your precious metals should always be of value to you, creating a great retirement fund for when you need it.


We discuss the best allocation strategies for precious metals and how to save thousands of dollars in fees in our must read Gold IRA guide.

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