Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Should You Own Precious Metals in a Retirement / Pensions Account?

Commodities / Pensions & Retirement Sep 27, 2007 - 12:03 PM GMT

By: Mike_Clark

Commodities In recent years, a growing number of countries have permitted their citizens to establish personal retirement accounts and allow them to choose the investments they may hold, including precious metals. But should an investor include a precious metals component in his or her long-term investment plan? And if so, how does one decide which precious metal investment product to own for retirement purposes?


Introduction

In the mid 1970s, the United States Congress enacted the Employee Retirement Income Security Act (ERISA), which among other things, created the Individual Retirement Account (IRA) for American workers. The purpose of the IRA was to enable individual Americans to save for retirement on their own in special tax-deferred, personal investment accounts available through commercial financial institutions, and allow workers who changed jobs to preserve their employer-sponsored retirement plan assets by permitting them to transfer (or “roll-over”) their plan balances into IRAs.

Over the past several decades, the IRA and other so-called “self-directed” personal retirement plans, such as the 401k, have grown immensely popular among American workers, as they've been modified to include greater flexibility and expanded investment choices. In 1986, for example, the U.S. Tax Code was amended to allow IRAs to hold American Eagle Gold and Silver bullion coins, in addition to equities, fixed income, real estate investment trusts (REITS) and money market investments. These options were broadened further in 1997, when Congress also authorized the inclusion of investment grade gold, silver, platinum, and palladium bullion bars and coins in IRAs. More recently, other countries have followed suit. For example, Canada created the Registered Retirement Savings Plan (RRSP) several years back, and England recently established the Self-Invested Personal Pension (SIPP) as personal retirement savings vehicles for their respective investing citizens. Each of these plans permits precious metals investments, as well.

Precious Metals As Retirement Assets

There are many advantages to including a precious metals component within one's retirement investment portfolio. For example, because precious metals are negatively correlated to “traditional” investments like stocks and bonds -- that is, their market prices tend to move opposite those of stocks and bonds --, studies have shown that portfolios having modest amounts of precious metals exposure will experience less overall volatility and greater long term returns than will those same portfolios without the precious metals included. Also, owning precious metal investments can further diversify one's retirement holdings by adding a tangible asset that, unlike stocks and bonds, has inherent (i.e., innate ) value.

And another important consideration, particularly in light of the seven-year precious metals bull market we are currently experiencing – the gold price has increased on average more than 15% annually over the past seven years -- is the fact that while one may pay income taxes on withdrawals from the account once retired, the market gains made on precious metals investments held in a retirement plan are exempt from capital gains taxes. The value of this provision is further highlighted when one considers the fact that in America, gains of precious metals, including ETF's, held outside of an IRA are taxed at the 28% “collectable” rate, as compared to the normal capital gains rate of 15%. This feature can result in enormous savings and add considerable value to one's retirement investments over the life of the plan, especially under current market conditions. Note the strong price performance of gold, silver and platinum since 2001 in the charts that appear below.

 

Some Basics…

Once an investor decides to include a precious metals component within his or her individual retirement account, a decision as to how to make that investment – that is, which metal invest in and what vehicle to buy -- must be made. And to be sure, the choices are many. But before considering the alternatives in detail, let's review some basic guidelines concerning precious metals investing for IRAs…

In the U.S. , an IRA investor may currently invest $4,000 of his or her pre-tax income if under the age of 50, and $5,000 if age 50 or over, each year. Moreover, balances from corporately sponsored 401k or other retirement plans can be transferred into a personal IRA under certain circumstances, and as a result, the IRA may contain considerable asset value.

As with all investment portfolios, it is generally prudent for the investor to diversify the holdings in his/her retirement account. Accordingly, the retirement investor may include a precious metals component by acquiring precious metals mining stocks or mutual funds, Exchange Traded Funds (ETFs), investment grade gold, silver, platinum or palladium bullion bars and coins, or other instruments, such as the Perth Mint Precious Metals Certificate.

As with all IRA investments, precious metals investments of any kind must actually be bought for cash from the retirement account by a qualified IRA trustee -- investors cannot deposit precious metals they may already own into an IRA account -- and held by a qualified custodian, which may also be the IRA account trustee. In the case of physical precious metals, the investor can designate not only what product(s) the trustee should purchase for his/her IRA account, but also specify the precious metals dealer or broker from which the trustee should acquire them.

Also, it is important to note that taking personal delivery of physical precious metals made as an IRA investment is prohibited; doing so is considered an “early withdrawal” from the retirement account by the Internal Revenue Service, and will result in penalties and taxes being assessed.

Which Is The Best Investment Alternative?

Regarding the appropriate precious metals vehicle to own for retirement savings, the IRA investor should understand that, as is the case with all investments, each choice will have its own particular advantages and shortcomings. The investor needs to decide the vehicle most appropriate for his or her retirement account based on his/her personal knowledge, comfort level and risk tolerance associated with each alternative.

The table below briefly highlights just some of the primary features and more significant disadvantages of each of these choices.

Investment Product Advantages Disadvantages
Stocks / Mutual Funds 1. Companies Owned Are Professionally Managed. 2. May Pay Dividends. 3. Easily Traded. 4. Prices Widely Quoted. •  Not Direct Ownership of Precious Metals. •  Management, Currency and Geo-Political Risk. •  Greater Price Volatility than with Bullion.
Exchange Traded Funds (ETFs) 1. Market Value Tracks Precious Metal Price Directly. 2. Easily Traded. 3. Prices Widely Quoted. •  Not Direct Ownership of Precious Metals. •  Relatively High Transaction Costs. •  No Dividend Yield. 4. Available For Gold and Silver Only
Physical Bullion Bars / Coins •  Direct Ownership Of Actual Precious Metals. 2. Tangible & Inherently Valuable. 3. Prices Widely Quoted 1. Cannot View / Inspect Holdings. 2. Storage Fees May Be Charged. 3. No Dividend Yield
Perth Mint Certificate 1. Easily Traded and Liquid. •  Government Guaranteed & Insured. •  Low Acquisition Costs / No Manufacturing Premiums. •  Offers Both Allocated (Direct Ownership) and Unallocated Accounts. •  Stored by AAA-rated Offshore Institution. 6. Gold, Silver and Platinum Investments Offered. 1. No Dividend Yield.

 

Perhaps the preferred choice for most retirement investors may be the Perth Mint Certificate Programme, as it is among the safest and most flexible of all alternatives. The Perth Mint was established in 1899, is government owned, is insured by Lloyds of London and has a AAA credit rating from Standard and Poor's. However, please note, the table above lists but a few of the factors individuals should consider when making a long term investment in precious metals. While a precious metals component clearly has a place in most every retirement portfolio, retirement investors should ensure all of their questions and concerns relating to these investments are satisfactorily and completely answered.


Epilogue

How to Invest in PM's in an IRA
Establishing a Gold-Silver IRA account is very straightforward and it can be done with Sterling Trust Company. Sterling Trust Company is one of the largest independent self-directed retirement custodians in the U.S. and administers accounts for individuals and businesses in all 50 states. Sterling Trust is regulated by federal and state agencies who oversee regulatory compliance of directed trustees and custodians.

Setting up a self-directed IRA with  Sterling Trust Company  is quite easy. First, call or email Gold Investments and request an IRA packet, which will be emailed or mailed immediately. (If you are interested in a Roth IRA, ask for a Roth IRA packet.)

Three simple steps are involved in setting up a gold-silver IRA with the Sterling Trust Company :

  1. Submitting completed paperwork to Sterling Trust Company
  2. Wiring funds to Sterling Trust Company
  3. Directing Gold Investments which precious metals or PMCP product to buy
The procedure is similar in the UK , Ireland and other jurisdictions. To learn more about adding precious metals to your retirement portfolio (be it an IRA, SIPP or other plan), readers should feel free to contact Gold & Silver Investments Limited for a free consultation.

 

By Mike Clark

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold Investments
Tower 42, Level 7
25 Old Broad Street
London
EC2N 1HN
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@goldinvestments.org
Web www.goldinvestments.org
.

Michael B. Clark is a consultant to Gold and Silver Investments Limited, www.goldandsilverinvestments.com , Ireland's Asset Diversification and Wealth Preservation Specialist. He is the President of Solidus Associates, LLC of Wilmington, Delaware, and has served in the precious metals industry for 25 years. He oversaw Deak-Perera's Precious Metals Certificate Program, America's largest precious metals investment program, in the early 1980s. Later he became Vice President of Precious Metals at Wilmington Trust Company, and President of both Delaware Depository Service Company and First State Depository Company. He obtained licenses for Wilmington Trust and DDSC to operate as Nymex and Comex depositories.

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in