A gold IRA is a type of alternative individual retirement account designed for individuals who want to hold precious metals like gold in their retirement accounts. The physical gold is not held in an account at a physical location you can check on, but is instead held and managed by your gold IRA’s custodian. As you purchase and sell gold within your IRA and the value of your gold changes, the balance of your IRA changes.
How Does A Gold IRA Work?
A gold IRA allows you to buy, sell and hold gold within a tax-advantaged individual retirement account. You open a gold IRA with the company of your choice who works with a custodian that manages the storing and tracking of your physical gold, for a fee. You never handle the physical gold yourself in order to remain in compliance with IRS regulations.
Gold IRA Custodians
The custodian of your gold IRA is who actually physically holds and manages your gold. There are many custodians in the industry, but not every gold IRA provider lets you choose your own.
Even the gold IRA companies that allow you to pick your own custodian strongly encourage you to go with their preferred partner.
Gold IRA companies charge relatively low fees in part because they receive commissions from the custodian they work with. This can create a perverse incentive for companies to work with custodians on the basis of who pays them the most, not who is the best option for you.
How To Choose a Gold IRA Company
- Evaluate custodian options. You have the right to choose your own custodian, so we discourage you from choosing a gold IRA company that doesn’t allow you at least a few custodian options.
- Assess fees. Each custodian charges their own fees, which are most often hidden and can add up to significant annual cost. The best way to know which gold IRA company and which custodian charges the lowest fees is not by looking at their rate tables but by looking at the price per ounce across multiple companies compared to the COMEX price of gold.
- Determine markup price. This requires a bit more legwork on your part, but it is worth it. For someone investing $50,000 in their gold IRA, picking the company with the cheapest markup would get them 26 ounces of gold, while picking the company with the highest markup would get them only 20 ounces of gold, based on pricing at the time of writing.
How Do I Open A Gold IRA Account?
- Choose a company to work with after evaluating the custodian options, fees and terms.
- Open an account with that company.
- Fund the account, bearing in mind minimum initial purchase and account minimum requirements.
Pro Tip
Investing in a gold IRA is not an optimal choice for your retirement security. They charge hidden fees that will eat away at any gains you do have. While most investors think of gold as a safe and secure investment, gold can be quite volatile. Consult with a fiduciary financial advisor to see what investments are best for your risk tolerance level.
