Pros & Cons of Having a Gold IRA

If you are looking for a way to beef up your retirement portfolio, putting physical gold into your IRA may be something that you are considering. There are quite a few benefits associated with doing so, but you might also be wondering about the potential pitfall of keeping physical gold in your IRA.

As with any investment, it is important to always weigh the pros and cons. You may not have even realized that keeping physical gold in your IRA was possible, but it is.

You just need to know how to go about it properly. Continue reading to learn about a few of the more notable pros and cons of investing in Gold IRA’s.

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5 Pros of Investing in Gold IRA’s

There are actually quite a few advantages that can be found with investing in gold inside your IRA. Here are five that are most commonly cited by financial planners.

Portfolio Diversification

Any financial advisor will tell you that is important to diversify your investments. This is particularly when you are planning for retirement. You need your money to last you for a number of years after you start earning a regular income.

When you put gold in your IRA, you will be adding to the overall diversification of your portfolio. The percentage that you allocate should consistently go up over a number of years.

Gold has historically been one of the more stable investments, so your IRA should perform quite well as a result.

A Type of Insurance

The gold in your IRA can act as a type of insurance. While other forms of investments, such as stocks and bonds, may perform quite well, the underlying fundamentals associated with them could crash at any time.

However, gold has been a standard currency around the world for centuries.

With physical gold in your IRA, you have the security of knowing that you have physical assets that you can draw upon should the need arise. This is a type of insurance that you really should not be without.

Once you reach retirement age, it will be easy to start reaping the dividends of your gold investments.

Gold Gives you Control

With many of the investments in your IRA, you have relatively little control over them. You do not run the companies and you do not set the interest rates. With a mutual fund, you put your faith in a manager that determines where your money will be invested. 

However, a self-directed IRA allows you to become in control.

When you have physical gold in your possession, only you can decide what you are going to do with it. You will not be waiting on someone else to decide for you. This is really one of the few investments in the world that give you this type of control.

You also determine when and how much you will sell when the time finally comes.

Potential Returns

You obviously want to have positive returns with any investment that is in your IRA. Physical gold has enormous growth potential. It is unbelievable to consider how much gold has gone in price over the years.

While there will be peaks and valleys to be sure, the overall growth rate for gold is something that you can literally take to the bank.

When the market is in turmoil, gold actually tends to perform quite well. If you have many years left before retirement, you will notice quite an increase in the price of the gold that you put in your IRA. That is the goal.

Tax Advantages

This is probably the most talked about advantage of putting gold in your IRA. If invested correctly, the gains made by gold in your IRA bring your many tax benefits during retirement. 

Even before that point, the cash that you spend on the gold can be taken as a deduction on your current taxes in many cases. Distributions during retirement will be taxed at a marginal rate.

3 Cons of Investing in Gold IRA’s

As with any investment, there are some downsides that you will want to consider. You will just need to weigh these against some of the pros already mentioned to determine if investing in gold inside your IRA is advantageous to you.

Here are three cons to consider.

Not a Liquid Investment

When you put gold into a self-directed IRA, it needs to stay put until retirement. After all, that is the goal of an investment in your retirement. This means that you will be unable to cash in on extreme fluctuations in the value of your gold should they occur.

You will also need to resist the temptation to sell when you need some money, as doing so will bring a hefty tax penalty.

The Type of Gold is Limited

You are limited in terms of the type of physical gold that can be put in your IRA. The IRS has some pretty strict guidelines about what is allowed. When it comes to gold, you need to make the coins, bars, or rounds that you buy are a minimum of .995 fineness. 

There is one exception and that is made for Gold American Eagle Bullion Coins that have a fineness of .9167.

Must Use a Self-Directed IRA

You cannot put gold you already have in your IRA. You must open a self-directed IRA and then purchase physical gold through a registered trustee. The trustee will then record the purchase and make sure that all of the proper forms are attached.

Physical gold cannot be invested in any other type of IRA that you might have. For some, this might seem like a limitation, but it is quite easy to open up a self-directed IRA on your own.

This is also how you can gain control over your retirement investments and assets.


Now that you know about some of the advantages and disadvantages associated with putting gold in your IRA, you can make a more informed decision about how to proceed.

Remember that a diversified portfolio is what you should always be aiming for. If you do that, then you should set up well when it comes to enjoying your retirement years.

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