For someone new to the world of gold investing, figuring out what companies that specialize in Gold IRAs “do” exactly can be challenging at best. After all, why can’t you just buy and hold all the gold that you want on your own? Why do you need a third party to do this for you, in the first place?
The short answer is that gold investment companies let you take advantage of precious metals investing through a special IRA the government allows so you can enjoy serious tax benefits.
Read Why Should You Get a Gold IRA? – Advantages and Risks.
Without a knowledgeable guide through all the regulations and red tape superimposed into the industry, it is easy to get into serious trouble with your taxes. Making investing in gold more of a liability than an asset.
So, let’s go into all the ways that a good Gold Company can help you do just that.
What Do Gold Investment Companies Do?
This might be a better question than what they are. What can they do for you? It varies a little with each broker, but there are three things that most of them will do for you.
- They’ll help you establish your gold IRA.
- They make arrangements for buying the physical metals for your account.
- They will also set you up with a custodian and depository to store your metals.
Setting Up a Gold IRA
You might already be familiar with IRAs from other investments you’ve done. Gold IRAs, also known as precious metal IRAs, still offer you the same tax advantages. You can often do a tax-free rollover of other IRAs or even 401(k) and 403(b) accounts into a gold IRA and then enjoy tax-free or tax-advantaged withdrawals when the time is right.
Gold investment companies exist to facilitate all of this. The difference between these and normal IRAs is that instead of holding money or paper-based assets, such as stocks and bonds, a gold IRA holds physical metals. They’re an alternative investment class, but they can be worth including in your portfolio.
Gold is a great hedge against inflation, and silver does some of that, too. Precious metals don’t lose value as stocks and bonds do during recessions, bear markets, or times of economic crisis. You can use this to preserve wealth and weather the storm.
Buying Your Precious Metals
The IRS has very picky requirements about the specific precious metals you can invest in and can’t invest in. You can buy anything you want if you spend your own money outside of a gold IRA, but inside a self-directed account, there are specific limitations. Many collectibles and rarities are not allowed, and what is allowed must usually meet certain minimum fineness requirements.
The lists are pretty extensive and can be hard to keep up with. A gold investment company knows all the ins and outs, however, so they know what you can buy and can even help you decide what to get. Once they know, they’ll make arrangements to buy the specific products you want and in the quantities that you want them.
I will warn you that IRS requirements might not be the only stipulations that you face. While a gold IRA can technically include gold, silver, palladium, and platinum products, not every gold investment company deals in all four metals. As explained in Golden Queen’s blog (https://www.goldenqueen.com/best-gold-ira-investment-companies/) only do gold and silver, and that might curtail your investment options.
Choosing a Custodian
The IRS really frowns upon gold IRA investors storing their own metals, coins, and bullion at home or privately. There’s just too much risk and so many things that can go wrong. For the most part, I’d advise you to just plan on using a depository.
Most brokers will have established relationships with certain depositories. Most of these storage vaults are in the United States and operated by very reputable companies. You will likely face annual storage fees as part of your account.
The biggest decision you might have to make is choosing segregated storage versus non-segregated. Segregated storage costs a little more when it’s available, but it means your pile of precious metals is stored separately from everyone else’s. Non-segregated storage is still highly organized and cheaper, but everyone’s metals are in the same room.
You should note that not all depositories offer both options. Also, some will be segregated only. Others might only do non-segregated storage.
While You’re a Client
During the time that your account is active, your gold investment company may have varying levels of commitment to you. Some will just make sure you stay informed about the status and value of your metals. That might even include a webcam link where you can see your pile visually at any time day or night.
The good ones will keep up customer service levels while you have an account active with them. Given the retirement-investment nature of a gold IRA, that might be years or even decades. Many gold IRAs are funded using rollovers from previous tax-advantaged retirement plans.
The great ones will engage you with serious educational resources you can use during the span of your account. You’ll learn all there is to know about precious metals and investing with them. You’ll even be kept up-to-date on what is going on with the industry at large.
When It’s Over
You might want to leave your gold IRA in place forever. If you don’t need the money and it’s growing in value, why not? I’m afraid the answer to that is how the IRS has RMD rules in place.
RMD stands for required minimum distributions. Once you get old enough, you have to start drawing off of the assets. You don’t have to spend them, but you can’t leave them in the tax shelter.
You can take physical possession of your metals if you want at this time. However, your gold investment company might offer to buy them back for cash. That helps you liquidate them.
Read What Is An IRA? (And How Does It Work?).
Key Takeaways
What do gold investment companies do? They let you take advantage of the tax benefits of a gold IRA account. They help you set it up, pick your metals, buy them for you, store them for you, keep you informed, and then help you liquidate when it’s time to take withdrawals.
