Understanding the Risks of Investing in a Precious Metals IRA

Understanding the Risks of Investing in a Precious Metals IRA

Understanding the Risks of Investing in a Precious Metals IRA

June 15, 2023 214 view(s)

Retirement planning is a balancing act. Diversifying assets is key to sustainably growing wealth and creating your dream portfolio. As a safe-haven asset class, precious metals investments, like gold, silver, platinum, and palladium, can help cushion other securities held in your portfolio during times of market turbulence. 

But did you know you can hold these metals in a tax-advantaged precious metals IRA? This guide will cover the risks of investing in a precious metals IRA so you can plan with fiscal confidence. 

Introduction to Precious Metals IRAs 

Precious metals IRAs are a type of specialized self-directed retirement account intended for holding precious metals assets. Self-directed IRAs allow investors to select the assets they want to leverage to maximize their return on investment. 

Sometimes called a “Gold IRA,” investors can hold physical bullion coins or bars in the account instead of paper assets. However, the account holder cannot hold just any old type of gold in their account. The precious metal must meet the purity and condition thresholds the IRA sets to ensure the asset's value. 


What is an IRA? 

An IRA , an individual retirement account, is a common way for people to save money for retirement. Any income earned is eligible to be put into an IRA and will grow annually. The best part is that any growth in this account is untaxed. You can invest in two main types of IRA accounts: a Traditional IRA and a Roth IRA. The main factor when determining which one you’d like to use will be whether or not you want your income taxed now or when you retire.

Traditional IRA

You will put money from your annual income in a Traditional IRA account. This can help you when filing your taxes in the year you contribute, but it will mean you will pay taxes on that money when you withdraw it. 


Roth IRA

This type of IRA is funded through money that has already been taxed. This means that you won't receive any tax breaks now, but when you withdraw the money during retirement, it will be tax-free. 

Get Our Free IRA/401(k) Investor's Guide

Get Our Free
Investor's Guide

Different Types of Precious Metal Investments 

Once upon a time, precious metals IRAs were limited to holding gold and silver American Eagles. Today, thanks to the 1997 Taxpayer Relief Act, the kinds of precious metals assets investors can hold in their retirement account has expanded. 

That means IRS-permitted gold, silver, platinum, and palladium bullion bars, bullion coins, proof coins, and rounds can be held in the account to appreciate in value. It’s also possible to hold precious metals in various denominations, from one-tenth to one-quarter to full-ounce bullion coins. 

These are the criteria set forth by the IRS for purity:

  • Gold: 99.5% pure

  • Silver: 99.9% pure

  • Platinum: 99.95% pure

  • Palladium: 99.95% pure

  1. 1 oz Silver Liberty Freedom Rounds
    1 oz Silver Liberty Freedom Rounds
    As low as $29.10

Any bars, rounds, or coins must be produced by an accredited refiner, assayer, or manufactured to ensure minimum fineness requirements are met. Proof coins must be kept in their original protective slab issued by the Mint, in pristine condition, and offer a certificate of authenticity. Alternatively, non-proof bullion coins must be in brilliant uncirculated condition and devoid of any apparent damage like scratches, dings, or structural defects.

Finally, these are the weight specifications for bullion bars:

  • Gold: up to 400 ounces 

  • Silver: up to 1000 ounces 

  • Platinum: up to 50 ounces 

  • Palladium: up to 100 ounces 

For smaller bullion bars, exact weight specifications must be upheld by the manufacturer for the asset to qualify according to IRA measurement standards. 

Benefits and Risks of Investing in a Precious Metals IRA   


There are several benefits when it comes to investing in a precious metals IRA. For one, you can have ownership of a tangible asset. Owning gold or silver could present a higher chance of high returns compared to capital assets like stocks, bonds, or mutual funds. Precious metals also offer a way to broaden your portfolio and build wealth.

A precious metals IRA has the same tax advantages as a traditional IRA. No capital gains taxes are owed on your precious metals investments held within the account. You can even sell your bullion bars or coins as long as the proceeds from profits are still kept within the account. Lastly, depending on the account type, your precious metals IRA can qualify for a tax deduction (Traditional IRA), or you can make tax-free withdrawals in retirement (Roth IRA).  


There are a few downsides for investors to consider when investing in a precious metals IRA. Brokers and robo-advisors cannot support you in holding precious metals in an IRA. This is because the physical asset will need to be stored and secured by a third party with the help of a custodian. Precious metals investments intended for an IRA cannot be stored at home. This is to prevent prohibited transactions like self-dealing which could result in penalties from the IRS. It also keeps your investment safe from theft, plus it keeps it insured. 

There are also certain costs associated with a precious metals IRA you’ll want to be aware of. Make sure you choose a custodian with lower, transparent fee structures to maximize the value of the assets held in your account. Compare transaction fees, admin fees, annual fees, wiring fees, and storage fees before choosing your custodian. 

Finally, you’ll want to ensure you don’t exceed the contribution limit for your account. If you hold multiple IRA accounts, the overall total of your assets cannot exceed $6,500 or $7,500 if you are 50 or older and eligible to make catch-up contributions. Otherwise, excess contributions can result in an IRS penalty. 

How to Choose the Right Type of Precious Metal Investments for Your Portfolio  

Considering your buying power is an important step in choosing the right type of precious metal investment for your portfolio. Bullion bars and coins come in a variety of denominations and levels of affordability. Just make sure the price of your purchased asset falls within the range of your IRA contribution limit. 

Outlining your investment goals should also be part of your selection process. It is recommended that investors allot 5% to 15% of their portfolio to precious metals assets due to their long-term store of value and ability to act as a hedge against inflation. 

You may also want to think about diversifying within the asset class through different types of gold or silver investments, especially when it comes to selling the investment later. Smaller bars or coins can be more liquid, while larger precious metals assets can be purchased at more valuable premiums. 

Similarly, diversifying between different precious metals assets can benefit portfolio growth. Gold, silver, platinum, and palladium have different uses that determine their intrinsic value in the market. Holding more than one type of precious metal in your retirement account can help offset volatility through risk management.

Free gold and silver investment kit

Get Our Free
Investor's Guide

The U.S. Gold Bureau — Your Trusted Precious Metals Dealer

The U.S. Gold Bureau offers a variety of precious metals investments you can use to build your dream portfolio. Our precious metals experts are well-equipped to assist you throughout all stages of the precious metals acquisition process. They’ll help make sure your investment type meets the standards set forth by the IRS. As a reputable dealership, we can ensure the origin, authenticity, purity, and quality of every product we offer.

Call us at (800) 775-3504 for a best-price quote, or reach out to us through our live chat to find out how you can prepare for financial freedom in retirement through precious metals investments.