Gold IRA Pros and Cons

Last Updated on February 12, 2023 by George

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You’re most concerned with conserving money in the early stages of your investing. If you want to expand your portfolio as much as possible in the future, you should always prioritize investing in growth assets. But when your fortune grows, you’ll need a strategy to safeguard it.

It takes several years and decades to save for retirement. Along the process, recessions occur, inflation can depreciate your assets, and the potential for a stock market crash may cause you to worry about your portfolio’s values.

You can protect the value of your portfolio by diversifying it into specific asset types.

A gold IRA combines tax benefits with the asset protection provided by precious metals. Investing in one could provide your portfolio with a beneficial anchor should the market decline just before you retire.

However, there could also be drawbacks, so you should know the advantages and disadvantages.

Before we get started:

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A precious metal IRA is another name for a gold IRA. You can put money into these tax-advantaged investment vehicles, known as IRAs, to buy actual metals.

In addition to receiving the same tax benefits as standard IRAs, this self-directed IRA allows you to invest in gold.

In turbulent economies or market downturns, gold has a historical tendency to increase in value. Depending on your gold IRA broker, you can also invest in silver, platinum, and palladium.

These metals all offer advantages compared to those of gold investment.

How Does this Work?

A common way to start a gold IRA is via a rollover from another retirement account. The money invested in 401(k), IRA, and other similar plans is already tax-advantaged, and you can maintain that status by transferring those monies into a gold investment.

Selecting a broker to set up your account is the first thing you need to do. After you do that, they handle most of the administrative tasks and paperwork required to open your account and transfer your funds.

This can be accomplished without paying fines or taxes.

Once the gold IRA is funded, you can select the precious metals you want to purchase, such as coins and bars. They are later transported to a repository, and they are kept there securely for the duration of the account.

There are Rules you Should be Aware of

Every IRA account is subject to restrictions and guidelines. This also applies to gold IRAs. Collectibles cannot be invested in, and there are yearly contribution caps ($6,000 in 2022; $7,000 for those over 50).

Payouts can only be made at 59 1/2; you must begin doing so by 72. According to the IRS, each account must also be managed by an authorized custodian and kept with a depository.

Why Invest Gold in Your IRA?

Individual Retirement Accounts (IRAs) safeguard your retirement and your family’s financial stability.

You can save money in these particular tax-sheltered accounts for future usage.

To have a secure and worry-free retirement, it is crucial to invest a sizeable amount of these long-term accounts in stable and strong assets.

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Cash in an IRA is possible, but it depreciates quickly, and inflation is out of control.

There is no better asset for this than gold because it is dependable, holds its value over time, and even grows in value.

Uncertainty is at an all-time high as the global economy struggles due to lockdowns, shortages, conflicts, and inflation, and investors are defending themselves by putting physical gold in IRAs.

These economic crises, which have a negative impact on the majority of other assets, benefit investments in gold.

Risk is not taking action to safeguard yourself and your family against economic threats despite being aware of them.

Safety means understanding the risks to your financial future and taking steps to safeguard it. With a Gold IRA, this is simple to do.

Pros & Cons


You can gain many benefits by putting some of your investment money into a gold IRA, such as the following.

  • Diversify Your Portfolio

    Investment capital and resources should be spread among a variety of asset classes. Precious metals are an utterly independent asset class from stocks and bonds, which can be viewed as one enormous asset class.
    Precious metals frequently move in different cycles and directions than assets based on paper, which is advantageous in this situation. By diversifying among various asset classes, you should ensure that at least one portion of your portfolio is expanding while another portion may be shrinking.
    You can transfer profits from assets experiencing an upswing into those experiencing a decline with routine rebalancing. By doing this, you’ll be well-positioned to profit from any asset class when its subsequent growth cycle arrives.

  • Benefit From Long-Term Holds

    A long-term investment is a gold IRA. That should, however, mean that you can gain from the long-term growth that precious metals have historically exhibited.
    Gold’s value has increased over the past 50 years, despite some ups and downs, arguably more so than the stock market. Over time, other precious metals also exhibit growth potential.
    Over the past ten years, silver has grown by double digits more frequently than gold.
    Additionally, the prices of palladium and platinum have a history of rising. This trend will likely continue as long as supply chains periodically experience disruptions due to industrial demands.

  • Protection From Inflation

    For two generations, inflation wasn’t a significant issue, but in recent times, it has come to the attention of many people again. When prices rise but spending power and value of fiat paper currency decline, this occurs.
    If you had $1,000 in the bank at the beginning of the year and had the same amount at the end, your money could have been more valuable. During times of inflation, precious metals are highly valued.
    As solid and tangible assets, their worth is less likely to vanish suddenly than it might with a stock or a currency. Since gold and silver have long been in high demand, they are going nowhere.

  • Hedge Against Instability

    In addition to inflation, precious metals also act as a buffer against instability when things get choppy on a social level. Many investors turn to gold and silver as safe havens for their money, whether due to market ups and downs or political unrest.
    It is well known that this phenomenon occurs in numerous nations worldwide. When it happens, it signals a sharp increase in demand for gold.
    Instead of holding cash reserves, stocks, or bonds that could quickly lose a lot of value in a market meltdown, investors would prefer to store it and keep their portfolio value until things calm down.
    The Great Recession served as unequivocal evidence for this idea.

  • Total Investment Control

    A mutual fund manager makes the investment choices on your behalf when you invest in one. When you invest in an index fund, you are automatically duplicating an index, and employer-sponsored retirement plans may provide you with few options.
    With a precious metals IRA, you maintain complete control. You get to determine how much money you wish to invest and how it will be split amongst gold, silver, platinum, and palladium.
    You can also select the amount you want to invest in a particular coin or piece of bullion. In many situations, you can choose your custodians and storage vaults.

  • Tax Advantages

    With one significant exception, gold IRAs are essentially standard IRAs with the ability to hold actual gold. With almost all gold IRA brokers, you can build a gold IRA that doesn’t tax any capital gains or asset development inside the account.
    Many will also permit you to open a Roth IRA, where you utilize after-tax income but pay no taxes on withdrawing the funds as long as they are kept for five years or longer. Pre-tax income can be used to contribute to a precious metal IRA.
    Alternatively, you can open the account by rolling over funds from an earlier retirement tax shelter. This covers TSP accounts, IRAs, Roths, SEP and SIMPLE IRAs, 401(k) and 403(b) plans, and Roths.


As you can see, precious metal IRAs have a lot of potential benefits, but only some investors are a good fit for them. Think about these potential drawbacks.

  • Restricted Fund Access

    You can always access your savings and sell any stocks or bonds you possess that aren’t part of a tax shelter to get cash.
    You can borrow money from many 401(k) plans to pay for things like college expenses, home payments, or even emergency medical expenses.
    Money that has been invested in a gold IRA cannot be removed. Taxes and penalties may also be added if an early withdrawal is made, usually before 59 1/2. This is not a wise choice for “rainy day” savings or unexpected living costs.

  • Liquidation Process May be Slow

    You could not receive a cheque in the mail or a direct deposit into your bank account when making a withdrawal or a required distribution.
    This is because your investments are in precious metals, which is what you may obtain if you take anything out. The gold IRA broker, custodian, and storage facility will ship your actual metals to you.
    Although some investors prefer it, doing so does make you personally accountable for the security of the precious metals. They are tough to insure and document at total value if you store them at home.
    Many brokers provide buyback choices at the close of an account, but the options and values offered might differ from what you want.

  • No Home Storage

    Once a withdrawal is made, you may store your precious metals at home, but you are not permitted to do so while the gold IRA is still in operation.
    This can be disappointing if you’re used to doing this with precious metals you’ve purchased outside of an IRA tax shelter. However, the IRS only forbids it.
    Only a precious metals IRA broker can create a gold IRA. A trained custodian will arrange for your bars, coins, and other assets to be housed in an IRS-approved storage facility.
    Although these are safe facilities, mistakes, accidents, and losses are known to occur; nonetheless, insurance can lessen your risk.

  • Not a Forever Plan

    A gold IRA, like a 401(k) or standard IRA, is intended to be an investment vehicle for retirement. You can invest in one of these plans for a while, although there may be contribution limits.
    It would be best if you started making the required minimum distributions as soon as you reach the required age, and these must be completed by your early 70s and are referred to as RMDs. Whether you want to do them or not, they are required.
    Although you can always store your precious metals on your own, neither the IRA tax shelter nor the security of a depository is available.

  • Not For Every Investor

    Any investment carries some risk. Given how much its value has increased since the early 1970s, gold appears to be a secure investment, but it is also incredibly unpredictable. Precious metals can be downright sluggish during prosperous economic times.
    Short-term volatility can be highly unsettling, and keeping the big picture in mind can be challenging. When precious metals perform the best, the remainder of your portfolio may experience extreme volatility.

  • Paying to Play

    Before opening an account for you, many gold IRA brokers have minimum investment requirements that you must meet. Many seek $10,000, $25,000, or even $50,000, while a select handful merely needs a few thousand bucks.
    Because of this, gold IRAs are sometimes only a choice for wealthy people.
    There are additional costs and levies to cover. Although some may be exempt, you must pay upfront setup fees and annual account maintenance and storage fees.
    This occurs with a class of investments that cannot generate dividend income. Investors, however, don’t buy gold for dividends; instead, they do so as a form of insurance against inflation, market volatility, and government spending.

Final Thoughts – Gold IRA Pros and Cons

That is a personal choice, just like any other. Although there are compelling reasons to invest in a precious metal IRA for retirement, there are also significant drawbacks and hazards that may prevent you from doing so.

Closer to retirement, doing a rollover from 401(k) earnings could maintain their value, but timing and exact numbers might be challenging.

If you haven’t already, seeking the advice of a financial counselor or retirement planner is always a bright idea. They can advise whether opening a gold IRA is a wise option and even how much you should deposit.

However, the choice is ultimately yours to make.

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