Gold IRA Pros and Cons, With Sources

A gold IRA holds actual coins and bars, not a fund that tracks a price. Your statement lists what the account owns, and you choose the products, within the IRS rules.

Those rules come with built-in custody. The IRS treats most metals and coins as collectibles, but bullion of the required fineness is excluded as long as a bank or an approved non-bank trustee keeps physical possession of it; certain US-minted coins have their own exception. In practice that means a named depository. Augusta, for instance, uses Delaware Depository and states it up front. You pay for that storage, but you also get a third party whose records you can check against the dealer’s.

Putting metal in an IRA doesn’t turn it into a different kind of account. The SEC, NASAA and FINRA describe a self-directed IRA simply as an IRA held by a custodian that allows a wider range of assets, and the IRA types they list (traditional, Roth, SEP, SIMPLE) carry the tax benefits that make an IRA worth having. That is the main reason people use the structure rather than buying coins outright; how the rules apply to your own account is a question for a tax professional.

Moving existing savings in can be done without touching the money. The IRS describes a direct transfer between institutions, and separately a payment to you that has to be redeposited in an IRA within 60 days. Trustee-to-trustee transfers also sit outside the IRS limit of one IRA-to-IRA rollover in any 12-month period. Talk to a tax professional before you start; the right route depends on the account the money is coming from. The order of events is set out in a rollover walk-through at Gold IRA Companies Ranked.

The account fees are flat and public. Goldco’s FAQ says the fee is the same whether you hold $30,000 or $3 million. Equity Trust, the custodian that Goldco and Augusta both name, publishes $50 setup, $125 a year administration and $110 a year non-segregated storage. Augusta prints the same figures for its accounts: $285 in the first year, $235 a year after.

Some companies take part of that cost off the table. Augusta says qualifying accounts may receive up to ten years of eligible fees paid, though it doesn’t publish who qualifies. Birch Gold Group says it covers the first year’s fees for accounts over $50,000. Goldco puts a price match in writing: show it a competitor selling the same coin for less and it will match the price or send a 5-gram silver bar, an offer it says it may change or end. Augusta advertises a 24-hour window to cancel if you find a better offer.

The largest drawback is the simplest. Metal sits in a vault and earns nothing. The CFTC states that precious metals do not pay dividends, create earnings growth or compound, and that transaction costs, storage and insurance can mean the price must rise a long way before you break even.

The price itself moves around as much as other assets do, the CFTC adds. Metals don’t react to economic conditions the way stocks and bonds do, but the CFTC is explicit that this shouldn’t be confused with being low-risk. We make no forecast either way.

The flat fees are only part of the bill. Every coin is sold at a markup over the value of its metal, and that gap can dwarf the account fees: in one complaint the CFTC describes, commissions and fees came to nearly $150,000 on a $300,000 rollover. Neither Goldco nor Augusta publishes a markup range. The CFTC lists overpriced coins and excessive or hidden fees among the ways metal buyers lose money, and its advice is to insist on all costs in writing.

Product choice matters here. The CFTC says numismatic, or collector, coins typically carry higher markups than bullion. Promotions can tilt you toward them: Goldco’s free-silver offer applies to its premium coins. And fixed fees weigh more on a small account; at Goldco’s $25,000 minimum, the yearly charge is a bigger share than at $50,000. A detailed review of Goldco’s fees and complaints shows how one company’s costs add up in practice.

Selling a fund takes a click. Selling metal in an IRA means a buyback, usually by the dealer, processed through the custodian. Augusta says a buyback is not obligatory on either side, and Equity Trust charges $30 per liquidation and $250 to close an account. Goldco advertises a buyback program but doesn’t publish its conditions.

The SEC, NASAA and FINRA alert on self-directed IRAs points to limited liquidity as a risk in its own right: it can make assets hard to sell when you retire or when required minimum distributions come due. Collector coins, the CFTC adds, are much less liquid than bullion.

A self-directed IRA moves responsibility onto the account holder. The SEC, NASAA and FINRA alert says self-directed custodians don’t sell products, give advice, judge the legitimacy of an investment or verify the figures you’re given. The CFTC adds that retail coin dealers generally aren’t regulated by state or federal authorities, and that their salespeople typically aren’t qualified or legally allowed to give investment advice.

The entry point is high at the two companies that pay us. Goldco generally requires $25,000; Augusta’s standard minimum is $50,000. And the route in nearly always runs through a sales call. If you’d like to compare how dealers present themselves before any of that, this comparison collects several in one place; the warning signs regulators describe are in our gold IRA red flags.