Gold Investing 101: How to Invest in a Gold IRA in 2019

by admin | October 26, 2018 4:01 pm

There’s a lot of talk about gold these days. Gold futures gained 3.8% in August following four monthly increases of 2.5% in July, 2.6% in June, 0.6% in May, and 1.4% in April. For the year to date, gold is 14.8% higher.

It’s true that there’s never been a better time to invest in gold than now. But many investors are not aware of the various options available for investing in gold. Holdings in precious metals such as gold, silver or platinum are considered to be capital assets, and therefore capital gains may apply. When it comes to tax purposes, the IRS classifies precious metals as collectibles, and thus they may potentially be taxed at the maximum collectible capital gains rate of 28 percent.

The first step in trying to determine whether or not a tax liability exists when selling gold is to determine your cost basis, or original cost of the metals. Using the example above, the cost basis would be $1,000 per ounce X 50 ounces which equals $50,000. Now, if an investor elected to sell those metals which they purchased for $50,000 at current gold price levels, then he or she would see a gain of $300 per ounce X 50 ounces. This would equate to a total gain of $15,000 and taxes would be due on this amount.

“A long-term investor could choose to open a gold IRA to shelter taxes until retirement,” explains Anthony Allen Anderson, VP of Sales and Marketing at GSI Exchange, which recently published a Precious Metals IRA Guide[1] to help educate investors.

With continued uncertainty concerning future monetary policy at The Federal Reserve, stagnant growth prospects in the U.S. and Europe, ongoing questions about President Trump’s economic policy, the threat of a government shutdown, a more aggressive posture with Russia, heightened risk of conflict with Korea and other reasons for concern about the global economy, Gold is seen as the most secure investment one can make during today’s unpredictable times. Let’s talk a little about what a gold IRA is and discuss how you can invest in gold in this way.

What is a Gold IRA?

A gold IRA or precious metals IRA is an Individual Retirement Account in which physical gold or other approved precious metals are held in custody for the benefit of the IRA account owner. It functions the same as a regular IRA, only instead of holding paper assets, it holds physical bullion coins or bars.

Gold can be a secure investment even if the value of the American dollar falls in the future. No one knows how stable the monetary system will be in the future.

As recommended by many of the top personal finance blogs[2], just like you can invest money in the stock market, a 401k or an individual IRA, the same can be done with Gold stocks and investments as well.

All the Gold in California

There are two primary ways to store assets in a Precious Metals IRA. A Vaulted Storage IRA allows an investor to store precious metals in a depository through an IRA Custodian. You can also consider a Physical Possession IRA, where an investor can create a Limited Liability Company (LLC), open a bank account for the LLC, and then register with a depository. After completing these steps, an investor can purchase, take delivery and store precious metals privately.

Is a Gold IRA Legal?

Self-Directed IRA’s were recognized as fully legal in the 1996 case of Swanson vs. Commissioner, 106 T.C.76 (1996), when the Tax Court rejected a challenge by the Internal Revenue Service giving its approval of a new IRA structure. The Physical Possession IRA plan, whether a Gold IRA or Silver IRA, is a type of Self Directed IRA that, once in place, is much easier to invest through than traditional custodial accounts. This means that individual investors will have more control over their retirement assets.

To learn more, you can visit GSI Exchange and ask to open a Physical Possession IRA Plan to get started. There is a $395 fee to set up a Gold IRA on your own, and they can help you determine which plan is best for you. From then on, it’s up to you to manage and handle your account.

Nothing Glitters Like Gold

A Gold IRA is an attractive investment option for anyone who is concerned about what the future might hold for the U.S. economy[3] or the stock market. It allows ordinary people (rather than Wall Street) to take control of their own money and financial future.

Endnotes:
  1. Precious Metals IRA Guide: https://gsiexchange.com/precious-metals-ira/
  2. many of the top personal finance blogs: https://blogging.org/blog/top-personal-finance-blogs/
  3. concerned about what the future might hold for the U.S. economy: https://www.usnews.com/news/the-report/articles/2017-08-25/trump-threats-could-shake-up-the-us-economy

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