A Look at the Precious Metals IRA

The precious metals IRA presents you with a unique alternative to the traditional IRA. Most investors spend most of their time investing in stocks, bonds and mutual funds. However, by investing in precious metals, you could take advantage of a different financial market. Here are the basics of the precious metals IRA and why it may be helpful to you.

Precious Metal IRA Basics

In order to understand how this type of account could help you, you need to understand the basics of the IRA first. An IRA is a retirement account that allows you to contribute money on a tax-free basis. The returns that you make through investing are then allowed to grow tax free as well. Then when you reach the age of 59 1/2, you can start to withdraw the money, and at that time, you will pay taxes on it. 

Most IRA investment firms believe that you should comprise a portfolio of standard investments. They fill the IRA with a lot of stocks and mutual funds. Every now and then, they might throw in some CDs or bonds as well. However, with the precious metals IRA, you can invest in a completely different part of the financial markets. By investing in gold and silver, you can provide yourself some unique advantages that you cannot get from a traditional IRA. 

Benefits of the Precious Metals IRA

  • Low correlation--One of the great things about precious metals is that they offer a low correlation to other types of investments. When you invest in stocks, your stock value will be affected by other stocks' values in the industry and the stock market as a whole. However, gold and silver make their own value. When the stock market goes down, it may not affect the precious metals market at all. Having an investment with low correlation allows you to profit even when the economy is down. 
  • Constant value--Another advantage of investing in a precious metals IRA is that you can feel confident that your investment will always have some sort of value. It is a universal currency, and every culture appreciates precious metals to a degree. There is basically no chance that the value of gold or silver will ever go to zero. When you invest in stocks, bonds or mutual funds, this is not the case. When you own stock in a particular company, you could have nothing tomorrow if the company goes bankrupt.

Other Considerations

While the precious metals IRA presents some unique benefits, you also have to be careful with this type of investment. Some scam companies claim to sell precious metals. When you allow someone else to store precious metals for you, as opposed to buying and holding the actual metals yourself, you never really know if they are there or not. You need to do a lot of research about the company that you plan on working with to make sure that they have a sterling reputation in the industry. 

Since you are dealing with a physical asset, there is a risk of theft. As compared to other investments that can be registered with a third party, such as stocks and bonds, this represents a higher risk for you. 

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