Should We Really Put Gold in an IRA?

Source: Thinkstock

Source: Thinkstock

“Gold is one of the dumbest things to put in your IRA,” said the slick TV commentator with his $200 haircut, perfect white teeth, and superior attitude. “Everyone knows income-producing vehicles are best for an IRA.” I tried to ignore the prepackaged message from someone who sounded like he hadn’t given any more thought to the topic than what he’d read somewhere. His advice was misleading and incomplete, and I wondered how many viewers might weaken their portfolios by acting on his sound bite.

On one hand, he’s right: the tax-advantaged nature of an IRA makes income generating assets ideal, especially when you factor in compounding. Gold generates no income. Yet, there’s another drawback to putting gold in an IRA — one the slick TV journalist probably never even thought of. You lose confidentiality. Gold is one of the last assets in modern society that still offers this advantage, and you’d have to give it up if you stick it in an IRA.

So, on a cursory level, one might nod along with the empty suit on TV and conclude that gold should be excluded from a retirement account. But these concerns are only reasons not to hold all your precious metals in an IRA, or have your retirement account be comprised entirely of gold. Indeed, the reasons to put some gold in an IRA have grown — in fact, it might be a major strategic mistake not to have a gold IRA.

A Gold IRA Is a Strategic Portfolio Move

There are solid, core reasons why every investor should have some gold in an IRA. See which of these factors apply to you.

Your IRA is one of your biggest — or only — investment accounts. If an IRA is where most of your investment funds are housed, it may be your only chance to add physical metal to your portfolio.

You want to diversify into a non-financial asset. Think about it: if your retirement account consists of just stocks and bonds, then all of your IRA investments are in paper assets. In today’s world, that’s the pinnacle of risk.

Tax-advantaged growth. As with any asset, gains can compound tax-deferred inside an IRA (or tax-free in a Roth.) The additional advantage with precious metals is that you can shift the allocation and not trigger a taxable event; for example, if you wanted to lighten up on gold to buy some silver.

Retirement inflation hedge. To have no inflation hedge in a retirement portfolio seems especially shortsighted in today’s monetary environment. Remember, regardless of what the “profit” column shows on your statement each year, those gains have to be adjusted for inflation; you’re eventually going to spend some of that money, after all. A dividend mutual fund yielding 2 percent, for example, nets you nothing after accounting for the current rate of inflation. The further away you are from withdrawing the funds, the longer inflation is eating away at your account value. The answer is to utilize one of the best inflation hedges known to man.

If you share our concern about the consequences of global fiscal and monetary excesses, holding some physical precious metals inside a retirement vehicle is a prudent move. The Hard Assets Alliance provides that service. As you’ll see below, the Hard Assets Alliance just opened the door to international storage for IRA holders.

But first, why should we use the Hard Assets Alliance and not one of the other programs you might see advertised? Well, for the same reason, we no longer start our cars with a crankshaft.