Gold IRA Rollover – All You Need to Know

What is a gold IRA?

A gold IRA is an individual retirement account, an account that functions the same way as a regular IRA account however, instead of holding paper assets, it holds physical bullion coins or bars.

Gold IRA History

After the financial crisis in 2008, which brought a recession, investors became interested in gold IRAs. The reason for that was the significant drop in the stock market and real estate, that took place between the years 2007 and 2009. Those two years, the stock market lost 50% of its value and that loss was reflected in people’s retirement portfolios. Although, there was significant losses in almost any type of investment, the price of gold moved the opposite direction reaching record highs, as all other precious metals did. (silver, platinum, palladium)

Reasons for You to Invest in Gold IRAs

gold storage

1-Diversification. There is no doubt that IRAs are suited for portfolio diversification in case, economic and world news cause another drop in the stock market.

2-Protects your investment from inflation. Gold is a hedge against inflation. During the years of the highest inflation after world war 2 (1946, 1974, 1975, 1979, 1980) the average real return of the Dow Jones Industrial Average was -13,33% compared to 130,5% for gold.

3-Gold is a tangible asset. Traditional investing is putting money in the stock market, buying certificates of deposit, or buying bonds. These are not tangible assets. In fact, it could take time for you to convert these investments into cash. For example, if you invest in CDs or bonds you may have to wait for a number of years before you receive a return. If you want to terminate your CDs investment and wish to withdraw early, you might have to pay a penalty. This is not the case with gold or silver as you can convert your coins or bars into cash immediately, as the demand for precious metals is constant.

4-Increasing demand for gold and silver industrial use. Both precious metals have a growing demand for industrial use. In particular, they are used in smartphones, computers, medicine, and nanotechnology. And if we consider the massive precious metals demand for jewelry, only then we get the full picture.

5-Gold is not a claim on someone else’s liability. Gold has never lost its value for mismanagement, corruption, theft, war, etc. Stocks have. Also, there has never been and never be a haircut to gold as its been happening with debts and savings.

6-Geopolitical uncertainty. Geopolitical tensions are growing, the Middle East is still in turmoil. Syria and Iran are under Russian control, with the United States having lost their credibility. Hong Kong tensions never stop, Brexit deal, and North Korea continues to upset its unruly behaviour.

7-The US China and the US EU trade war. Although it seems as the Chinese and the Americans are coming to their senses and trying to close a new trade deal, the Americans and the Europeans are now just about to start a new trade war themselves.

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What is a Rollover IRA

A rollover IRA is an account that allows you to shift funds from your former employer sponsored retirement plan, (401k) or other type of retirement account.

Rollover IRA Benefits

1-A rollover IRA will keep your retirement dollars safe from taxes, when the process is done properly.

2-A rollover IRA can provide a wider range of investment choices that may meet your goals and reduce risk.

3-Gold IRAs tend to have low fees compared, to some 401k plans which have high administrative fees. Although, these high fees are not enough to make contributing to the fund a bad deal but, if you can get a better deal by paying lower fees, then it makes sense to switch from a 401k account, to an IRA account.

4-As you switch from one job to another, over the course of your career, then it makes sense to keep rolling over your plans to a single rollover IRA account.

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Gold IRA Rollover vs Gold IRA Transfer

There is a large difference between a rollover transfer and a rollover. According to the IRS, there is a clear distinction between the two. A rollover is when the money being moved is paid directly to you and then you deposit the money in the account that you want. A transfer, is when the custodian transfers the money directly to the new custodian. In this case, you never see the money.

I personally recommend the IRA transfer. It is easy, you will not have to worry about a thing and the possibility of getting penalized by the IRS is zero.

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How to Initiate an IRA Account

To initiate a gold IRA account is simple. First, you need to find a custodian. It is important to have a custodian because, it is illegal to hold the gold yourself. The custodian’s task will be, to hold the gold you invest via your IRA. If you have trouble finding a custodian, you can ask your bank for a reference, or your trust company, or even your credit union. You also have to do your own research, to make sure he has a long history of solid gold performing IRAs.

The next step is to find a precious metal broker, who will actually sell you the gold. In most cases, the custodian will be able to provide you with a list of brokers. After you find the suitable broker, then you will have to open your new account and buy your precious metals. That’s all.

When the time arrives for you to retire, you can choose either to accumulate the precious metals or, to liquidate them into cash. The IRS will tax either task as an allocation as it always does. Remember, two things are certain in life, death and taxes.

Gold IRA Rollover and Gold IRA Transfer Rules

If you decide to go ahead with an IRA rollover, then you will have 60 days to deposit the money to the custodian. Failing to keep that deadline, the money will become a taxable withdrawal and you will have to pay the 10% early withdrawal penalty.

If you decide to go ahead with an IRA transfer, you will not have to worry about the 60-day rule. The money will be wired directly from the old custodian, to the new. This is the best way to invest in gold through your IRA because, the process will take part in the background, without you having to worry about a thing.

What Percentage of my Portfolio Should I Rollover to my Gold IRA

A serious investor never puts all eggs into one basket. For example, you do not want all your savings invested in stocks, bonds, real estate etc. During the 2008 crisis the stock market dropped 50% and real estate suffered heavy losses. On the other side, gold stood its ground and reached record highs.

Nowadays, traditional forms of investment can bring the investors high profits and heavy losses too. A down to earth investor, should have a percentage of his savings placed in non correlated assets. Gold and precious metals, are non correlated assets. Non correlated assets are the assets whose value goes up, when mainstream assets value drops. Gold and other precious metals, always performed better in times of crisis and investors include them into their portfolios for security reasons.

Most investors invest in gold between 5% and 10% of their savings. However, some investors are aggressive and place into gold a larger percentage of their savings.

The money you wish to invest in your gold IRA is your own personal decision. All you need to do is to set your priorities. Are you happy with your IRAs returns? Is your IRA exposed to stock market instability? Are you happy with the way the economy is going? What about the dollar’s value, will it rise or fall? Do you believe gold has the potential to reach $6000 per troy ounce?

If you want to diversify your portfolio with a non correlated asset, then investing 5% to 10% of your savings to gold, will be more than enough.

If you are not happy with the way the economy is going, the accumulating debt and the performance of the dollar, then you could invest a 10% to 20% to gold.

Furthermore, if you happen to believe all the above and that golds price is going to explode, then you could invest a 20% to 30% into gold.

It is not advisable to the investor to hold a portfolio completely made out of gold.

When times are favorable for one particular asset, then it is prudent for the investor to increase the percentage of its investment on that particular asset. For example, if times favor stocks, then the investor should place an extra 5% or 10% percent into stocks. If the market is bullish towards gold, then it would be a good idea for the investor to increase the percentage of his investment into gold.

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Is There a Safe Investment?

recession

There is no safe investment whatsoever. Over the years, there has never been an investment whose value moved upwards and only upwards, year after year. Although, all types of investments have their good and bad moments, in the long run the investor ends with a substantial amount of profit.

There are high risk investments, medium risk investments and low risk investments. High risk investments most of the time have high returns and low risk investments have rather low profit margins but, low risk investments give you a high level of security.

Gold is considered to be a low risk investment because, of its ability to do well when times are bad. In the next chart, you will see why gold is an important asset in a crisis situation.

Black Monday1987 Iraq-Kuwait War1990 Dot Com Crash2001 Financial Crisis2008
Stock Market Decline -38.9 -22.5 -27% -34%
Gold Price Results +5% +7.5% +1% +5%
Gold Outperformed Stocks By Ratio 45:1 31:1 29:1 40:1

IRS Approved IRA Coins and Bullion

When it comes to investing in IRA coins or bullion, not all coins or bullion are approved. That’s because the IRS has placed strict purity rules and requirements. Therefore, all coins and bullion approved, are those who meet the strict IRA rules. The IRA approved gold, should have a purity grade of at least 0,995, for silver 0,999, for platinum 0,9995 and 0,9995 for palladium.

Gold IRA approved

  • 1-American gold eagle coins
  • 2-American gold buffalo coins
  • 3-Australian gold kangaroo nugget/coins
  • 4-Austrian gold philharmonic coins
  • 5-Canadian gold maple leaf coins
  • 6-Credit Suisse golden bars
  • 7-Johnson Matthey gold bar
  • 8-Valcambi gold combi bar

Silver IRA approved

  • 1-American silver eagle coins
  • 2-Australian kookabarra silver coins
  • 3-Austrian Philharmonic silver coin
  • 4-Canadian silver maple leaf coins
  • 5-Mexican silver libertad coins
  • 6-Johnson Matthey silver bar
  • 7-Royal Canadian silver bar

Platinum IRA approved

  • 1-American eagle platinum coins
  • 2-Australian koala platinum coins
  • 3-Canadian maple leaf platinum coins
  • 4-Isle of man noble coins

Palladium IRA approved

  • 1-Canadian palladium maple leaf coins
  • 2-Russian ballerina palladium coins
  • 3-Baird palladium bar
  • 4-Credit Suisse palladium bars

Shall I Include Other Precious Metals in my Gold IRA

Gold IRA is a term used to describe not just an IRA invested solidly in gold, but rather an IRA consisting of various precious metals. (Gold, Silver, Platinum, Palladium) Of course, there can be an IRA where gold is the only precious metal invested in and this is the usual case.

In a well-balanced gold IRA, the largest percentage of the investment is in gold usually 80% to 90%, with silver following with a 10% to 20% and platinum-palladium with a 5%. Silver, platinum and palladium, are volatile and higher risk precious metals than gold. When times favor gold, all other precious metals follow. During those times, they tend to have higher returns than gold therefore, it is sensible to for an investor to have a small percentage from his/her portfolio invested there.

It is also sensible for the investor to invest small in those volatile metals because, when they suffer losses, their losses are heavier than those of gold. We want to take advantage of the rise and maximize profits and at the same time to minimise losses.

Conclusion

Investing in a gold IRA is becoming increasingly popular for the modern investor, as gold can offer a number of benefits to the investor. Gold will actually act as a hedge to protect your lifetime savings during bad times.

If we also take into account the geopolitical instability around the world, the recession we expect in 2020, the overvalued stock market and the undervalued gold, now is the best time to invest in gold and other precious metals.

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10 comments on “Gold IRA Rollover – All You Need to Know

  1. I was thinking of investing a little bit of my savings into a gold IRA. I’m not nearing my retirement. But the thought that my old age will be a little secured, is quite reassuring. But all the terms and rules and regulations were scaring me a lot because I couldn’t understand most of it. And this article has given me a ray of hope. The author has explained everything so easily. All kinds of rules and conditions have been explained by the author along with some reliable and approved coins that have been listed. The best part, the procedure to initiate this has also been given. Very good read. 

    1. Thank you for the comment, you’re right, there is a number of rules and regulations placed by the government. The reason behind that is to safeguard investor’s savings. It is crucial for all of us to organize our retirement funds now, so we do not depent on welfare when we grow older.  

  2. Hello dear, thanks for sharing this information with us , I was actually doing some research online when I saw your post, I really fancy these post, I believe investing in a gold IRA is fantastic, thanks for the information, I will do something about my retirement fund when the pandemic is over, thanks for the info.

    1. Investing in a Gold IRA is the only way to know that when you retire, your savings will still be there waiting for you. This is not the case now, with most investors watching their retirement funds decimated due to stock market downturn. 

  3. Heloo Dear, a big thanks to you for sharing this educating article on gold ira rollover. The US China and the US EU trade war is really one important reason to invest in Gold IRA. Anyways I have been sourcing for informations on Gold IRA rollover for some time now, am really glad am seeing this article it contains all necessary informations I have been searching for. Thanks for sharing. 

    1. Geopolitical turmoil, financial turmoil, trade wars, even covid-19, they all feed gold and cause stock market downturns.

  4. Hello there. Thanks for this amazing piece, I really haven’t had much experience on gold IRA rollovers but it such is a nice move especially with the lockdown in most countries as a result of covid19. Gold IRA would be a nice way to store up investments that are immune to inflation and fluctuating market movements. I implore anyone interested in investing to consider this. 

    1. Gold has been around for thousands of years. Since then, gold was seen as a way to protect wealth and to store value. Every time investors face financial turmoil or geopolitical uncertainty, they always turn to gold to protect their wealth.

  5. Hey nice article you have there. I have heard little about Gold IRA  Rollover from a friend, having stumbled into this article, I now have a better perspective of it’s framework. It is indeed a retirement platform my dad’s will be pleased to know about in other to maintain the standard of living he has set due to a specific percentage of his salary that will be rollover. I will definitely do well to make some recommendations and refer him to this article for more clarity.

    1. Due to stock market’s downturn many investors have seen their retirement funds decimated. However, those who had the chance to invest in gold IRA’s have seen their retirement funds grow.  

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