By Doug Young

Gold Backed IRA

One of the aftermaths of the 2008 financial crash was that a lot of consumers in the United States faced the stark realization that the value of their pension funds had diminished considerably. Most were at a loss to know what to do and whether there was any remedial action that they could take.

In more recent times the alarming, increasing National Debt, the damage that the unforeseen pandemic did to the economy, the rise in inflation and interest rates, and the surge in geo-political tensions have made investors realize that they cannot take anything for granted anymore.

Throughout my many years of experience in the financial and precious metals fields I have consistently found that Investment brokers and IRA custodians have traditionally insisted that index linked funds are the safest forms of investment. Nowadays however I am seeing more and more evidence that regular people have discovered that this is not always the case.

It might be okay for commissioned brokers to take a traditional approach, but the average person needs his or her retirement plan to keep pace with inflation if they are going to make ends meet throughout their twilight years and enjoy the quality of life that they were anticipating.

This is where the idea of a Gold backed IRA has came into play.

Between 1933 and the mid-1970s gold could not be purchased by regular citizens as a form of investment. Two decades after this confiscation was lifted gold also became eligible as an IRA investment, even though few people were aware of this at the time. Thanks to the internet and many TV and radio commercials that has all changed. The news is everywhere these days that just about anyone can hold a gold backed IRA.

Everyday folk now know that owning gold can be a way of hedging and protecting their investments against inflation. While backing an IRA with gold entirely is not advisable, gold could be – and many experts now recommend that it should be – an important part of your investment portfolio.

In this scenario you buy real, physical gold which is retained in an IRS approved depository until you sell it and take your distribution. This gold is owned by you but you cannot touch it until taking your pension. Early withdrawals are subject to tax penalties.

Americans Searching For ‘Ways To Buy Gold’ is at an All Time High According to Google Trends! Here’s Why…


A Gold Backed IRA Enables You To Invest In Gold With No Money Down!

I regularly point out to ordinary, individual investors that one big advantage of a gold backed IRA is that it enables you to invest in gold even if you don’t have any surplus cash available. As long as you have an existing retirement fund you can use some or all of that to buy gold or other precious metals.

This is the way that many Americans have been able to add gold to their investment portfolios without having any out of pocket expense. They have been able to use funds that were otherwise locked away and unavailable to them and which in a lot of cases were performing poorly and not as well as they had anticipated.

The Benefits of a Self Directed IRA

One of the challenges that frustrates me immensely is that many IRA custodians will not work with clients who want to invest in non-traditional products, and gold falls into this category. If this is your experience and you still want to back your retirement with gold or other precious metals, the solution is to open a Self Directed IRA.

In this case your custodian is still there to report to the IRS, but you as the account holder are at liberty to decide what to buy. You can hold multiple IRA accounts as long as your contributions to all of them combined does not exceed the maximum annual allowance overall.

What Can Americans Put into Their Gold Backed IRAs?

A gold backed IRA is not limited to just gold as it can also contain other precious metals, namely silver, palladium, and platinum. There are restrictions, however, as to the forms that these items can take. Only 7 gold, 6 silver, 5 platinum, and 1 palladium products are eligible to comply with IRS regulations.

Those items include but are not limited to gold, platinum and silver American Eagles, gold, platinum, and silver Canadian Maple Leafs, Credit Suisse and Pamp Suisse gold bars, and the Silver Mexican Libertad. The reason for the restrictions is that gold coins and bars produced in some countries and in certain forms are not considered to be pure enough.

Other precious metals such as rare coins can be useful investments, but cannot be included as part of an IRA. They would be eligible for personal investments, they can be stored in a safe at home or a bank deposit box, and they are not subject to IRS reporting. Numismatic coins tend to be more appealing to someone who wants to be able to take immediate possession of his precious metals whenever he pleases.

Can a Gold Backed IRA Contain More Than Just Physical Precious Metals?

This is a question that I get asked a lot. The answer is Yes! Not only the physical metals themselves, but other precious metals related items can become part of a (Self Directed) gold backed IRA. These include shares in companies that mine for these metals and gold ETFs. Ironically, such investments can often rise and fall in opposition to actual precious metals.

There is also a host of items that can be included which traditional investors never normally consider such as livestock, certain real estate investments, and a number of different funds. They tend to be products off the beaten path.

You can also include your traditional types of investments in a gold backed IRA. So, as you can see the main difference between a Gold Backed IRA and a traditional Self Directed IRA is that you can include physical metals in it.

How to Open a Gold Backed IRA

I have found that a customer approaching a Gold backed IRA Company is normally in one of three situations:

  • He has already got a retirement plan but he wants to switch to an IRA
  • His IRA is not backed by gold and he wants to transfer
  • He has never opened an IRA before

For the person with a 401k or some other employment related account from a previous job, all he or she has to do is conduct a rollover. This entails cashing in the 401k and immediately using those funds to open a gold backed IRA with a custodian.

As long as this is done within 2 months (which is easily achievable – setting up a custodian, buying gold, having it deposited in an approved facility), there are no penalties from the IRS. Retirement funds are tax-deferred until you start to receive payouts and if you fail to meet the deadlines the IRS will think you are taking your distribution early.

In the next situation one IRA custodian will hand the reins over to a new custodian. These two professionals make arrangements; stocks, shares, or funds are sold to release money for the Gold IRA, and the new fund is set up. Again, there are no penalties.

The third situation is easy. Americans only have to research potential Gold IRA companies; trustees as they are often known.

In all three cases there is a set-up fee, but it is not astronomical. Custodians then take an annual fee in return for reporting to the IRS and any other services the customer requires (additional reporting, for example).

It is very important to understand the relevance of how different precious metals companies set their fees. If you don’t you could end up paying thousands of dollars more than you need to over time. I have explained more about that here: More information.

It is not necessary to move all monies into gold or to transfer all monies out of existing accounts.

The Reasons Why Top Analysts Are Bullish About The Prospects for Gold in 2024


Why are people choosing gold and other precious metals to back their retirement funds? For one thing, history shows that gold is stable when other markets and the US dollar are weak. This is the case universally, worldwide. Gold is not just useful to Americans alone as it is internationally recognized for its rarity and beauty.

If the dollar crashes, gold is still money. Then again, if the value of precious metals goes down, that is normally because the economy is recovering. Precious metals are best treated as a means of balancing or hedging an investment portfolio, not dominating it.

I have written about this in much more detail here: Why Invest In Gold?

Assessing Precious Metals IRA Companies

If you decide that investing IRA funds in gold is wise, you must then choose a company to work with. I have provided elsewhere on this site the following tips and information to assist you with your research and due diligence:

The Leading Gold IRA Companies Compared Side-By-Side

The Role of Gold and Precious Metals Traders

Some firms specialize in helping consumers arrange a Gold backed IRA. They sell the gold, but they are not custodians of it when their customers make a transaction. Associates within the firm will therefore suggest a company or companies that administer gold backed IRAs and other alternative investments. Once arrangements have been made for the customer’s previous custodian to hand over their account to the new custodian, the customer buys gold from the trader who then corresponds with the new custodian.

The advantage with this arrangement is that two organizations work together to do a lot of the work on the client’s behalf.

The Role of Precious Metals IRA Custodians

Clients open IRA funds with the help of a custodian. This is a legal requirement since consumers cannot administer their own pension funds. There are many regulations, particularly reporting to the IRS, which IRA custodians handle from their end.

A Gold backed IRA custodian is the same as any other custodian except for one thing: he is willing to take custody of an IRA backed by non-traditional funds. He does not sell precious metals but works with customers who prefer to invest in niche funds and stocks rather than selecting mainstream investments. Gold is considered to be an alternative investment.

Should I Work With a Gold IRA Company or a Custodian?

My 3 Best Gold IRA Companies

Gold IRA Company My Rating Best For Find Out More
Best Overall ZERO BBB and BCA Complaints Ever Website
Read My Review
#2 High Percentage of Satisfied Customers Website
Read My Review
#3 Best Gold IRA Newcomer Website
Read My Review

My Top Recommended Gold IRA Company in

I recommend Augusta Precious Metals because they are a ‘One Stop Shop’. They are a Gold Dealing Company who have a dedicated department for precious metals IRAs, staffed with experts who understand the precious metals market, retirement funds and all the associated IRS procedures and tax benefits.

They are a well established organization with an excellent reputation for first class customer service, excellent independent ratings and their staff will handle the entire gold backed IRA set up, rollover or transfer process on your behalf.

They are the only gold IRA company that have never received a single complaint ever at the Better Business Bureau (BBB) and Business Consumer Alliance (BCA).

>> What Makes Augusta Precious Metals Stand Out?

About the Author: Doug Young
Doug YoungDoug is a highly experienced professional and widely trusted authority in financial investing, commodity trading, and precious metals. With over 20 years of expertise, he helps others make informed decisions by sharing a combination of personal experience, extensive knowledge and meticulously researched information on gold IRAs, precious metals investing and retirement planning. He regularly writes news items on these topics. He has considerable experience of evaluating Gold IRA and Precious Metals Companies, gained over a period spanning more than a decade.

See full bio