Understanding the Mechanisms of Gold IRAs

As part of retirement planning, diversifying investments is of the utmost importance. A physical Gold IRA provides an ideal solution for anyone interested in adding precious metals such as gold to their retirement portfolio - unlike typical IRAs that feature stocks and bonds as investments only - an allowing individual to own actual physical gold instead. We will detail here how a physical Gold IRA works as well as any considerations you should bear in mind before opening one yourself.

What Is a Physical Gold IRA?

A physical Gold Individual Retirement Account (IRA) is a type of self-directed IRA which allows account holders to invest directly in physical gold rather than paper assets such as stocks or bonds, providing protection from inflation, currency devaluation and economic instabilities. Physical Gold IRAs must adhere to specific regulations set in place - some products cannot be included into a physical Gold IRA portfolio.

Establish a Physical Gold IRA

  • Selecting a Custodian: Since IRS rules prevent individuals from keeping physical gold held within an IRA in their physical possession, you will require selecting an approved custodian such as a bank, credit union, trust company or brokerage firm to set up and administer your account. A typical example would include banks, credit unions trust companies or brokerage firms as approved providers for asset custody services.

  • Fund the Account: When opening a physical Gold IRA, funding it either by rolling over existing retirement savings such as from an inherited 401(k), or making cash contributions can be done either way.

  • Select Your Gold: Once your account has been funded, the next step should be selecting which gold products you would like in it. According to IRS law, only certain forms of gold (American Gold Eagle coins and bullion bars) may be included such as American Eagle coins.

  • Storage: When purchasing physical gold to add to an IRA, its storage must take place at an approved depository to meet IRS standards for safety and security.

Advantages of a Physical Gold IRA

For decades now, gold has served as an inert store of value that often correlates negatively to dollar performance, providing it an effective hedge against inflation.

  • Diversification: By including gold in your retirement portfolio, diversification increases, and risk decreases significantly.

  • Tax Benefits: Like traditional IRAs, physical Gold IRAs provide tax advantages as they allow contributions to be tax deductible while growth occurs tax deferred.

Considerations and Risks

  • Volatility: While gold can be an attractive investment option, its value could fluctuate substantially at times - therefore you must prepare yourself to expect this to happen when purchasing this precious asset.

  • Storage Fees: Physical Gold IRAs typically involve additional costs such as storage and insurance expenses that could erode your investment over time.

  • Liquidity: Gold can generally be considered a liquid asset; however, selling and accessing funds from an actual Gold IRA might take more time and patience to sell and access than stock or bond investments.

  • Regulations and Restrictions: Some investors find the stringent regulations regarding what kinds of gold may be included and stored cumbersome.


Physical Gold IRAs can make an excellent addition to a well-diversified retirement portfolio, but like any investment it's essential that the benefits and risks are carefully evaluated before deciding about them. Consulting with an advisor familiar with precious metal investments is invaluable when trying to make informed choices regarding whether physical Gold IRAs are appropriate options.