Gold IRA vs. Physical Gold: Which Is Right For You?

For many reasons, gold is a popular investment product: it can diversify your portfolio and act as an inflation hedge. It can also mitigate risk.

However, buying physical gold is not the only way to invest. Investors are opening gold IRAs to supplement or replace their physical gold investments.

There are many benefits to investing in physical gold and gold IRAs. Understanding the differences can help you make better investment decisions. Continue reading to find out everything you need about investing in a IRA that holds gold versus physical gold.

What is a Gold IRA and how can it help you?

A gold IRA can be described as a type or individual retirement account. There are two types of IRAs: a Roth IRA or a traditional IRA. The "self-directed IRA" is a type of traditional IRA called a gold IRA.

Your IRA broker will invest the money you have contributed in a traditional IRA. You can also invest in precious metals if you have a self-directed IRA.

Individual retirement accounts that hold gold can also include silver, platinum, and paledium. You can also invest in a gold ETF or a gold mining company with your self-directed IRA.

Retirement accounts are a great way to diversify your portfolio beyond the traditional mutual funds. You can also enjoy the benefits of investing directly in precious metals, without the need to store it.

What is Physical Gold?

Physical gold is exactly what it sounds like — physical, tangible gold products. There are a few places you can purchase physical gold:

  • Dealers in gold, pawn shops and rare coin shops
  • Individuals
  • Websites that are gold

You can also purchase physical gold in many forms.

  • Collectible gold coins
  • Coins made from gold bullion
  • Bars of gold bullion
  • Decor and jewelry made of gold

Collectible coins and bullion make the best investments in gold. The rare and collectible faces of gold coins are what make them valuable, but their value can fluctuate with time. Private mints and refineries produce gold bullion, which includes gold bars, rounds and non-collectible coin.

There is a difference between physical gold and an IRA.

Two of the most popular options for gold investing are physical gold and gold IRAs. Knowing the differences can help you decide which option is best for your investment portfolio.

These are the key differences between a physical gold IRA and a gold IRA:


You cannot physically take possession of precious metals when you invest in a Gold IRA. You will need to find a place to store your gold investments.

Many custodians of gold IRAs have at least one to two depositories that they use to store physical gold clients have in their IRAs. These depositories are available for you to choose from or you can do your research to find the best storage location.

You have complete control over the storage of gold you buy. You have the option of storing the gold in a bank safe deposit box, in your basement safe, in your backyard safe deposit box, or in your home.

But, great power also comes with great responsibility. If you decide to invest in real gold, then you will be responsible for its safety and consequences. For safety reasons, many people who invest in precious metals opt to store their products inside vaults.


Security and storage go hand-in-hand. You can be confident that your precious metals and gold will be safe from theft or natural disasters if they are stored in a certified repository. If they are not, they can be insured to their value.

Specialized storage facilities for gold are available with a variety of features that will keep precious metals safe. These storage facilities include:

  • Provide round-the-clock, armed security
  • High-quality cameras should be available at all times
  • Use temperature-controlled facilities to keep gold safe and preserved

You have two options: segregated storage for your gold, or commingled storage which will save you money.

Investing in a gold IRA is generally safer than buying real gold and storing it. However, storing your gold in a deposit box will make it just as secure as if it were stored in your self-directed gold IRA.

Additional fees

There are varying fees when you invest in gold IRAs instead of physical gold.

When you open a gold IRA, your custodian may charge you a few different fees, such as:

  • One-time account set up fee, usually between $50 and $150
  • Brokerage fees are typically between $50 and $150 annually
  • You pay storage fees directly to the storage facility, or your custodian.

Before you make any investments in your retirement account, your IRA custodian must disclose all fees.

You don't need to pay any upfront fees if you buy gold direct. Only your storage options will cost you. Your investment in gold may not be subject to fees if you keep it at home.

Tax Implications

Precious metal IRAs as well as physical gold offer different tax consequences and tax benefits.

No matter if you have a Roth or traditional gold IRA, the tax laws applicable to your retirement account will apply. These accounts allow you to grow your assets and not pay taxes. Roth IRAs are pre-tax dollars while traditional IRAs use them.

Both cases grant gains tax-free. You can delay paying taxes on traditional IRAs (or self-directed gold IRAs) until you withdraw your retirement money.

However, real gold investment has less tax benefits. The capital gains rate is used by the IRS to tax gold as a collectible. This rate is not higher than 28%

Selling precious metals requires that you comply with all IRS reporting requirements. To report gold transactions, you will need to file Form 1099B with your taxes. Responsible investors must be familiar with the IRS reporting requirements.

Gold IRAs are exempted from capital gains tax and only subject to the rate of taxable income.

Methods of funding

happy couple buying physical gold online using laptop and credit card

The majority of gold IRA custodians require that you fund your new IRA via an IRA rollover. You cannot give them cash to purchase the gold in your gold IRA. You will need to transfer funds from an existing Roth or traditional IRA via a process called gold IRA rollovers.

You can still pay for actual gold using cash, check or any other payment method that your merchant accepts. You don't have to wait for your IRA rollover process to complete. You can purchase gold today to increase your portfolio.

Limits on Contribution

You must adhere to the same contribution limits for gold IRAs as you do for traditional IRAs when you invest in them. These limits may vary. In 2022 they were $6500 per year with an additional $1,000 for investors who are 50 years old or older.

There is no limit to how much actual gold you can purchase in a single year. Experts recommend that you don't invest more than 5%-10% of your portfolio in gold. However, it is your decision.

Different types of products available

You can select any level of purity that you want when you invest in physical precious metallics. You may opt for less pure gold if you have a smaller budget. You have the option to choose from gold coins, gold bullion and gold bars.

You can only invest in a gold IRA if you are at least 99.5% pure. This includes certain types of gold coins, most gold bullion, and gold bars products.

Physical Gold Investment Options

french gold coins with different gold jewelries

There are many options when it comes to buying gold as an investment. You have the option to buy any kind of gold product that you want, keep it for as long or as little as you like, and then sell it when you are ready. Your taxes will change depending on how long the gold is held.

Your sale of gold that you have held for less than one year will be subject to short term capital gains tax. If you hold physical gold for longer than one year, it is subject to long-term capital gain tax.

You can choose from a variety of gold products to invest in your retirement savings portfolio. These are:

  • Physical gold coins
  • Rounds of gold
  • Bars of gold
  • Collectible gold coins

You can also buy items with a small amount of gold, such as jewelry, art and decor.

You can invest in any level of gold, but understanding the purity notations will help you decide if a product made from gold is worth your investment.

Most likely, you've heard gold described in terms of its "carats."

  • 24 carat: 100% pure gold
  • 18 carat – 75% purity
  • 14-carat: 58.3% purity
  • 10 carat – 1.7% purity

The minimum standard for caratage in the United States is 10 carats.

We recommend that you search for gold products with a purity at least 99 percent when looking for an investment. These products will be easier to sell and are more valuable than lower-carat alternatives.

Types of Gold You Can Add to Your Gold IRA

The self-directed gold IRAs that are self-directed must meet certain standards. These standards go beyond the requirements of physical gold investing. First, the IRS requires gold IRAs to be managed by gold custodians. We mentioned that you cannot store or hold your gold by yourself. You need a custodian.

The IRS regulates what types of gold can be included in a gold IRA. Products must be at least 99.5% pure.

Certain collectible gold coins are eligible for IRA gold products.

  • American Buffalo coins
  • Australian Kangaroo coins

American Eagle coins are the exception to this rule. These coins have a 91.67% yield but can be used to hold IRA gold.

You will need to verify the purity of any gold product before you add it to your gold IRA account.

Many companies that offer gold IRA services take the guesswork out when it comes to choosing which gold products you want to keep in your IRA. You can only select eligible products and they will add them to your account. They will store them for free.

Benefits of Investing In Physical Gold and a Gold IRA

hand stacking wooden cube with plus sign

There are many benefits to investing in a gold IRA and owning gold. These are the benefits of both investing options:

Pros and Cons of Gold IRAs:

  • Acceptable to include any approved precious metals such as platinum, silver, and palladium
  • Custodians can help you store and manage your gold investments.
  • Capital gains taxes are not applicable. However, there are tax benefits.
  • Can you directly fund your retirement account?

The pros and cons of physical gold:

  • Get immediate access to your physical gold coins, and other products
  • Give yourself more control over your gold investments
  • No cash-out or distribution requirements

Are They at the Same Risk?

Both physical gold and gold IRAs have the same market risk. Your investment's value will fluctuate depending on the gold price.

But, gold storage comes with its own risks. You run the risk of losing your entire precious metal investment if you try to keep it at home. Your investment could be stolen, burned, or misplaced.

Minimum Investment

Physical gold and Gold IRAs have different minimum investments requirements.

Gold IRA

Although the IRS doesn't have a minimum amount for gold IRAs (or any other investment type), most custodians have minimum amounts, usually at least $10,000.

Physical gold

For physical metal products, there is no minimum investment. You can buy a small amount gold with a few hundred dollars and gradually increase your investment.

How much gold can you invest in a Gold IRA

womans hand counting dollar bills for investing in gold ira

The IRS caps the amount that you can invest each year in a gold IRA. This limit will be $6,500 in 2023. You can also contribute $1,000 each year if you are over 50.

How much physical gold can you own?

You can have as much physical gold and silver as you want. The U.S. has no restrictions on gold ownership.

What is the best option for you?

You now have a better understanding of the differences between buying real gold and investing in a gold IRA. Now you can decide which investment option suits you best.

Who should invest in physical gold?

People who are:

  • You want total control over your precious metal investments
  • You want more investment options (including gold of lower purity)
  • You don't want to be bound by IRA rules
  • You do not want the tax benefits offered by IRAs

Who should invest in a Gold IRA?

For people who are:

  • You want a hands-off approach for gold investing
  • You can take advantage of IRA tax deductions and tax benefits
  • You don't want to be responsible in storing or owning gold
  • For the extra security of your IRA investment, don't mind paying fees

To learn more about investing in gold, check out our articles at Learn About Gold.

Frequently Asked Questions

Is it possible to take physical ownership of gold from my IRA

Many people wonder if they are allowed to possess physical gold within an IRA account. This is a valid question as there is no legal route to it.

You can still own gold in an IRA if you look at the law.

Most people don't realize the cost savings they could make by putting their gold into an IRA rather than keeping it in their homes.

It is easy to toss gold coins, but it's not easy to place them in an IRA. You'll have to pay twice taxes if you keep your gold in your home. You will pay taxes twice: once to the IRS and one for the state in which you live.

There are two ways to lose your gold: pay taxes twice and keep it in your house. So why would anyone want to keep their gold in their home?

You might argue that you need the security of knowing that your gold is safe in your home. But to protect yourself against theft, you should consider storing your gold somewhere more secure.

If you're planning on visiting frequently, it is best to keep your gold safe at home. Thieves can easily steal your gold if you don't keep it safe.

Better yet, store your gold inside an insured vault. Your gold will be safe from fire, flood and earthquake as well as robbery.

Another advantage to storing your gold in a vault is that you won't have to worry about paying property tax. Instead, income tax will be charged on any gains made from the sale of your precious metal.

You may be interested in an IRA if you don't want to pay taxes on your gold. An IRA will allow you to avoid income tax while earning interest on your gold.

Capital gains tax doesn't apply to gold. That means you have the right to cash your investment at whatever time you choose.

Federally regulated IRAs mean that you won't face any difficulties in transferring your gold to another bank if it moves.

Bottom line: You can have gold in an IRA. Your fear of it being stolen is what holds you back.

How do you withdraw from an IRA that holds precious metals?

You may consider withdrawing your funds if you have an account with a precious metal IRA company such as Goldco International Inc. When you sell your metals, the value of those funds will be higher than if it was kept in the account.

This article will help you understand how to withdraw funds from an IRA that holds precious metals.

First, find out whether your precious metal IRA provider allows withdrawals. Some companies offer this option while others do not.

Second, find out if you are eligible for tax-deferred gains from selling your metals. This benefit is offered by most IRA providers. Some IRA providers offer this benefit, but others don't.

Third, make sure to check with your precious metal IRA provider if there are any fees associated with these steps. You may have to pay an additional fee for the withdrawal.

Fourth, ensure that you keep track your precious metal IRA investment for at least 3 years after selling them. In other words, wait until January 1st each year to calculate capital gains on your investment portfolio. Follow the instructions on Form 8949 to calculate the gain.

In addition to filing Form8949, you must also notify the IRS about the sale or purchase of precious metals. This ensures you pay tax on any profits from your sales.

Finally, consult a trusted accountant or attorney before selling your precious metals. These professionals can ensure that you adhere to all procedures and avoid costly errors.

How do I open a Precious Metal IRA

You can open an IRA in precious metals by opening a Roth Individual Retirement Account (IRA), which you can self-direct.

This type of account is better than other types of IRAs because you don't have to pay any taxes on the interest you earn from your investments until you withdraw them.

This makes it appealing to those who want to both save money and get a tax cut.

You are not limited to investing in gold or silver. You can invest anywhere you wish, as long as it is within the IRS guidelines.

Most people associate “precious” metal with gold or silver, but there are many different types of precious metals.

These include palladium, platinum, rhodium,osmium,iridium, andruthenium.

There are many ways to invest in precious materials. These include purchasing bullion coins and bars, as well as shares in mining companies.

Bullion Coins and Bars

Buying bullion coins and bars is one of the easiest ways to invest in precious metals. Bullion is a general term that refers to physical ounces of gold and silver.

Bullion bars and bullion coin are real pieces of metal.

While you may not immediately see any change after buying bullion coins and bars in a store, there will be some long-term benefits.

This is an example of a tangible piece in history. Each coin or bar has its own story.

When you look at face value of the coin, you'll often find that it's worth far less than its nominal value. When it was first introduced in 1986, the American Eagle Silver Coin cost only $1.00 per troy ounce. Today, however, the American eagle's price is closer to $40.00 per an ounce.

Since the value of bullion has increased dramatically since its introduction, many investors prefer buying bullion coins and bullion bars rather than futures contracts.

Mining Companies

For those who want to purchase precious metals, another option is investing in shares of mining companies. When you invest in mining companies, you are investing in the company's ability to produce gold and silver.

You will get dividends based off the company's profits in return. These dividends will then be paid out to shareholders.

The company's growth potential will also be of benefit to you. The company's share prices should also increase as demand increases for the product.

You should diversify because these stocks have a tendency to fluctuate in their prices. This allows you to spread your risk among multiple companies.

However, it's also important to remember that mining companies aren't immune to financial loss, just like any stock market investment.

Your ownership stake could become worthless if the price of gold falls significantly.

The Bottom Line

Precious metals such as gold and silver provide a haven during economic uncertainty.

But, silver and gold can be subject to price swings. You might be interested in long-term investments in precious metals. Consider opening a precious metals IRA with a reputable company.

This allows you to benefit from tax advantages and physical assets.

Is a gold IRA worth it?

Yes, but it's not as simple as you think. It depends on how much you're willing to risk. If you can afford to invest $10,000 every year for 20-years, you could possibly have $1,000,000 by retirement age. However, if all your eggs are in one basket, then you will lose everything.

Diversifying your investments is important. Gold does well when there is inflation. You want to invest in an investment asset that rises with inflation. Stocks do this well because they rise when companies increase profits. This is also true for bonds. They pay interest each year. They are great in times of economic growth.

But what happens when there isn't any inflation? When there is no inflation, stocks and bonds will lose even more value. Investors should avoid investing all of their savings into one investment like a stock mutual funds or bond.

Instead, they should consider investing in a mixture of different types and funds. They could also invest in bonds and stocks. They could also invest in cash or bonds.

This way, they have exposure to both sides of the coin. Inflation and deflation. They will continue to see a rise over time.

Which precious metals are best to invest in retirement?

It is important to know what you have already saved and where money you are saving for retirement. Start by listing everything you have. This should include all stocks, bonds, mutual fund, certificates of deposits (CDs), insurance policies, life insurance policies and annuities. Take all of these items and add them together to find how much you have left for investment.

If you are under 59 1/2 you should consider opening a Roth IRA Account. While a Roth IRA does not allow you to deduct contributions from taxable income, a traditional IRA allows for that. However, you will not be able take tax deductions on future earnings.

You will need another investment account if you decide that you require more money. Start with a regular broker account.

What are the three types?

There are three basic types for IRAs. Each type has its advantages and limitations. Below, we'll discuss each one.

Traditional Individual Retirement Accounts

A traditional IRA allows pre-tax money to be contributed to an account. This allows you to earn interest and defer taxes. You can withdraw money from the account tax-free after you retire.

Roth IRA

Roth IRAs allow after-tax dollars to go into an account. Earnings are exempt from tax. If you withdraw funds for retirement, your withdrawals from the account are exempted of tax.


Similar to a Roth IRA except that employees must make additional contributions. The additional contributions are taxed but earnings remain tax-deferred. The entire amount can be converted to a Roth IRA if you are leaving the company.

What is the best precious-metal to invest?

The investment of gold is high-returning and has high capital appreciation. It protects against inflation as well as other risks. As inflation worries increase, gold prices tend to rise.

It's a good idea for you to purchase futures gold. These contracts guarantee you will receive a certain amount of gold at a fixed price.

But, not everyone is able to afford gold futures. Some prefer physical gold.

They can also trade their gold easily with others. They can also sell it whenever they want.

Many people prefer not to pay taxes on their gold. To avoid paying taxes on their gold, they purchase it directly from the government.

This will require you to make multiple trips to your local postal office. First convert any gold that is already in circulation into coins or bars.

Next, you will need to stamp the coins or bars. Finally, you send them to the US Mint. They will then melt down the bars and coins to create new coins.

These new bars and coins have the original stamps stamped on them. That means that they're legal tender.

If you buy gold from the US Mint directly, you won’t have to pay tax.

Which precious metal would you prefer to invest in?


  • SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (
  • To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (
  • Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals. (
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (

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How To

How to Open a Precious Metal IRA

Precious and precious metals are one the most sought-after investment vehicles. Because they offer higher returns than traditional investments such as stocks and bonds, they are very popular. But, it is important to do your research and plan carefully before investing in precious metals. Here's how to open a precious-metal IRA account.

There are two types of precious metal accounts. They are paper gold and silver certificates (GSCs) and physical precious metals accounts. Each type has advantages and drawbacks. GSCs, on the other hand, are more accessible and can be traded. You can read more about them below.

Physical precious Metals accounts consist of bullion, bullion, and bars. Although diversification benefits are great, this option has drawbacks. You will need to pay a lot of money for precious metals, whether you are buying, selling, or storing them. Their large size makes it difficult to transport them between locations.

The silver and paper gold certificates are also relatively affordable. In addition, they're easily accessible and traded online. They are ideal for those who don't wish to invest in precious metals. However, they aren't as diversified as their physical counterparts. These assets are also supported by government agencies, such as the U.S. Mint. Inflation rates could cause their value to drop.

You should choose the account that best suits your financial needs before you open a precious-metal IRA. These are some factors to consider before you do this:

  1. Your risk tolerance level
  2. Your preferred asset allocation strategy
  3. How much time will you invest?
  4. No matter if you intend to use the funds in short-term trading.
  5. What type of tax treatment do YOU prefer?
  6. What precious metal(s), would you like to invest?
  7. How liquid do you need your portfolio to be
  8. Your retirement date
  9. Where to store precious metals
  10. Your income level
  11. Your current savings rate
  12. Your future goals
  13. Your net worth
  14. Special circumstances that may influence your decision
  15. Your financial overall situation
  16. Your preference between physical and paper assets
  17. Your willingness to take risks
  18. Your ability to manage losses
  19. Your budget constraints
  20. You desire to be financially independent
  21. Your investment experience
  22. Your familiarity with precious metals
  23. Your knowledge about precious metals
  24. Your confidence in the economy
  25. Your personal preferences

After you have determined the type of precious metal IRA that best suits you, you can open an account with a reputable dealer. You can find these companies through referrals, word of mouth, or online research.

Once your precious metal IRA has been opened, you'll need decide how much money you wish to invest. It's important to note that each precious metal IRA account carries different minimum initial deposit amounts. Some require only $100, while others will allow you to invest up to $50,000.

As stated above, the amount of money invested in your precious metal IRA is completely up to you. You should choose a higher initial deposit if you want to build wealth over time. However, a smaller initial deposit might work for you if your goal is to invest less money each month.

As far as the actual precious metals used in your IRA go, you can purchase any number of different types of investments. Here are some of the most common:

  • Gold – Bullion bars, rounds, and coins
  • Silver – Rounds & coins
  • Platinum – Coins
  • Palladium – Round and bar forms
  • Mercury – Round and Bar Forms


By: Learn About Gold
Title: Gold IRA vs. Physical Gold: Which Is Right For You?
Sourced From:
Published Date: Mon, 23 Jan 2023 23:20:31 +0000

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