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Can I Buy Gold in My Roth IRA? Yes—Here's How to Do It

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When it comes to retirement planning in a Roth IRA, most people think of a portfolio of traditional stocks, bonds, and/or mutual funds. But did you know that you can actually buy gold in a Roth IRA? Yes, you can invest in physical gold and still enjoy the tax-free growth that comes with this type of account.

If you’re wondering whether gold is a smart choice for your retirement portfolio and how to get started, we’ve got you covered. In this article, we'll explore the steps to buy gold in your Roth IRA, what to look out for, and the pros and cons of going for the gold.

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So, can I buy gold in my Roth IRA?

The short answer is yes, but there’s a catch. Not all Roth IRAs allow you to invest directly in physical gold or other precious metals. You’ll need a self-directed Roth IRA (SDIRA), which gives you the flexibility to hold non-traditional assets, including gold, silver, real estate, and more.

Gold Roth IRA rules: What you need to know

Before you can start investing in gold with your self-directed Roth IRA, there are specific regulations you’ll need to be aware of:

  • Approved gold: Not all gold qualifies for inclusion in a Roth IRA. The IRS has strict guidelines about the type of gold you can buy. Only certain coins, bars, and bullions that meet minimum purity standards are eligible. For example, American Gold Eagle coins are allowed, but South African Krugerrands are not.
  • Storage requirements: You can’t simply buy gold and keep it in a safe at home. The gold you purchase through your Roth IRA must be stored in an IRS-approved depository, which is a secure third-party facility.
  • Custodian: To manage the process, you’ll need a custodian who specializes in self-directed IRAs. The custodian will facilitate your gold purchase, arrange for its storage, and ensure that all IRS rules are followed.

Is it worth investing in gold in a Roth IRA?

Certainly, there are cases where investing in gold might be worth it for long-term investments such as retirement. Gold provides a hedge against inflation and economic uncertainty. The main advantage is that gold retains its value over time (at least it has up until now—as with everything in investing, nothing is guaranteed).

“Gold is considered a means of preserving wealth and acts as a buffer to economic risks and inflation,” says Yosef Adde, a jeweler with over 20 years of experience in buying and evaluating gold. “When residual assets like stocks and bonds may be subject to erratic behaviors, gold will generally hold its value.”

Economist Rita Martinak explains the deal with investing in gold: “Gold has a history of being a haven for investment and a strong hedge against inflation,” Martinak says. “It has been a safe investment even during geopolitical uncertainty and economic downturns.

“Gold prices often rise when the dollar's purchasing power goes down, remaining remarkably stable even during inflationary periods,” she says. “Thus, it can be a valuable component of a diversified investment portfolio.”

Roth IRA gold investment options: Physical gold vs. gold ETFs

When it comes to investing in gold through your Roth IRA, you have two primary options: physical gold and gold ETFs. Here’s a look at what each option offers.

Physical gold

  • Pros: Investing in gold helps diversify your investment portfolio. Physical gold has been a store of value for centuries and can provide protection against inflation. “Compared to stocks and bonds, gold often moves inversely,” Martinak says.
  • Cons: The downside is that it needs to be stored in an IRS-approved facility, which comes with added costs for storage and insurance. Plus, physical gold doesn’t generate income or dividends, making it less liquid than other investments. “Its value depends purely on price appreciation,” Martinak says. “Gold prices can be volatile in the short term because they are influenced by external factors such as geopolitical events and changes in currency values.”

Gold ETFs

  • Pros: Investing in a gold ETF allows you to track the price of gold without the hassle of buying and storing physical gold. It’s much easier to buy and sell on the stock market, and it’s more liquid than owning physical metal.
  • Cons: While it offers the convenience of a paper asset, investing in a gold ETF doesn’t give you ownership of physical gold. In this case, you're investing in gold companies, and like all companies, these businesses can have a crisis and break. You also won’t have the same protection against inflation that physical gold can offer.

Pros and cons of holding gold in your Roth IRA

As with any investment, there are multiple benefits and drawbacks to consider when deciding whether to add gold to your Roth IRA portfolio.

Pros:

  • Diversification: Gold provides a hedge against economic downturns and inflation, making it a potentially important addition to a diversified portfolio.
  • Tax advantages: Any gains from gold in a Roth IRA grow tax-free, and you won’t pay taxes on withdrawals in retirement.
  • Long-term stability: Gold tends to hold its value over time, which can be a safety net during periods of market volatility.

Cons:

  • No dividends or interest: Unlike stocks or bonds, gold doesn’t generate income. There’s no compound interest on gold. Its value only appreciates through price increases, which makes it less predictable.
  • Added costs: Physical gold investments come with added costs for storage, insurance, and custodian fees.
  • Limited growth potential: While gold is stable, it doesn’t offer the same high-growth potential as stocks or mutual funds.

Roth IRA gold investment: Here's how to do it

Investing in gold with a Roth IRA requires more effort than buying stocks or bonds, but it’s doable. Here’s a step-by-step guide to help you get started:

1. Open a self-directed Roth IRA (SDIRA)

Not all financial institutions offer self-directed IRAs. You’ll need to find a provider or custodian who allows alternative investments like gold.

2. Fund your SDIRA

Once your self-directed Roth IRA is set up, you’ll need to fund it. You can either contribute new funds (within annual contribution limits—as of 2024, that’s $7,000, or $8,000 if you're 50 or older) or roll over funds from an existing Roth IRA or another retirement account.

3. Choose your gold investment

Next, decide what type of gold you want to invest in. You can opt for physical gold (coins or bars), or if you prefer not to deal with storage and shipping, you can invest in gold ETFs (exchange-traded funds) or gold mining stocks. These options track the price of gold without the hassle of holding the physical metal.

4. Buy the gold through your custodian

You can’t simply walk into a jewelry store and buy gold into your Roth IRA. Your custodian will need to purchase the gold on your behalf. Once the purchase is made, the gold will be sent to an IRS-approved depository for safe storage.

5. Monitor your investment

As with any other asset in your Roth IRA, you’ll want to keep an eye on your gold investment’s performance. The value of gold can fluctuate based on global economic conditions, so it's important to periodically check how it's performing against your retirement goals.

Gold IRA vs Roth IRA: What’s the difference?

A gold IRA is a type of self-directed IRA where you can invest only in physical gold, silver, platinum, or palladium.

A Roth IRA, on the other hand, is a combination of multiple investments (that can include gold if you'd like!) that allows for tax-free growth and qualified withdrawals, making it a popular choice for long-term retirement planning.

So, how do the two compare? While both options allow for investing in gold, a gold IRA is specifically tailored for precious metal investments and is often used by those who want to diversify their retirement portfolio. A traditional or Roth IRA can include a wide range of investments—stocks, bonds, mutual funds, and potentially gold—making it more versatile but less specialized.

Unless you're very specific about only investing in precious metals, we recommend sticking to a Roth IRA.

Bottom line: Is a gold Roth IRA right for you?

Investing in gold through your self-directed Roth IRA may be one smart way to diversify your retirement portfolio, especially if you’re looking for a hedge against market volatility and inflation. However, it’s not for everyone. Gold can be expensive to store and doesn’t provide the same growth potential as other investments. Before diving in, weigh the pros and cons, and make sure you have a clear plan for how gold fits into your overall retirement strategy.

FAQs

Can I convert a Roth IRA to a gold IRA?

Yes, you can transfer or rollover funds from your existing Roth IRA into a self-directed Roth IRA that allows gold investments.

Can I buy gold coins in my Roth IRA?

Yes, you can buy certain types of gold coins, like American Gold Eagles or Canadian Maple Leafs, in your Roth IRA. The coins must meet the IRS’s minimum purity standards to qualify.

How much gold can I buy in my Roth IRA?

There are no specific limits on how much gold you can buy, but your Roth IRA has contribution limits. In 2024, you can contribute up to $7,000 ($8,000 if you’re over 50) annually.

Can I store gold from my Roth IRA at home?

No. The IRS requires that all physical gold held in a Roth IRA be stored in an approved depository. Keeping gold at home would disqualify your IRA, resulting in taxes and penalties.