Every day it seems the stock market reaches new highs. Investors looking for bargains in such a bullish market will need to be patient. If current trends remain steady and fundamentals are strong then your chances of buying into this upward trajectory are good; high prices don’t necessarily mean that prices won’t continue to go up. Still, the likelihood that the market will experience some sort of correction is nearly certain. Historically, the stock market experiences a corrective drop every 12 months or so. Now whether that next drop (or the one after that, and so on) will be a moderate correction or a full scale meltdown as was seen in 2008 – when retirement accounts lost $2 trillion in value in a mere 15 months – is impossible to know.
No smart investor should ever rule it out. The possibility should have every investor worried about their retirement portfolio. But what if it isn’t a stock market crash? What if it’s runaway inflation or the devaluation of the dollar? Is there an investment that can help provide insurance against those happenings too?
Gold prices have trended upward for the last 10 years. Over the last 12 years gold has outperformed the stock market. Despite this, many experts expect gold prices to continue to rise. Because of the high cost of mining gold, when gold prices drop to a certain level no new mines are brought online. This in turn decreases supply and eventually forces the price of gold up again. Also, as geopolitical tensions in the world increase, as they are clearly doing now, investors tend to flee paper assets like the dollar and the stock market and instead look to the “safe haven” of gold.
To buy gold in an IRA it’s generally necessary to establish a Self-directed Gold IRA, one which allows you the ability to purchase physical gold and silver as opposed to only permitting gold and silver stocks and ETFs to be held. Gold coins as an investment allow the investor to capitalize not only on the price movement of gold but because of their numismatic value, bullion coins carry premiums over melt value. Coins also enjoy strong liquidity.
A Gold IRA is one in which the custodian allows you to purchase physical precious metals, including gold and silver, in your IRA. The typical IRA is not set-up to allow these types of investments. Please note that while these IRA accounts will allow you to purchase gold and silver coins, they must be kept within the IRA and not in your possession to comply with applicable IRS regulations. Instead, your IRA custodian will designate a licensed depository to hold the precious metals on your behalf.
Only those certain types of gold and silver coins designated as acceptable by the IRS. These are typically proof coins that have gone through a special minting process using certain designated dyes. To make these proofs, coin blanks are deposited into presses and struck a number of times to create detailed coin images above a translucent background.
Gold and silver are by far the most popular choices for Precious Metals IRAs. An IRA can purchase gold and silver coins such as American Eagles or Canadian Maple Leafs, some coins from Australia and Austria, or physical bullion in the shape of bars or rounds. Only gold coins with a purity of 24 karat (0.995+ fineness) are allowed in an IRA, with the exception of the 22 karat US Gold Eagle. Any metals owned inside of a precious metals IRA must meet certain fineness requirements and must be produced by an approved and accredited refiner.
The issuance of proof coins in any one year or month is typically limited by the mints supplying them. The prices of these coins typically reflect a variety of variables in addition to the current prices of gold and silver, namely, the condition of the coin, mintage, scarcity of that particular issue, age, and demand. Given their appeal as collector’s items, these coins will often fetch a premium over their bullion value, depending on market conditions at any given time.
Where to Begin
The intention of this article was to answer a number of questions new investors might have regarding gold and silver coins and IRAs. Any investor would be well-advised to complete due diligence before making any investment. In order to help you in your research, a new FREE mini-course was developed to aid the new investor toward this goal. It is entitled “The Secret to Successful Gold Investing.” This course is filled with tips and information to help guide you into investing like an expert.
