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Gold IRA Basics for Self-Directed IRA Owners who Diversify with Precious Metals

With the stock market continuing to make new highs, it might be a good time to take a bit of IRA money off the table and put it in something else. Of course, gold and other precious metals are always on the short list, and are popular choices among owners of self-directed IRAs. Gold, especially, has a proven track record of being a relatively stable store of value and an important ballast for Gold IRA portfolios in times of crisis and uncertainty that goes back thousands of years.

For larger portfolios, we believe that gold and precious metals have a place in anyone’s asset allocation. But before you start making purchases in your own IRA account, there are certain things every Gold IRA owner should be aware of.

  • You can’t buy gold or any other precious metal or retirement asset whatsoever from your spouse, your children or grandchildren, your parents or grandparents, or those of your spouse. You also can’t buy gold for your Gold IRA from any entities any of these people control. If you do, you’ll run afoul of prohibited transaction rules that apply to all self-directed retirement accounts, and potentially cause yourself to incur fines, penalties and a big income tax liability.
  • You can’t buy jewelry or gems, regardless of the quality of the gold in them. Direct ownership of jewelry and gemstones are both on the list of prohibited investments for IRAs and other retirement accounts – along with alcoholic beverages, life insurance and collectibles.
  • You can’t maintain physical possession of the gold. There are TV ads pushing ownership of gold coins that show a woman fondling gold coins on her dining room table. This is fine outside of retirement accounts. But if you want to own gold within your IRA, you can’t be storing it in your own home. If the IRS finds out, they’ll deem any gold you have in your possession to have been distributed, with all the taxes and penalties that would normally occur. You’ll lose the tax benefit of holding your gold within the IRA.
  • You can’t just buy any coins or bullion. Any gold you hold in your IRA – or any other self-directed retirement account for that matter, – must be in coin or bullion form, and must be from a mint that is known to mint coins or process bullion of sufficient purity and consistency. Not every type of coin or bullion qualifies. For example, the South African Krugerrand, while a well-known coin among numismatics enthusiasts and gold coin collectors and investors, is not suitable for your Gold IRA.

Here are some coins on the approved list:

  • American Eagles
  • Australian Kangaroo/nugget coins
  • Australian philharmonic coins
  • Canadian Maple Leafs
  • Chinese Gold Pandas
  • Proof American Eagles
  • American Buffalo Bullion Gold Coins
  • Credit Suisse/PAMP Suisse Gold Bars.

Some coins we know to be ineligible for IRA purposes include:

  • Austrian Coronas
  • S. Buffalo Proofs
  • British Britannia Coins
  • Belgian 20 Franc coins
  • Chilean 100 Peso coins
  • Dutch 10 Guilder
  • French 20 Franc coins
  • Hungarian 100 Koronas
  • S. Liberty Coins
  • South African Krugerrands
  • Other collectible or rare coins in general, other than those on the approved list.

This isn’t a knock on these coins. They may be fine investments for non-retirement accounts. And, of course, you can direct your IRA to invest in indirect gold ownership via gold and precious metals mutual funds, closed end funds or ETFs, via gold mining stocks, pooled accounts or futures contracts. But if you want to take a direct interest in gold, you have to hold it in one of the approved bullion or coin forms, and you must have a custodian hold it on your behalf.

Why Own Gold in a Gold IRA?

Gold IRA  Precious Metals IRAYou can own gold, as well as other precious metals, within your Gold IRA.

Nothing lasts forever. Economies, empires, stock markets and currencies rise and fall. Governments issue and revoke currencies, and they devalue them when they get into trouble.

Currency devaluation doesn’t have to be an Argentinian-style, overt slashing: When a government pursues expansionary monetary policy at the expense of investors, and runs up tons of debt in relation to its production capacity, they can devalue the currency over time through the pernicious effects of inflation, which eats away at the purchasing power of a retirement portfolio like cancer eats through bone.

Yes, you can own gold, as well as other precious metals, within your retirement accounts, including IRAs and solo 401(k)s, subject to certain restrictions. An upcoming article will get into the precise types of gold you can own. Here are the reasons why the vast majority of investors with substantial assets to protect should consider investing a portion of their portfolio in gold.

Hedge against uncertainty. Geopolitical uncertainty is ever present, and can happen anywhere. In the vast majority of cases, an approaching crisis is foreseeable only with hindsight. If it were easy to steer economies away from icebergs, everybody would do it. The fact is that avoiding severe economic dislocations is, in practice, very difficult for politicians and policy makers to do.

When the world is in crisis, gold tends to surge. This means that when some of your international investments are in trouble, demand for gold as other investors flock to safety normally push prices up. You have the option of standing pat, or selling gold to those trying to escape struggling currencies at a good price, and buying some distressed assets yourself. The choice is yours.

Diversification. This tendency of gold to zoom when some other asset classes are crashing – not necessarily American stocks – are key to its power. Because gold can act as a counterweight to volatile assets such as international stocks and bonds and foreign currency-denominated investments means that the addition of a modest amount of gold may actually reduce your portfolio’s volatility as a whole.

Scarcity. The price of oil has plummeted lately, thanks to a cutback in demand, the discovery of vast new oil reserves, and the increased efficiency of fracking. No such comparable process is happening for gold. While gold mines are still hard at work trying to find more gold, the fact remains that gold is still a tremendously hard-to-find, scarce resource and it’s a very difficult, resource-intensive process to find it.

Gold’s value has always resided in its beauty, durability and its scarcity. Neither is likely to change any time soon.

Tangibility. One of the reasons gold has been such an anchor in rough economic waters for thousands of years is that it’s tangible. Your fellow investors have faith in it because they can touch it. Where public confidence in paper assets can collapse with alarming suddenness, this tends to enhance the demand for gold. Where any paper security can theoretically drop to zero, an interest in gold is always going to retain at least some value.

Inflation. Gold is also a historically effective bulwark not just against catastrophic economic events abroad, but also against the slow and steady erosion of inflation. The weaker the dollar gets, the more dollars an ounce of gold will generally command.

There are no guarantees. Like any other commodity, gold prices rise and fall with market forces. Where people are confident, gold prices tend to be restrained. They tend to rise when people somewhere are fearful, generating demand for the security and stability of gold – the traditional rock where everything else is in a state of collapse.

American IRA, LLC and founder Jim Hitt have long-established expertise with administering Gold IRAs and precious metal IRAs. For more information, visit us at www.americanira.com, where you can download our exclusive guide to the gold IRA. Or call us today at 866-7500-IRA(472).

We look forward to serving you.

 

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Asset Diversification with Gold IRAs

Financial advisors and successful investors agree that asset diversification is the key to a lucrative investment portfolio. Precious metals are among some of the more popular assets held within a self directed IRA.

With a gold IRA from American IRA, you can invest in many different types of precious metals including, gold, silver, platinum, and palladium.

Tax Benefits of Gold IRAs

If you are among the many people that have been investing your personal funds in precious metals, you will be glad to know that you can capitalize on this opportunity to generate retirement wealth tax-deferred or tax-free. Use your gold IRA to drive your own level of success by controlling your own investments.

Freedom of Choice

As with all self directed IRAs, the choices are up to you. You have the freedom to decide which precious metals dealer you use, the type of product you want to hold in your IRA, and which precious metals depository you would like to use.

Types of Products Permitted in a Gold IRA

  • Gold bars hallmarked by a NYMEX- or COMEX-approved refiner/assayer with a purity of 24 karat (0.995+ fineness) and be hallmarked by a NYMEX- or COMEX-approved refiner/assayer.
  • Gold coins: with a purity of 24 karat (0.9999 fineness). The only exception is the 22 karat U.S. Gold Eagle.
  • Silver coins & bars: They must have a 0.999+ fineness, like the 1 oz. U.S. Silver Eagle.
  • Platinum/palladium bars & coins hallmarked by a NYMEX- or COMEX-approved refiner/assayer: They must have a 0.9995+ fineness.

Experts Needed

Precious metals are some of the less complicated assets to hold in your self directed IRA. You simply need:

  • A broker dealer to assist you with the purchase and sale of your precious metals.
  • An insured storage facility/depository that charges you an annual fee to store your precious metals for you.

Notes to Consider

  • Annual valuations are based on the dollar value of the metals held in your IRA as of December 31st of the reporting year.
  • You may not hold the precious metals personally but rather you must store those precious metals in an insured approved depository.
  • The depository you select will charge you an annual fee to store your precious metals.
  • American IRA does not refer nor endorse any brokers or dealers and, as such, we are not responsible for their performance.
  • Pricing of the precious metals you choose must be done by the broker or dealer you select. American IRA does not determine the value nor the pricing of your metals.

Getting Started

Contact our office today to open your Gold IRA. Our team will guide you through the EZ application process and get you on your way to earning tax-deferred and/or tax-free income within your retirement account. 1-866-7500-IRA(472) or sean@americanira.com. If you are an American IRA Client and you have questions regarding the investment process, please contact our office 1-866-7500-IRA(472) or transactions@americanira.com.

 

Jim on Google+

Gold IRAs

Asset Diversification with Gold IRAs and Other Precious Metals

Financial advisors and successful investors agree that asset diversification is the key to a lucrative investment portfolio. Precious metals are among some of the more popular assets held within a Self-Directed IRA.

With a gold IRA from American IRA, you can invest in many different types of precious metals including:

  • Gold
  • Silver
  • Platinum
  • Palladium

Tax Benefits of Gold IRAs

If you are among the many people that have been investing your personal funds in precious metals, you will be glad to know that you can capitalize on this opportunity to generate retirement wealth tax-deferred or tax-free. Use your gold IRA to drive your own level of success by controlling your own investments.

Freedom of Choice

As with all Self-Directed IRAs, the choices are up to you. You have the freedom to decide which precious metals dealer you use, the type of product you want to hold in your IRA, and which precious metals depository you would like to use.

Types of Products Permitted in a Gold IRA

  • Gold bars hallmarked by a NYMEX- or COMEX-approved refiner/assayer with a purity of 24 karat (0.995+ fineness) and be hallmarked by a NYMEX- or COMEX-approved refiner/assayer.
  • Gold coins: with a purity of 24 karat (0.9999 fineness). The only exception is the 22 karat U.S. Gold Eagle.
  • Silver coins & bars: They must have a 0.999+ fineness, like the 1 oz. U.S. Silver Eagle.
  • Platinum/palladium bars & coins hallmarked by a NYMEX- or COMEX-approved refiner/assayer: They must have a 0.9995+ fineness.

Experts Needed

Precious metals are some of the less complicated assets to hold in your Self-Directed IRA. You simply need:

  • A broker dealer to assist you with the purchase and sale of your precious metals.
  • An insured storage facility/depository that charges you an annual fee to store your precious metals for you.

5 Notes to Consider

  1. Annual valuations are based on the dollar value of the metals held in your IRA as of December 31st of the reporting year.
  2. You may not hold the precious metals personally but rather you must store those precious metals in an insured approved depository.
  3. The depository you select will charge you an annual fee to store your precious metals.
  4. American IRA does not refer nor endorse any brokers or dealers and, as such, we are not responsible for their performance.
  5. Pricing of the precious metals you choose must be done by the broker or dealer you select. American IRA does not determine the value nor the pricing of your metals.

Getting Started

Contact our office today to open your Gold IRA. Our team will guide you through the EZ application process and get you on your way to earning tax-deferred and/or tax-free income within your retirement account. Contact us at 1-866-7500-IRA(472) or sean@americanira.com.

If you are an American IRA Client and you have questions regarding the investment process, please contact our office at 1-866-7500-IRA(472) or transactions@americanira.com.

 

Jim on Google+

Gold IRA: Options For Investing In Gold Using A Self-Directed IRA Or Traditional IRA

The past few years have proven to be incredible for gold investors, and as a result more and more people are looking for ways to invest in Gold using their IRA and 401(k). The good news is there are many options available to you for investing in Gold using your retirement accounts, but depending on which type of gold investment you wish to make, you may need a different type of retirement account.
Read more

Jim Hitt Gives his Expert Opinion on the Frequently Asked Questions About Silver Investments

In a December 2011 report, Money Morning reports that ‘Right now, silver prices are on a major tear. They could even break as high as $250 by the end of the year.’ Today Jim Hitt, CEO of American IRA, is responding to a question that is growing in popularity–should people invest in silver?

In a December 2011 report, Money Morning reports that ‘Right now, silver prices are on a major tear. They could even break as high as $250 by the end of the year.’ Today Jim Hitt, CEO of American IRA, is responding to a question that is growing in popularity–should people invest in silver? The decision as to whether to invest in silver and gold is as personal a decision as whether one prefers to wear silver or gold. The answer will vary depending on that persons personal preference.

Silver IRA
Jim Hitt says “These days, it seems like every other ad they hear on talk radio is pitching gold. It’s true that gold has historically been an important store of value, a unit of exchange, and the commodity that traditionally undergirds currencies. But gold is not the only commodity with those properties.

According to Money Morning, ‘Right now, silver prices are on a major tear. They could even break as high as $250 by the end of the year. By 2015, it’s estimated that global industrial demand for silver – largely driven by India and China – will increase 36%, from 487 million ounces in 2010, to 666 million ounces.’

Consider silver. Like gold, silver also has beauty and scarcity – so much so that it, too, has been used as the standard unit of measurement of value underlying the currencies of nations and empires for centuries. In fact, the silver standard was commonplace in Europe and Asia from the fall of the Byzantine Empire through the 19th century. In the 1795, the United States adopted a de facto silver-based monetary system – derived from the Spanish Milled Dollar, or so-called “pieces of eight,” and maintained it, more or less, until 1875. However, Congress took the economy off the gold standard during the Great Depression, and placed the country back on the silver standard, and allowed the U.S. Treasury to expand the monetary supply independently of the Federal Reserve by issuing money against silver held in the U.S. Treasury’s vaults. The Treasury continued to redeem notes in silver on demand until 1968.

Why Silver?
Although silver is closely correlated to gold, in that it tends to do well during times of economic uncertainty. However, silver theoretically has less speculative demand associated with it. Consider: Any time they hear an asset class being hawked on the radio to mass market investors, there is frequently some speculative froth built in to the asset class. The money may be “hot,” and amateur investors are prone to dump holdings when the breaks don’t go their way.

This can create opportunities for savvy traders. But most long-term investors who don’t want to devote their days to trading may prefer a more boring, staid market. In today’s environment, silver may provide a way for investors to participate in the benefits of gold investing, but ‘below the radar,’ in an asset class less exposed to the ups and downs of popular sentiment.

More generally, while silver isn’t an income generator, it is in some ways an ideal IRA holding. It is liquid enough so they can sell when they need to, and volatile enough to be a long-term holding. It is an effective hedge against inflation and economic uncertainty, and it is unlikely ever to fall to zero. Silver is the most conductive metal on the periodic table – even more so than gold – and therefore has intrinsic value to industry in a variety of applications, which tends to support its price.

Silver’s price has historically floated around, relative to the price of gold, trading between 1/15th of the price of gold at the high end and 1/100th at the bottom. They can view the current prices of gold, silver, platinum and copper, as well as other commodities, here. Owning some silver may help provide some diversification benefit against fluctuations in the price of gold, while still providing the benefits of a precious metal allocation in their portfolio.

Using an IRA to Purchase Silver
They can use an IRA, and in some circumstances, a solo 401(k) plan or SEP IRA, to purchase silver. They can’t buy jewelry, though. Instead, they must hold silver bullion or select from a list of known and standardized silver coins.

They also can’t take possession of their IRA’s silver, or other precious metals, directly. If they do, they will trigger income tax liability on the entire amount – on top of early distribution penalties if they are under age 59 and a half.

Instead of taking direct possession, they must establish a special type of savings vehicle called a “self-directed IRA.”

With a self-directed IRA, they appoint an administrator to hold the silver – or any other non-prohibited asset – on their behalf.

Additionally, they must abide by certain rules restricting whom their IRA can do business with. In a nutshell, they cannot buy, sell, borrow or lend from their IRA, nor pledge it as collateral. Neither their immediate family, nor any of their ascendants or descendants, can buy, sell, lend to or borrow from their IRA. The same applies to any entities they control. Lastly, their accountant, financial advisor, attorney, or anyone else who advises they regarding their IRA may not transact with the IRA, nor may any entities they control.

Standard IRA Limitations Apply
Like all other IRA accounts, they can only contribute a maximum of $5,000 in new money per year ($6,000 for those over age 50) to all their IRAs combined, subject to certain income requirements (see IRS Publication 590 for details on contribution limitations to IRAs.) They can roll over an unlimited amount from other IRA accounts into a self-directed IRA. If they want a higher contribution limit, they may consider establishing a self-directed SEP IRA account or solo 401(k) plan.”

CNN Money Answers The Question “Are You Better Off Than Your Mom and Dad?” The Good News-Young People Still Believe In The American Dream

Jim Hitt, CEO of American IRA-A National Provider of Self-Directed IRAs, says “Things are pretty spooky. The United States, fresh from a downgrade on its bonds, was unable to come to an agreement to cut the ballooning deficit. Meanwhile, the European Union is teetering on the edge of collapse because of its own inability to get its fiscal and monetary house in order. And Iran is building nukes – and inviting a military response that could disrupt the flow of oil from the Persian Gulf.

With all this negativity it is encouraging to see that young people still believe in the American Dream and why shouldn’t they?! It’s within reach especially with the right tools at their disposal-Self Directed IRAs are an important part of that tool box.”

Successful gold investors feel that gold is the perfect hedge against chaotic times. When economies zig, gold zags. The value of gold, priced in dollars, tends to rise under conditions like these:

  • Economic or political chaos or uncertainty
  • Runaway government spending
  • The debasement of currency by central banks (i.e., ‘quantitative easing’)
  • Wars and the threat of wars
  • High oil prices or the threat of a disruption in supply
  • War
  • Inflationary periods
  • Poor investing environments in stocks and bonds
  • Low yields, thanks to “easy money” policies and/or a ‘flight to safety’.”

While gold doesn’t pay a dividend, in some ways it is the ideal retirement asset: It has intrinsic value. It is reasonably liquid; it is volatile enough to warrant being a long-term holding. It provides a diversification benefit against stocks, bonds, real estate, small businesses and employment fortunes. And together with real estate, it may be among the few assets in their portfolio that can never go to zero. In fact, the worse things get, the better gold is likely to perform.

Owning Gold in an IRA?:
Individual Retirement Arrangements aren’t limited to stocks, bonds and mutual funds. IRA’s can invest in a wide variety of valuable assets, including certain kinds of gold. No, they can’t use an IRA to own jewelry or other collectibles. But they can own gold bullion and coins, including American Eagles, Canadian Gold Maple Leaf coins, American Silver Eagle coins and American Platinum Eagle coins. They can also own gold and silver bars, provided the purity is at least 99.9 percent. They cannot own South African Kruggerands, however, among some other prohibited coins.

Restrictions:
They cannot own jewelry in an IRA. And they cannot take physical possession of the gold. Otherwise the government will consider the amount they take possession of to be a distribution – subject to taxes and penalties.

Instead, investors who want to own gold within an IRA must find a trustee who will set up a special account called a ‘self-directed IRA.’ The trustee will help them select a custodian, who will hold the gold on their behalf.

Like all other IRA accounts, they can only contribute a maximum of $5,000 in new money per year ($6,000 for those over age 50) to all their IRAs combined, subject to certain income requirements (see IRS Publication 590 for details on contribution limitations to IRAs.) They can roll over an unlimited amount from other IRA accounts into a self-directed IRA. If they want a higher contribution limit, they may consider establishing a self-directed SEP IRA account or solo 401(k) plan.

Alternatives:
Of course, just because they have a self-directed gold IRA, they aren’t limited to physical gold. They can also invest their gold allocation in gold-linked securities, including gold mining stocks, ETFs and mutual funds.

Gold may be a good choice for those in businesses that are very cyclical, who are very closely tied to the stock or bond markets in other areas of their portfolio, who does not need to generate immediate income from that portion of his holdings, and who may be pessimistic about the U.S. or global economy.

Jim Hitt, CEO of American IRA-A National Provider of Self-Directed IRAs, cautions “We do not give investment advice. We share this article to give investors information on how gold investments work and, while these investments have been largely successful for our clients, we advise anyone thinking about this or any type of investment to meet with their financial advisor and/or financial professional before making any investment decisions. It is also critical for every investor to do their “due diligence” in researching investments before making any investment.”