Tips For A Safe Gold Investment

While you can access precious metals with ETFs or exchange-traded funds, commodity futures, or mutual funds for gold, silver, platinum, or palladium, many investors choose the physical metal placed in an IRA to diversify their retirement portfolio.

These investments are no less risky than any investment opportunity meaning there needs to come a degree of fear of loss despite the suggestion that gold is what deems a “safe haven.”

An investor needs to be shrewd with their understanding that even those assets that present as “impervious to price reductions” are not so. It’s essential to research in order to be a step ahead with your diligence and knowledge in the fundamentals of investing with the metals, plus all the rules and regulations that apply.

This includes the fact that the physical metals are not recognized as registered securities. The “SIPC or Securities Investor Protection Corporation” does not cover the direct investment of these metals, including gold. Let’s look at some of the other “priority rules” meant to keep an investor protected.

Tips For A Safe Gold Investment

When investing in gold, it’s essential to follow reliable advice like that from a quality organization like Kingold Jewelry, a firm that has come to be well-established and reputed in the gold IRA industry.

Companies like these are few and far between, making it somewhat challenging when an owner of a self-directed IRA is attempting to make the best decisions with their precious metal investing only to find problems they’re unsure how to manage.

It’s vital for someone looking to add an IRA backed by a precious metal to research diligently, speak with industry experts to gain knowledge about the fundamentals of investing in metals, plus gain insight into the primary rules and regulations that pertain to the investments.

Every investor should be aware of a set of “golden rules,” so to speak, that means to guide you through your first foray into the gold IRA experience. Let’s look at a few of these to get you on your way.

Pushy salespeople should be avoided at all cost

When choosing precious metals as a back for your IRA, there is an exceptional risk of becoming involved with fraud or extreme sales pressure. What you need to remember going in is that there is no professional of reputation in the investment industry who will prod you into an instant decision on your investment or expect that you will “act immediately.”

Even if an individual behaving in this manner is not guilty of fraud, the actions are entirely inappropriate, as are unsolicited calls. Some tactics that you need to prepare yourself for include:

  1. What’s known as the “phantom riches” strategy in which you will be promised the possibility of significant profits.
  2. Scarcity” tactic in which you will be advised there are few available, and you should probably “jump on it” if you don’t want to lose out on the opportunity.

Look into the background of the dealer you select

You’ll find no “regulator-approved” universal dealer list from which all investors can find legitimate firms to buy from. On the other hand, you can use authoritative sites, including the Better Business Bureau, which rates its accredited members. It also details their activities and offers reviews and testimonials on the varied businesses. 

Further, “BASIC – Background Affiliation Status Information Center with the NFA – National Futures Association” lets investors know if an individual or an organization has registered and if these are under any disciplinary action or were at any point.

The phrase “low risk” is cause for alert

No one should advise an investor that any investment is not risky or deemed safe. Precious metals offer risk in merely the way the price tends to fluctuate, the cost of storage, and in numerous other ways.

The dealer should be fully transparent in the authentic risks and be willing to provide a “risk disclosure statement” before any funds are submitted for a purchase.

The recommendation is to gather as much information from the representative you work directly with as possible, including their business details and that of the firm. If the individual is at all hesitant or refuses, walk away from that transaction.

The cost can be exceptional

A self-directed individual retirement account backed by precious metals, complete with varying fees and charges, is considerably more expensive than a conventional IRA. Before you make any sort of commitment or even take that initial step to register, it’s wise to speak with an advisor or reach out to a custodian to get an accounting of the mandatory fees.

Not only will you be responsible for the initial account set-up costs, but there will be commissions with the indication that these can range as great as 15+ percent of the overall investment. That amount should also include the following:

  1. Management costs
  2. Storage charges
  3. The leveraged amount of the purchase
  4. Continued interest fees

It is suggested that with the expense, it can prove difficult to see gains with physical metal investments. The recommendation is to fully preview the costs compared to the returns you would need to see in order for you even to level out. View here for guidance on starting a precious metals IRA.

Final Thought

Precious metal IRA, particularly gold IRA, wouldn’t necessarily be a greater risk than any other investment choices on the market. Still, the thing to consider is it is also not without risk, as often seems to be the misperception among those newly considering the option for their retirement portfolio.

When these individuals see “safe haven” terminology, the belief is that you can plop it in storage and allow it to merely produce for you. If only investing were that simple.

Unfortunately, if this is the mindset you consider, take some time to research to learn the fundamentals of a precious metal investment to be placed in an IRA, plus bring yourself up to speed on the “golden rules.”

About Lija Parveen

Leave a Comment