"Gold is one of the dumbest things to put in your IRA," said the slick TV commentator, with his $200 haircut, perfect white teeth, and superior attitude. "Everyone knows income-producing vehicles are best for an IRA."
It was a prepackaged message from someone that sounded like he hadn't given any more thought to the topic than what he'd read somewhere. His advice was misleading and incomplete, and I wondered how many viewers might weaken their portfolios by acting on his sound bite.
To be clear, he's partially correct: the tax-advantaged nature of an IRA makes income-generating assets ideal, especially when you factor in compounding. Gold generates no income.
And there's another drawback to putting gold in an IRA, one the slick TV journalist probably never even thought of: you lose confidentiality. Gold is one of the last assets in modern society that still offers anonymity-and you'd have to give it up if you stick it in an IRA.
So on a cursory level, one might nod along with the empty suit and conclude that gold should be excluded from a retirement account. But these concerns are only reasons not to hold all your precious metals in an IRA, or have your retirement account be comprised entirely of gold. Indeed, the reasons to put some gold in an IRA have grown-in fact, it might be a major strategic mistake not to have a gold IRA.
Here's why, along with an offer for six months' free storage with a new gold IRA.
A Gold IRA Is a Strategic Portfolio Move
There are solid, core reasons why every investor should have some gold in an IRA. See which of these factors apply to you.
Your IRA is one of your biggest-or only-investment accounts. If an IRA is where most of your investment funds are housed, it may be your only chance to add physical metal to your portfolio.
You want to diversify into a non-financial asset. Think about it: if your retirement account consists of just stocks and bonds, then all of your IRA investments are in paper assets. In today's world, that is the pinnacle of risk.
You'd like tax-advantaged growth. As with any asset, gains can compound tax-deferred inside an IRA (or tax-free in a Roth). The advantage is that you can shift the allocation and not trigger a taxable event-for example, if you wanted to lighten up on gold to buy some silver.
You need a retirement inflation hedge. The big objection to putting gold in an IRA is that it doesn't generate interest. But to have no inflation hedge in a retirement portfolio seems equally shortsighted, especially in today's monetary environment. Remember, regardless of what the "profit" column shows on your statement each year, those gains have to be adjusted for inflation-after all, you're eventually going to spend some of that money. And the further away you are from withdrawing the funds, the longer inflation will eat away at your account value. The answer is to utilize one of the best inflation hedges known to man.
Clearly, most of us can benefit from placing some precious metals in an IRA.
So, we should just contact one of those companies advertising gold IRAs, right?
No! Here's why.
The Horse-and-Buggy Industry of the 21st Century
The process to set up a gold IRA has traditionally been slow and cumbersome. US law requires that IRA assets be held at a trust company to ensure proper tax reporting and recordkeeping. However, most gold dealers are not trust companies. For them to offer physical gold IRAs, they must partner with a trust company that's willing to hold physical gold.
So when a gold dealer offers to purchase gold within an IRA, the process for the investor looks like this:
Open an account with a gold dealer
Open a separate IRA account with a trust firm (usually done via snail mail)
Fund your account with the trust
Request a purchase of metals from your chosen vendor
Wait for funds to transfer and your order to settle
This procedure takes 30-45 days-it still takes a month even if you already have an IRA or a relationship with a dealer. Further, dealers typically charge high fees when purchasing gold for an IRA. And when you want to sell or take a distribution, get ready for more paperwork, verification checks, and shipping fees, all of which take another 2-3 weeks.
This "manual" process has led to lengthy delays, unexpected costs, and never-ending frustrations. Check out some of the common complaints IRA holders have had with this antiquated system.
IRA transfers can take up to 30 days to execute, depending on the follow-up procedures of the custodian.
Deposit confirmations are not always sent to the client in a timely manner and are not automated.
Clients cannot lock in an order until the custodian verifies the cash balance with the dealer, exposing them to market risk.
The purchasing process typically takes 8-10 business days to settle.
Metals must be shipped to the custodian's vaulting facility, and the IRA holder is responsible for those costs.
Deliveries to the vaulting location may not be tracked by the custodian, nor are the deliveries compared to the order invoice for accuracy of delivery. This has been a growing concern by investors.
Limited storage options. Most custodians only offer one or two storage locations, and most of those are in Delaware.
The sell process is costly, cumbersome, and time consuming.
Poor customer service is one of the biggest complaints. When the client has questions about his IRA or order, the dealer refers him back to the custodian-and the custodian refers him back to the dealer! The client is often passed around without ever getting his questions answered.
This doesn't sound fun. Fortunately, the Hard Assets Alliance has completely changed how business is done with gold IRAs.
The New "Gold" Standard in IRAs
HAA's program has streamlined the entire gold IRA process and greatly reduces the time and hassle to open an account. In most cases, you can do everything online. It's a breakthrough service, and we want to highlight it now, before the April 15 deadline, so you can still make a 2014 contribution.
The Hard Assets Alliance IRA reduces both time and hassle. The online platform lets you electronically create an IRA account and a trust account simultaneously.
Entrust, a well-known custodian, provides the trust account, and it receives your application in real time. In most cases, it takes only 10-15 minutes to open a traditional or Roth IRA account; SEP and SIMPLE accounts take about one to two weeks to process, and Entrust will work with you to facilitate transfers. The process is straightforward and user-friendly.
Further, there are no additional fees to purchase or sell precious metals within a Hard Assets Alliance IRA. And like all HAA products, all buying and selling can be done online.
As far as we know, this is the only fully automated online IRA to offer physical precious metals.
By way of testimony, it only took me about ten minutes to open a traditional IRA at HAA, and I received my approval five minutes later. And get this: I paid less than 3% above spot for one-ounce gold bars! That's because HAA bids your order out to a network of dealers, so you're essentially getting institutional rates.
Also, only permissible bars and coins are displayed for purchase. The rules can get a tad complicated-that's been another hazard: buy the wrong form of gold for a retirement vehicle and you risk invalidating the entire IRA, triggering an unwelcome taxable event. No worries with HAA.
Store Your IRA Gold in Zurich
Foreign gold storage for IRAs, while available for US investors, has been a very tedious process, with the setup requiring a good deal of time, paperwork, and expense. However, your IRA can now store gold Eagles (only) in Zurich, Switzerland.
This is an offering you won't find almost elsewhere in the industry. And there's no minimum for this vault. That means you can start your own international bullion storage program, in one of the strongest jurisdictions, with one, one-ounce gold Eagle.
And you can start a gold IRA with storage in New York City or Salt Lake City with as little as a tenth ounce!
And here's another sweetener.
Six Months' Free Gold Storage for New IRA Accounts!
The April BIG GOLD comes with an offer for six months' free storage for all new IRA accounts, including all four metals and all three storage locations. This discount makes it very inexpensive to start your own gold-backed IRA.
It's only valid for readers of BIG GOLD, and you can get the link with a risk-free trial subscription. It's a very attractive offer, and is good whether you make a 2014 or 2015 contribution-yes, if you hustle, you can still reduce your tax liability for 2014.
The reasons to put some gold in an IRA are mounting. And with the Hard Assets Alliance, we can avoid the VHS-tape versions of the industry and jump straight to Blu-ray.
I encourage you to consider what your purchasing power will be by the time you retire, and how a gold IRA might be a very effective way to preserve your standard of living.