During 2017 and 2018, markets worldwide have become more volatile. In such an environment, diversification plays an important role and continues to be a foundational component of Modern Portfolio Theory. One asset class that aids in providing diversification is gold.
The World Gold Council notes that the price of gold loses its correlation with stocks during a recession. This adds a level of stability that is desired when uncertainty exists, giving gold a strategic position in many people’s investment portfolios. Owning gold and silver in a self-directed IRA has been one way that investors have utilized the stability of gold as an anchor for their retirement portfolio. The IRS has some specific guidelines on what forms of metal you can own in your IRA. It starts with recognizing that there are two primary types of precious metals:
The value of gold or silver bullion coins and bars is based solely on the metal content.
The IRS has set minimum-fineness levels for bullion metal held within an IRA:
- Gold: .995 fine (except for American Gold Eagles)
- Silver: .999 fine
Numismatic and Semi-numismatic
These gold and silver coins command a higher price than the value of the gold and silver bullion content. This is due to the rarity and collectability of these coins. The most popular are pre-1993 coins, which were minted prior to the government confiscating gold during great depression.
Numismatic coins are not approved for holding within a self-directed IRA.
Managing Gold in the 21st Century
With the rapid movement of information in the age of technology, having the ability to quickly buy and sell assets is becoming an important component of managing wealth. As alternative assets gain more visibility in a world of digitized everything, companies are working to provide their clients with the same real-time access to manage them as they do their stocks and equity-based assets.
Until recently, physical gold and silver were left out of these financial technology innovations. That is no longer the case. Online tools are available that make management of physical gold and silver as easy as managing stocks and bonds, improving its utility value in a diversified retirement portfolio. It’s nice to know that as technology quickens the pace of activity in the world, it is also being used to manage wealth at the same pace.
Please note that this material is meant as an informational tool only. As such, any information contained herein is not meant as and should not be construed as any type of advice from Provident Trust Group, LLC, as Provident Trust Group, LLC is a non-discretionary, passive, directed custodian who does not advise or solicit. Please consult your tax advisor, attorney or other qualified professional for any advice you may require.