Gold IRA vs Physical Gold

Best Ways to Invest in Gold IRA

Gold IRA vs Physical Gold


One of the most common forms of investment is undoubtedly gold. It has been used as a solid investment for centuries. The asset can also help diversify your investment portfolio, so you might be considering buying it. There are many ways to invest in gold, but the two most popular options are through a gold IRA or simply buying physical gold and keeping it. A gold IRA involves buying gold that would be stored in your self-directed individual retirement account (IRA). However, while you would be buying the gold, you would not physically store

any of it. If you want to do that, you will be better off by buying physical gold in gold jewelry or coins.

Both options carry their own considerable features, benefits, and drawbacks that you need to keep in mind. As someone who has invested in both types of gold, I drew up this thorough comparison of gold IRA vs. physical gold to help you determine which one is the right option for you.

What is Gold IRA?

A traditional individual retirement savings account (IRA) lets you buy and sell stocks to save for your retirement. A gold IRA is a form of a self-directed individual retirement savings account (IRA) that lets you buy and store exclusively gold. However, such gold is not something that you can possess physically, and it is not in the form of gold jewelry. Instead, it is typically traded in the form of gold bullions, stocks, bars, or coins.

To sum, here are the notable features of a gold IRA that you must know about:

  • It involves buying gold assets for your retirements account
  • People who have a gold IRA account are looking to diversify their investments
  • Your account can hold various gold types, including gold bars, bullions, stocks, and coins
  • With a gold IRA, you can also choose to invest in gold mining companies
  • A gold IRA follows the same guidelines and rules relating to tax benefits, withdrawal limits, and contribution limits that typical IRAs include

What is Physical Gold?

Investing in physical gold is exactly what it sounds like- you buy physical gold assets and store them for your future. This type of gold can be anything, such as gold coins, jewelry, bullion, or bars. In such a case, you actually have the asset under your custody, and you can do whatever you want with it, including using or selling it off.

 Here are some notable features of investing in physical gold that you must know about:

  • You must know the market prices and changes in order to understand when the right time to invest in physical gold is
  • It would likely lead to a good valuation in the future
  • It provides you with financial insurance in case of inflation
  • You need to have plentiful financial knowledge in order to invest and trade in physical gold
  • Physical gold can add stability to your retirement plans and accounts

Gold IRA Features List

To give you a more thorough idea, here are all the things you must know about gold IRA:

  • While you will not own the physical gold, you will be investing in a variety of gold types through your IRA accounts, such as gold stocks, stocks in gold mining companies, or gold-traded EFTs
  • The conventional brokerage doesn’t offer gold IRA investment services, so you will need to look for a reliable custodian who can help you invest with gold IRA
  • Your custodian will also be holding the physical gold assets under their storage
  • If you take the physical gold under your custody through your self-directed IRA, the IRS will consider this as a withdrawal, which may lead to greater taxation and penalties
  • You will need to give custody of the gold to a bank or a third-party trustee that the IRS approves
  • There are only a few forms of gold that are approved by the IRS, which you should learn about before you buy any gold
  • You might also be able to  hold other precious metals like silver, platinum, and palladium in your gold IRA
  • There are numerous fees you will need to pay when you have a gold IRA, including those related to holding, insurance, and seller fees
  • A gold IRA helps you diversify your investments and savings for your retirement
  • You need to find a trustworthy and reliable custodian because theft and fraud are common in the gold IRA industry

Physical Gold Features List

Here is everything you need to know about investing in physical gold:

  • It is essential to do your research on the market changes and rates before you buy physical gold to make the most of it
  • Physical gold is your best protection against inflation
  • You should be mindful of what you are buying if you are considering gold jewelry since secondhand ones might not give you the best return on your investment
  • Unlike other forms of investment, physical gold cannot be hacked or erased, which is why it is more reliable in some cases
  • It acts as a counterweight to stocks since it can often move in the opposite direction of the stock market
  • It adds diversity and stability to your retirement investments
  • Physical gold almost always leads to reasonable valuation in the future
  • Storing gold at home can be massively risky since it can get stolen or lost
  • You cannot immediately sell physical gold if the need arises
  • Knowing when the right time to sell and earn a good return on your physical gold can be tricky

Comparison of Gold IRA with Physical Gold

If you are considering investing in gold, you might be wondering whether to simply buy and store it or do it through a gold IRA. Here’s a thorough comparison of both options to bring about more clarity:

Comparison #1: Safety

One of the biggest considerations when investing in any kind of gold is security. Thus the questions arise- which of the two options is safer?

There are a lot of factors that affect the safety of the gold. If you have invested in physical gold, you have complete control over it and where to keep it. You can keep it in the bank or at home. Storing at home can be pretty risky in the case of loss or theft.

On the other hand, storing gold IRAs is relatively safer. The gold will not be under your physical possession but somewhat under a third-party custodian. You will be paying them monthly storage and insurance fees. Hence, the gold will be much safer there, and even in the case of theft or loss, you will be reimbursed since you were insured.

However, all of this could be futile and dangerous if you don’t invest in a reliable and well-known custodian company since frauds are common in the industry.

Comparison #2: Cost

When the two are compared, it is clear that the more costly option is the gold IRA. When it comes to physical gold, you will be storing the gold and buying it on your own with no help or intervention from a third party.

However, a gold IRA requires investing in a gold IRA account. Other than that, it is also a requirement to get a reliable custodian to help you with the storage and paperwork. All of this amounts to numerous fees, including withdrawal fees, insurance fees, storage fees, and an account maintenance fee.

Purchasing physical gold may require an initial investment of buying a safe or vault for your home. Otherwise, you would need to invest in a storage locker in the bank to keep your gold safely.

Therefore, when compared, it seems that physical gold is less costly, although more dangerous, since at least the gold in your IRA is insured.

Comparison #3: Complications with Liquidation

The fact is that liquidation is an issue with gold regardless of how you invest in it. If you want to sell your gold, it will take much longer. However, the amount of time it takes to liquidate the asset depends on how you have invested in the gold.

 If you have bought physical gold, you will need to look at the market conditions to see if it is the right time to sell it. This might not always be, so you will need to wait. Moreover, finding a buyer can also be difficult, especially for someone who will buy it from you at a reasonable rate.

Moreover, liquidating IRA gold can be difficult if you have not bought it from a dealer with a buyback program. In such a case, you will need to find a dealer on your own, which can be tedious. Once you have, you will need to ship the gold to them. All of this can be cumbersome and take a lot of time.

Luckily, the best gold dealers and custodians are the ones that have a buyback program. Hence, before investing in a gold IRA, you should find one that offers such a program.

Final Verdict

Gold is an excellent way to diversify your retirement portfolio. It can prevent your savings from crashing down when the stock market crashes and protect you against inflation. However, you must do plentiful research on gold IRA and physical gold to learn about which investment is suitable for you.

Gold IRA is a good option if you want to make the most return out of your investment since it is much safer, and you can invest in various types of gold, including stocks and physical gold. However, it is often more costly and comes with various restrictions.

On the other hand, physical gold is slightly more straightforward. You can simply buy the gold and store it on your own. However, without insuring the gold, this option can be risky. Not to mention, liquidating physical gold is more tedious than gold IRA.

All in all, based on the above-mentioned comparison, I believe that the better option is undoubtedly a gold IRA. While it may seem costly, it is actually more worthwhile down the line. Investing in a gold IRA is also much safer and helps you diversify your retirement portfolio even more.

If you are leaning towards a gold IRA on the gold IRA vs. physical gold debate and are considering your options for investing, consider getting in touch with Goldco. They offer you multiple investment types and even a high buyback guaranteed program. Visit their website for more information!  

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