Precious Metals IRA - Community thoughts

[Spiralpiece]

Time to pose a question to the greater PMBug community:

I'm looking for what you all think about these "IRA-approved" physical silver holdings like APMEX/Kitco/Northwest Mint and just about every other silver dealer offers in some way or another. I'm all for personal responsibility and holding my own PM's, but I'm curious of the validity of how these could be useful in expanding ownership of PM's (even if held in a trust).

Kitco has a decent explanation, as well as some trust companies they list. I read about one specifically because I recognized the name from New Mexico, they work with Brinks out of New Mexico to move your physical silver order to a Depository in Albuquerque (assuming they stay in State with it), for example.

Important: I'm not looking for investment advice. Yes, I do have a traditional IRA. No, I haven't called any of them to ask about details because I assumed it would all be sales pitch anyway.

Just trying to generate some discussion about something that may be (for some) a "put-it-down-and-step-away" train of thought. For others, like me, I'm genuinely curious about the potential. Always an opportunity to learn from others' experience, knowledge, or even caution!

 

[white&yellow999]

I have had thoughts about opening one of these myself. The problem I have with these PM IRA's is that you have to have to store your bullion at a depository or a bank of some sort. I am not really worried that they are not secure as much as I would be that I couldn't get to it in the time of crisis, if confiscation happens you don't have control, and they might sell it or "loan" it out.

 

[Spiralpiece]

Hey thanks for the reply -

That's pretty much what it boiled down to for me too. If the system of trust deteriorates slowly, perhaps there's more you can do to get to this physical in holding.

I've been doing more reading on it, and it prompted me to ask some questions to a local credit union to see how they manage their IRA's (or just send it out to some larger group to manage), and if they work with a local depository of some description if this sort of service is even offered...

 

[DoChenRollingBearing]

My problem exactly. I ditched my IRA four years ago, paid the taxes and the penalties (I was 51) and used much of what I had to buy gold to keep near me. Not in a bank or similar. NEAR ME.

That's a tough question. You have to look at your own circumstances and make a hard judgement. We wish you well!

 

[DSAbug]

I think having your gold and silver in an IRA defeats the purpose of having gold and silver. Why does everyone always want to have another person between them and their gold?

 

[DCFusor]

I don't think it defeats the entire purpose, just some of it. As DoChen mentioned, he took a hit on taxes to get out of his IRA, and that can be fairly serious for some people - it would be for me and I have some gold in my IRA.

I go with the idea - gold is better than no gold, wherever, while I agree that having some close to you seems pretty wise too.

 

[DSAbug]

I don't think it defeats the entire purpose, just some of it. As DoChen mentioned, he took a hit on taxes to get out of his IRA, and that can be fairly serious for some people - it would be for me and I have some gold in my IRA.

I go with the idea - gold is better than no gold, wherever, while I agree that having some close to you seems pretty wise too.

You have no gold if it's in an IRA. You have paper gains.

To those that think otherwise, I have only one thing to say.

MF Global.

 

[DCFusor]

I'd take an instant max tax rate paper loss - very real at the moment, to get out of IRA paper and into physical gold. And then pay tax on any gains I made in that, instead of the way it works now.

That's not a risk, that's a certain loss. How can you suggest that is smart? Surely you can't say paper is a certain loss - just a finite probability of loss, less than 1.0.
But if I ditch the paper IRA - that's a 30% or so instant certain loss with probability 100%.

I'll never let fear make me kill myself - I'll make whatever it is I'm afraid of try and kill me, because it might not be able to pull it off.ffftt:

FWIW, I've been trading in and out of paper gold etfs in my IRA to great profit - and never saw some mythical tax I was supposed to pay extra because of that. Nothing reported on the tax forms from my brokerage. I prefer the "safer" things like PHYS of course there.

 

[Spiralpiece]

This is the kind of discussion I thought may come out of the question
@ derek - I wanted somebody to say MF Global! That's what I thought right before I did the OP, and almost didn't post due to that, ha!

@ DCF - I've been around investors with your attitude about fear I've done some research into silver and gold ETFs before with my IRA, never understood why I didn't jump into silver in the middle of last year...

Cheers ~

 

[rblong2us]

never understood why I didn't jump into silver in the middle of last year...

cos you have a better 'sixth sense' than me

and can still get it a fair bit cheaper than after that huge takedown.

lucky it was only 50 kilos i bought and im only £5k down

I was told it would bring down the Comex, so obviously it was an altruistic decision and not for any grubby profit :wave:

Max Kaiser and Wynter Benton ? ...... pah


Best is to buy whenever you can, forget what you paid and think only in ounces or kilos

 

[DSAbug]

I'd take an instant max tax rate paper loss - very real at the moment, to get out of IRA paper and into physical gold. And then pay tax on any gains I made in that, instead of the way it works now.

That's not a risk, that's a certain loss. How can you suggest that is smart? Surely you can't say paper is a certain loss - just a finite probability of loss, less than 1.0.
But if I ditch the paper IRA - that's a 30% or so instant certain loss with probability 100%.

I'll never let fear make me kill myself - I'll make whatever it is I'm afraid of try and kill me, because it might not be able to pull it off.ffftt:

FWIW, I've been trading in and out of paper gold etfs in my IRA to great profit - and never saw some mythical tax I was supposed to pay extra because of that. Nothing reported on the tax forms from my brokerage. I prefer the "safer" things like PHYS of course there.

30% haircut to pull your money out? Sounds a lot like MF Global...

If you don't see the dangers in investing in ETFs then you are missing the point behind owning gold in the 1st place. You have no clue what the government is going to do when the shit hits the fan. The whole reason to own gold is so that you have protection. If they are willing to own up safety deposit boxes, raid pensions and confiscate gold.. Do you honestly think they wouldn't touch your IRA or GLD investment?

At the very least, I GLD to continue trading at a severe discount to gold (by design and due to fees) and premiums to rise on physical gold. Will the difference be more than 30%? IMO, it's a certainty and it will start being more obvious to retail investors when GLD fails to participate as well in major rallies and under-performs during corrections. Just like how SDS severely underperformed a straight up SPY short this past year.

If you are going to invest in something through your IRA, buy some gold shares.. Don't buy GLD where you are guaranteed to underperform the metal.

 

[DCFusor]

You are forgetting the "out" part of my trading. 50% of the time I have zero risk due to ETFs (or anything paper, I don't use etfs for much else), and yes, I'm well aware of that.

My investing mostly involves other things entirely - capex for my business, solar power for my campus, things like that. Sure I have some shiny, and not just gold either.

The tax rates are well known for pulling money out of an IRA - that's the price you pay for having one - you pay no other taxes on money put in or trading profits in one. It has nothing to do with frauds like MF - this is the government, its own fraud enforced by guys with guns.

Right now, this is saving my butt in a divorce - that money can't be touched by someone now an outsider (The IRA is inherited and isn't even in my name directly). There are advantages to the IRA stuff, believe it or not. Had I pulled it out - it could all be taken by a court order - bam, it's gone.

GLD (or IAU or probably half a dozen others) underperform the metal, but that's picking nits, frankly. I never said I had no metal, and I've lectured others myself about the dangers of paper gold - but there are times and places, and different strokes.

Physical metal is real hard to trade - low liquidity and high premiums going each way. For keep it forever, it's fine, and has advantages for sure, but it's not the only way to amass value either.

I find it best not to talk much about the gold "near me" for reasons that should be obvious from the above. At this point that is far higher risk than any ETF, and sadly, I'm too far from water for those handy boating accidents to occur... Not all risks are from fraud in the financial business.

If by gold shares, you're talking about miners - well, they've really underperformed the metal of late AFAIK, but I don't follow them much. Otherwise, I don't know what you're talking about. I trade copper and coal miners, but not gold so much. I work in a certain range of beta that suits me and with businesses I can see into and understand (very rarely fly by night startups, which gold miners often are)...just personal preference there.

I'm a cowboy trader, swings of a few days at a time, always watching and using tight stops, as well as into many sectors and countries. Short of a meteorite hitting, or all world governments deciding by fiat that everything paper - not just paper gold - is reset, I'll do better than most because of my watchfulness - typically about 10 hours a day. And being out, having learned the discipline to wait for a juicy trade to set itself up, out otherwise. This game goes to the nimble, especially the last 5 years or so.

I tend to sell things still going up, not waiting for that last penny or a trailing stop, as I've learned over the years that too good to be true - is usually true, so I get out - being too greedy is just as risky as it gets. When that exit ramp gets too crowded, chances are real good I've been out awhile already - I've learned that one the very hardest way.

And when you're out - you're out. Half the time my risk is precisely zero. The devil is truly in the details in this game - and unless you know them, you can't make blanket statements about a particular way of doing things.

My trading in GLD, has, by the way, outperformed the metal by quite a margin...buy low, sell high, even short sometimes, wash, rinse repeat. Sure if you just buy and hold it...it stinks. Why would you do that? As far as my trading goes, it might as well be digital pigeon feathers with a lot of weird emotions tied into it. I make money by not falling for the emotions others are controlled by, in this and everything else I trade.