Is a Gold IRA Worth it in Today’s Economy?

When we are watching the news, reading it, or doom scrolling through our favorite social media app, it is pretty hard to avoid the fact that here in the United States, we are approaching an …


When we are watching the news, reading it, or doom scrolling through our favorite social media app, it is pretty hard to avoid the fact that here in the United States, we are approaching an economic recession.  Given the rapid inflation rates and the fact that unemployment is still fairly high, there is just a lot going on right now in the world of the economy.  Although many of us probably wish we could ignore it, the fact remains that it impacts all of us as well.

Although the above is a sort of broad concept, a recession ends up trickling down to our individual finances a lot as well.  That means that now more than ever, we need to be vigilant in terms of how we allocate our resources and invest.  Saving for retirement might not be your biggest priority right now, but that does not mean you should ignore it entirely.

Today, we will be discussing one method of doing so that allows you to also protect yourself from inflation.  Our paper currency loses spending power every year, and it is hard to account for that when we are saving for our retirement.  That is where “hedges” against inflation come in, but more on that in a bit.

What is an IRA?

To get a basic idea of what an IRA is, you might want to check out a resource like this one.  The acronym stands for “individual retirement arrangement,” and it is an account that we can open to specifically save for that period in our lives.  As far as the benefits of them, the main thing is that there are special tax rules surrounding them.

Now, the exact nature of those will largely depend on the type that you decide to open.  You are also not limited to just one.  However, note that there are fees associated with all of them, so it can be difficult at times to have several open at once.

Roth IRAs tax you when you deposit the money into the account rather than when you withdraw it as traditional ones do.  It is up to you to decide which model you would prefer.  Of course, you can also get the help of a financial advisor if you are not certain.

Meanwhile, there are also self-directed IRAs.  As you can probably guess based on the name, they are a more flexible option if you want to diversify your holdings in your individual retirement arrangement.  The holder is fully in charge of it, but outside help can be of use at times.

Gold IRAs

Gold IRAs are actually a part of the self-directed IRA category.  You can find an example of how they work here,, if you’re curious to see them in action.  The gist of it, though, is that you use gold investments as part of your retirement plan.

This can work in a few ways, and you can always mix and match them.  Perhaps the most popular option is to use bullion from precious metals (typically gold) and store it with a custodian that holds your IRA account.  Typically, they are taxed as collectibles.

Another option is to store a coin collection in a similar manner.  Not all coins are accepted, though.  Some examples of ones that include the Australian Kangaroo and Canadian Maple Leaf coins.  If they have the right percentage of precious metals in them, they are likely eligible.  Again, they will be considered collectibles for tax purposes.

You can also use stocks that are for companies in the gold or precious metals industry, although these are not as popular for gold IRAs because they can usually be placed in the other types as well.  All of these are perfectly viable options, though.

Are they Worth it?

Now that you have a bit of a better understanding of what they are and how they work, you are probably wondering whether or not individual retirement arrangements geared towards gold and precious metals are actually worth it.  As we mentioned above, there are going to be some costs involved.  Precious metals are not “cheap” unfortunately, although that is what makes them worthwhile to invest in in the first place.

Part of this comes down to the way that we handle retirement here in the United States since other parts of the world have slightly different systems.  For the most part, we are responsible for our own retirement funds.  Social security helps, but it alone is generally not enough to sustain a person throughout the decades of their retirement.

That is why we must place such emphasis on preparing and saving up for when we do get to our golden years.  Inflation can really do a number on the funds that we set aside, though.  When the dollar is constantly losing its value, we cannot necessarily depend on it to keep its buying power decades down the line.

This is where those “hedges” that we mentioned earlier really come into play.  A hedge against inflation is an asset that does not get hit as hard (or at all) by the impact of inflation on paper currency.  A classic example of it is gold.

Although it has been used in this way for centuries if not longer, it has not lost its luster over time.  It is still a highly desirable material, both in its raw and refined forms.  We use it for all sorts of things from jewelry to motherboards in our smartphones and computers.

In that sense, it does seem worth it to have at least a small self-directed IRA dedicated to gold.  You certainly do not have to do anything extravagant if you do not want to.  Anyone can open one, and even a single gold bullion is better than nothing for later on in life.

Because you can liquidate some of the pieces of gold or parts of a coin collection, they are also a reliable resource to have if you end up having an emergency.  Really, it is hard to argue that given the current economic climate, it is not worth it to have an account like this one.

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