Self Directed Gold IRA – What It Is & How It Works

Self Directed Gold IRA - What It Is & How It Works

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No matter your age or income bracket, you've probably heard a lot about the importance of diversifying your retirement. A diverse retirement portfolio is able to carry you through tough times, while also yielding passive income when the economy is good.

But what types of diversification are there? One of the most popular is to invest in a self-directed gold IRA. What exactly is this, and is it worth the hassle?

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What a Self-Directed Gold IRA Is

A self-directed IRA is very simple. This retirement account comes with the same tax deferments and benefits that you get with a traditional IRA. But instead of being controlled by an investment manager, you are the sole person choosing what you invest in.

Self-directed IRAs can be used to purchase traditional assets like stocks, bonds, and mutual funds. But there are also several alternative assets that can't be held in a traditional IRA. As long as you comply with the relevant regulations, you can hold things like real estate, cryptocurrency, and precious metals.

A gold IRA is a retirement account that's funded by gold. When you take distributions from the account, you will do so by liquidating the gold. Alternatively, you can have pure gold sent directly to your address instead. Just keep in mind that you'll need to pay taxes once you take distributions.

How It Works

Self Directed Gold IRA - What It Is & How It Works

The IRS has laid out guidelines for investing in gold, silver, platinum, and palladium. Each of these metals is subject to purity guidelines. You can only buy certain coins from sovereign mints, as well as bars that meet certain standards.

You are not allowed to use collectible coins, circulated historic coins, other numismatic rarities, jewelry, scrap metal, rounds, or other forms of precious metals. You must use approved bullion with a high purity rate.

A self-directed IRA will be managed by a custodian. This is an institution that's in charge of maintaining your assets and giving you reports on them. But they won't choose your investments for you. They'll simply carry out your instructions for the investments.

When you invest in gold, that will need to be stored in a licensed depository. There are dozens of depositories in the US and internationally that meet the IRS standards for security. It's not legal to keep your account in your home.

Your custodian will put your metals in their vault and issue ongoing reports. Each vault has a full insurance policy and undergoes regular audits.

You don't really need to do anything from there, until you're ready to take distributions. Then you'll coordinate this with your custodian. Depending on the gold dealer that you use, you might be able to sell your metals back to them.

You will pay annual fees for storage and for your custodianship. These vary depending on the companies. Some companies charge a percentage of your holdings, so you pay more as you accrue more. Others charge flat fees, so you always pay exactly the same amount no matter what.

Benefits of a Self-Directed Gold IRA

The benefits to a self-directed gold IRA cannot be understated.

❑ Tax Benefits

Self Directed Gold IRA - What It Is & How It Works

If you're investing your retirement funds instead of making a cash purchase, then you get tax benefits. You don't need to pay taxes on any of your holdings until you take distributions. That gives your wealth more time to appreciate.

You can even fund your new IRA with a rollover from your current retirement account. This is a tactic that moves funds from one account to the other without any tax penalties. It's important to work with a skilled custodian or dealership, though, so they can help to streamline this process.

You have to complete the paperwork to move your funds in the first 60 days after opening your new IRA. Otherwise, you'll be subject to tax penalties and IRS penalties for withdrawing money early from your account.

❑ Inflation

One of the biggest reasons to invest in gold specifically is to help hedge against inflation. As people hold their assets over time, they'll see the price of precious metals go up over the years. That's because it keeps pace with inflation.

A dollar earned in 1960 is worth barely anything today. But if you invested that same dollar into precious metals, those metals could now be exchanged for far more than you initially invested.

Precious metals are considered a stable investment. They don't have a lot of space for dramatic growth. And they do sometimes go through slumps in price. No investment is without risk. But precious metals are a way to secure your savings against inflation in ways that a simple bank account can't.

With everything we're hearing about inflation these days, this is more important than ever. Plenty of Americans are worried that their retirements will vanish, worth a mere fraction of what they were a few years ago.

❑ Economic Volatility

Over the past fifteen years, the global economy has seen multiple massive upheavals. Sometimes you simply don't know what's coming around the corner. There are people who have lost massive amounts of their retirement, including retirees who then have no income stream to live on.

When the stock market crashes, precious metals tend to soar in value. So if you secure part of your retirement in these metals, you can live off of them until the market forces stabilize. Many people who are retired or nearing retirement prefer to do this.

There's not a lot of trust in the stability of the economy anymore. So precious metals are an investment that can give people peace of mind.

How to Get Started with a Self-Directed Gold IRA

If you want to invest in gold for your retirement, we recommend working with a precious metals dealer. These are gold dealerships that specifically cater to customers seeking IRAs. They carry IRA-eligible products, have knowledgeable staff, and can help you through all of the relevant paperwork.

These are a few of our top recommendations.

#1. Goldco


Goldco is the foremost specialist in gold IRAs today, and our top recommendation overall. Their customer service simply can't be beat.

When you sign up for Goldco, you'll be given a dedicated precious metals specialist. This person will walk you through all of the paperwork. They'll also ask questions and answer your questions, getting to know you along the way. The more they know, the better their recommendations will be.

Goldco has an excellent industry reputation, with thousands of satisfied reviews and great feedback from organizations like the BBB. Whether you're buying gold for the first time or very familiar with the industry, they're super helpful.


  • Excellent streamlining of the customer service.
  • Rated best in the business by multiple trusted publications and commentators.
  • Handle everything in house, including talking to your custodian for you.


  • Not as many educational resources as Augusta.

#2. Augusta Precious Metals

Augusta Precious Metals

Augusta Precious Metals is another excellently-reviewed company that serves people throughout the US. Because their services are more in depth and intense, they have a minimum buy-in of $50,000, which is twice Goldco's.

But if you can afford that, the company does have very good resources. They will even teach customers about the market with one-on-one sessions with a Harvard analyst.

Augusta also has a lifetime of service. So even after you make your purchase, you can always call to get an update on your holdings. You can also ask for insights about the market and the future.


  • Educational tools including one-on-one webinars.
  • Celebrity endorsements and ambassadors.
  • Five different departments of experts in the IRA process.


  • Minimum investment for an IRA is $50,000.

#3. American Hartford Gold

American Hartford Gold

American Hartford Gold is a top pick because they have worked hard to make gold investment accessible. You don't need to meet any minimums for a buy-in, and they have fewer fees than many other companies. At the same time, their customer service team has gotten awesome reviews.

The trade-off for this is that most of AHG's inventory is several years old. This does not affect the quality of the bullion at all. But if you have specific recently-minted pieces that you're set on buying, you might not be able to find them in this inventory.


  • No fees for setup or required minimum investments.
  • Solid selection of metals from past years.
  • Tons of reviews from satisfied customers.


  • Not the widest selection of new, modern coins.

Final Thoughts

A self-directed gold IRA is a solid way to protect yourself against various economic factors. You can fund it by moving over retirement funds from your existing accounts. But the process to do so can seem complicated.

Because of that, there are gold IRA companies. Some are better than others, however.

Our top recommendation is Goldco because of the hands-on customer service. They truly carry you through the whole process, even going as far as to communicate with all the third parties for you.

Augusta Precious Metals is a great choice if you have a little more to spend, and you want the one-on-one service that clients receive.

On the other end of the spectrum, American Hartford Gold is great for people on a budget. They don't have any investment minimum, but their list of products is a little more limited.

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