- 06 Oct 2022
- Precious Metals
- Comments: 0
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When you're planning to invest in something new, you want to buy from a reputable company. Vanguard is among the largest and most reputable investment companies on the planet. They have an overwhelming number of investment and financial services available to their clients.
Many people turn to Vanguard automatically as they look for an investing company. But is that the right choice when you're looking for a gold IRA? It's possible that Vanguard doesn't have the specific options that you're looking for.
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Vanguard is an investment management firm that has been around since 1975. Since its inception, it has grown to a massive global base. Not only does the company help with retirement and retirement assets, but they also help with every other kind of investment.
Vanguard works with every type of client, from the individual investor to the massive financial institution. Their goal is to connect every customer with the investments and the portfolio planning that they need. Because every consumer is different, everyone will partake of slightly different services in slightly different ways.
One of the most unique aspects of Vanguard is the company setup. They are fully investor owned. When you invest with Vanguard, you are investing in specific funds. These funds then have a stake in the Vanguard company itself. So the success of the funds is paramount to Vanguard's continued existence. As such, they are constantly working for the client.
Vanguard is known for having a client-focused approach. Every customer is given unique insights and solutions for their specific needs. The company has a solid reputation in the investment world, dabbling in many different kinds of asset.
When you go to the Vanguard website, you can find information about alternative investments. These are investments that can't be held in traditional accounts, unlike stocks and bonds. Typically, these investments are more complicated and unique. They might have specific risks, but they might also have benefits not seen with traditional investments.
That's the case with precious metals.
Precious metals are considered alternative assets. The IRS defines them as "collectibles," the same way you'd define art or baseball cards. But these items have been used as currency for hundreds of years. They perform more stably against the stock market than many speculative collectibles.
Precious metals are traded as commodities on the open market. Commodities are items that are interchangeable no matter who produces them. Gold from a mine in Argentina is the same as gold from a mine in Canada.
People often invest in gold to hedge against stock market volatility. When the stock market tanks, the price of gold and silver shoots up. The price went through a massive spike in 2008, the likes of which had never been seen on the market. It went through another smaller spike during the 2020 pandemic.
The Vanguard website goes on to say that trading in commodities is riskier than trading in normal assets, even when working with precious metals. The prices can rise and fall unpredictably in response to many different types of global pressure.
The Vanguard website continues by saying that since commodities trading is highly specialized, they do not support it on their platform. Gold and silver are not investments that you can purchase.
So Does Vanguard Offer Gold IRAs?
Vanguard does not sell gold, silver, or any other precious metal, whether you're buying with your retirement funds or with your cash savings. The company believes that commodities are too volatile to be traded, so they work with more predictable assets instead.
So no, you can't open a gold IRA through Vanguard. They may be able to help you with the paperwork to create a self-directed IRA, but you'll have to find a different company to act as your gold dealer. And then you'll also need to find a custodian and depository on your own, too. It's much easier to work with a gold IRA company that has already networked with custodians and depositories.
Gold Fund Option
Vanguard doesn't sell bullion, numismatics, or other commodities. You cannot purchase coins or other precious metals from them. But there is the potential to invest in a partial gold fund.
A gold fund is a fund that is covered by many different investors. The money goes toward certain investments, and the profits from these investments are shared proportionally among the investors. Gold funds let people play with these commodities without needing to coordinate delivery or liquidation of their assets.
There is no pure 100% gold fund with Vanguard, possibly because the company considers the precious metals industry to be risky. But there is a fund that invests about 1/4th of its funds into mining companies and precious metals. This is the VGPMX fund.
The goal of VGPMX is not to focus exclusively on gold or its advantages. Instead, they want to look for opportunities that occur when investors underinvest or overinvest in money-intensive businesses. These money-intensive businesses often feature mining companies and refineries, especially with the tumultuous economy affecting precious metals pricing.
VGPMX has been in existence since 1984. Since being created, its average return annually is a little over 4.3%. That's a solid return rate to keep up for almost four straight decades.
In order to invest with the fund, you need to commit to a minimum of $3,000. The expense ratio per year is 0.35%. When you compare the fund to options with similar distributions of assets, you'll find that it's a relatively inexpensive option.
The fund's goal is to buy securities wherever an industry's spending is in decline. In addition, the fund tries to invest in unique companies, rather than firms whose products or process can be replicated easily. These types of companies include ones with extensive networking, differentiated products, low-cost setups, or other significant advantages over their competitors.
In December of 2021, this fund boasted $1.8 billion in assets, with stocks in 45 different companies. The companies are distributed throughout the globe rather than just in the US or Europe.
Gold for Retirement
This mutual fund may be an option for people investing for retirement. That is to say, it is technically a traditional asset that shows consistent gains. It has been part of the finance sector for almost four decades, and yet it continues to be managed well enough to turn a profit. That's a similar story to Vanguard's other funds, since the success of the funds keeps the company alive.
But there are many mutual funds that you can invest in for retirement. In fact, there are other funds that put 100% of their assets toward the precious metals industry, if that's what you want.
Mutual funds have an advantage over physical holdings in that they generate returns. Because this fund is so well established and well managed, it has less risk than some similar ventures. It also has a relatively low minimum investment and low overhead costs.
But mutual funds like this will not give you the advantages that people are usually looking for in bullion.
Bullion provides a hedge against inflation. Instead of letting your savings stagnate in your account, depreciating more and more each year, you can tie them up in bullion. As the product increases in cost year to year, it will keep up with the shrinking value of the dollar.
Bullion also tends to soar when the stock market is volatile, as mentioned. For this reason, many retirees want to have part of their funds held in gold and silver. That way, if their passive income dries up during economic stress, they can slowly liquidate their precious metals and live on that income instead. It's a safety net.
You won't be able to use Vanguard to make that kind of investment. While Vanguard is undoubtedly excellent for finding funds with solid returns, it's not ideal for those who want to invest in alternative assets.
Risks of Bullion
Vanguard states that they do not trade in commodities because of how complex these assets are. That's fairly standard for straightforward investment management firms. Smaller companies are more likely to be interest in gold dealership, sometimes alongside other alternative assets such as real estate.
While precious metals are more stable in price than some commodities, they can fluctuate greatly. These are some of the risks that you undertake when you invest in bullion:
For these reasons, we don't recommend investing in bullion if you want to turn a quick profit. It's a way to secure part of your assets for your own peace of mind. If you do this, it's because you've decided that the risk of losing a small portion of your investment is worth the security.
And of course, there is never any guarantee that your investments will be "secure." All investments come with risks and can lose everything.
Our Top Alternatives
Vanguard may not sell bullion, but we know quite a few companies that do. These are our top picks for a precious metals IRA.
When you work with any of these companies, they will:
You may also have seen these companies endorsed by a variety of celebrities, politicians, and commentators. Some of them run advertisements on national television or through the internet.
Goldco has been on top of the food chain for years, and that remains true today. From 2006 until now, they've been providing gold IRAs with a greater degree of convenience than any competitors. Customers with Goldco report being delighted by their experiences, particularly by the knowledge and helpfulness of their dedicated representatives.
Every person who works with Goldco is given one dedicated representative who will become familiar with you personally. They'll work with you for the entirety of your relationship with the business. A basic minimum investment requirement is $25,000.
#2. Augusta Precious Metals
With a minimum investment requirement of $50,000, Augusta Precious Metals has a somewhat pricier barrier for entry. But if you have enough to invest, the services are definitely worth it. They've received the endorsement and ambassadorship of Joe Montana due to how streamlined and helpful their services are.
Augusta focuses strongly on education. In addition to the many resources available to educate yourself, the company has five teams of experts. Each team is devoted to a different niche step of the IRA and precious metals process. So they know absolutely everything they possibly can.
#3. American Hartford Gold
American Hartford Gold began operations in 2015, but has risen to be a leader of the pack in less than a decade. Their service and reputation beat out more formidable competitors who have been around for 20 years or more. While many customers found them through their late night advertisements, many others were directly referred.
Because American Hartford Gold doesn't charge fees or investment minimums, they're much more affordable. So if you only have a little saved up and aren't sure how to meet the other minimum requirements, this is a good place to go. Their customer service reputation is impeccable, with the team swiftly following up on questions and resolving any issues.
Vanguard is such a popular and successful investment company that they seem like an obvious choice for a gold IRA. But unfortunately, they don't sell commodities like gold. There's only one fund involved in the precious metals industry, and even that only invests 25% in mining companies.
If you want to store gold in your IRA, we recommend working with Goldco instead. They've been perfecting their process since 2006, with thousands of satisfied customers along the way. Goldco makes the whole process so convenient that you don't need to worry about anything.