Precious Metals
Gold Investments: How to Invest in Gold
Photo by Zlaťáky.cz
Photo by Zlaťáky.cz
No commodity in the world has the lasting value of gold across the known empires of history – and with an increasingly volatile global economy demonstrating the limitations of unbacked paper currencies, it’s no wonder that more and more people are looking into the merit of investing in gold.
Whether you’re a beginning investor who is just starting to diversify your savings (check out our guide to investing in gold first if so) or are someone who’s accustomed to dealing in high-value trades, gold has earned its reputation as a hedge against other investments. In this guide, we’ll go over gold’s value as an investment in the current economic climate and provide detailed information on how to invest in gold from multiple approaches.
BGG - Table of Contents Table of Contents
BGG - Key Takeaway Key Takeaways
- The two common paths for investing in gold include buying gold for placement in a Precious Metals IRA or making a cash purchase for home delivery. From there, you will be able to choose your gold investments, such as bullion, proof or numismatic coins, and even jewelry.
- Gold purchased for placement in a Precious Metals IRA must meet the IRS’s purity requirement of 99.5% pure, with the exception of the American Gold Eagle coin, which limits the types of gold you can invest in but provides tax benefits.
- Buying and storing bullion gold yourself provides you with immediate access to your investment, although its liquidity will depend on the form of gold you choose (with coins such as the American Gold Eagle being the most liquid).
- With a Precious Metals IRA, you’ll choose an approved custodian and depository to ensure your gold investments are properly stored, secured and insured.
- Numismatic coins enjoy a specialized market that can lead to staggeringly high prices, but they can be difficult to liquidate quickly at a fair price.
- When it comes to buying and selling physical gold bullion on hand or in your Precious Metals IRA, choose a reputable dealer like Birch Gold to avoid counterfeiting concerns.
How to Invest in Gold
If you’re ready to learn how to invest in gold, there are two common pathways that you can choose from based on the amount you’d like to invest and your overall investment experience, including Precious Metals IRAs and making a cash purchase for home delivery. For Precious Metals IRAs, you’ll have the option to invest in eligible gold bullion bars, rounds and coins, along with select proof coins. When making a cash purchase for home delivery, you have the ability to invest in a wider range of gold products, including gold bullion, numismatic coins, proof coins and jewelry. Here are the steps on how to invest in gold for both options.
1. Choose your investment method
When it comes to investing in gold, there are two primary paths: Buying gold for placement in a Precious Metals IRA or making a cash purchase for home delivery. Let’s break down each option:
A. Precious Metals IRA
A Precious Metals IRA is a self-directed individual retirement account that enables you to invest in alternative assets like gold and other eligible precious metals, including eligible silver, platinum and palladium. A gold-backed IRA helps you diversify your retirement funds, and you can roll over all or a portion of your 401(k) and IRA accounts into physical gold possession. Read more in our guide on how to buy gold with a 401(k) if you’d like to dive in and get started.
Unlike possessing gold (which we’ll cover next), precious metals IRAs enable you to own physical gold without having to provide storage, security and insurance for the gold. As such, you can benefit from the gold market without taking on additional hassle and risks.
Investing in gold through an IRA has a few requirements to keep in mind:
- Purity requirements: Investing in gold through a precious metals IRA requires you to meet the IRS’s purity requirements. Gold purchased for placement in an IRA must be 99.5% pure, with the American Gold Eagle coin being an exception at 91.67% pure.
- Depository requirements: Gold purchased for placement in an IRA must be stored in an approved precious metals depository to ensure it’s protected.[1]
- Withdrawal requirements: Similar to conventional IRAs, withdrawals generally follow the same rules. Distributions can typically begin without penalty at age 59½, and required minimum distributions must start at age 73 for Traditional Gold IRAs to avoid penalties. You can take distributions either in cash by liquidating your metals, or by making an in-kind distribution to take physical possession of your metals, with taxes applied according to the account type.
Investing in gold via a precious metals IRA is as simple as opening a Gold IRA through a custodian of your choice (read more on where to invest in gold for tips). This can be done with the assistance of a reputable gold dealer like Birch Gold Group, who has established relationships with some of the leading self-directed IRA custodians. Then, make your purchase and store your metals at the precious metals depository of your choice.
B. Cash purchase for home delivery
Your second option for investing in gold is taking physical possession outside of a retirement account. With a direct purchase of gold, there’s no IRA custodian involved, no retirement rules to follow and no restrictions on when you can sell. You pay for the metals outright and either take home delivery or arrange private storage.
A cash purchase of gold offers flexibility, allowing you to choose from a range of bullion coins and bars, proof coins, numismatic pieces or even gold jewelry. There are no IRS eligibility requirements because the purchase is not held in a tax-advantaged account. However, that flexibility also comes with greater responsibility. You are in charge of storage, insurance and security.
Direct purchases of gold also face different tax implications. Generally, gold purchased outside of an IRA are treated as collectible for federal tax purposes, meaning if you sell it at a profit after holding it for more than one year, the gain can be taxed at a maximum long-term capital gains rate of 28%.[2]
2. Choose the type of gold to own
Now that you understand how to invest in gold through a precious metals IRA or a direct purchase for home delivery, the next step is choosing the type of gold to own. It’s important to note that not all gold is eligible for placement in a precious metals IRA. Here are your options:
A. Gold Bullion Bars & Coins
Gold bullion bars and coins represent the literal, physical form of gold, and are valued primarily based on gold content. Many bullion coins and bars are IRA-eligible, as long as they meet the IRS’s purity requirements, which require gold to be 99.5% pure, with the exception of the American Gold Eagle coin at 91.67% pure.
The price of gold bullion closely tracks the spot price of gold, plus a premium that covers minting, distribution and dealer costs. For investors focused on gold’s role as a store of value or inflation hedge, bullion is often the most straightforward option.
When buying gold bullion, it’s important to note that these products typically carry lower premiums than collectible or proof coins, making them a more cost-efficient way to gain exposure to investing in physical gold. They also tend to be more liquid, especially coins like the American Gold Eagle or the Krugerrand, thanks to active global markets that make it easy to buy and sell gold bullion.
B. Gold Numismatic Coins
Minted prior to 1933, numismatic coins are not valued solely on their precious metals content – as are bullion coins and bars – but also based on their condition and scarcity. Collectors vie for these increasingly rare coins at dealers and auctions, with some coins selling in the millions depending on their rarity.
Because of the extra historical value they carry, gold numismatic coins have not only additional value but also additional meaning for owners and prospective buyers. Saint-Gaudens double eagles, for example, fetch top prices when they are in mint or near-mint condition and professionally graded. However, these numismatic coins, professionally graded or not, are not eligible for inclusion in a Gold IRA.
The requirement of keeping the coins intact means that if you choose this gold investment strategy, you should expect to have an adequate and secure storage space with climate-controlled conditions. Be sure to insure your collection to protect it against disasters and theft, or work with a precious metals depository to keep your assets both safe and insured.
It’s also worth bearing in mind that numismatic coins are relatively illiquid assets. If you suddenly need funds quickly, your options for converting numismatic coins into spendable currency at their full value are virtually nonexistent. Pawn shops will buy your coins, but it won’t be for what they’re really worth. If that’s not a concern for your situation, however, numismatic coin investing can be a satisfying pursuit.
C. Gold Proof Coins
Another gold investment option is gold proof coins. Proof coins are the highest-quality coins in the world. They undergo a strict minting process that involves striking them at least six times using hand-polished dies. Once struck, they are thoroughly examined to ensure they are free of any blemishes. The result is a mirror-like finish with exceptional detail, showcasing the highest standard of coin minting.
Gold proof coins are often produced for collectors, as they are issued in small mintages, making them rare and valuable. Additionally, proof coins come with a higher premium due to the intensive labor required in their production. While bullion is bought and sold for its weight, proof coins are renowned for their rarity and quality, which can allow them to appreciate in price well beyond the intrinsic value of their metal content.
There are various gold proof coins you can invest in for physical possession, but only one is eligible for placement in a precious metals IRA: The American Eagle Gold Proof Coin. This limited-edition version of the American Gold Eagle bullion coin highlights the meticulous minting process and production standards of the U.S. Mint.
D. Gold Jewelry
While jewelry might not be the most profitable way to invest in gold, as it often has extremely high markups, it can be an enjoyable option due to its beauty and art form. Overall, 49% of gold mined is used for jewelry production,[3] showcasing its high demand worldwide. However, using jewelry as a gold investment is often not advised, as the returns are not as reliable as coins, bars, and rounds. Additionally, gold jewelry is not eligible for placement in a Gold IRA.
Comparing Gold Investment Options
Choosing the right type of gold depends on your goals, budget, and whether you’re investing through a retirement account or making a direct purchase. The table below highlights the key differences between the common gold product types discussed, including eligibility, premiums and typical use cases.
| Comparing Gold Investment Options |
|---|
| Category | IRA Eligibility | Best For | Premium Level | Storage |
|---|---|---|---|---|
| Bullion Coins, Bars & Rounds | Often yes, must meet the IRS purity requirement of 99.5% pure, with the exception of the American Gold Eagle coin | Price-focused investors | Lower | Approved depository for placement in an IRA, or personal storage for direct purchase |
| Numismatic Coins | No | Collectors | Higher | Personal |
| Proof Coins | Sometimes | Collectors/hybrid investors | Higher | Depends on account |
| Jewelry | No | Personal Use | Very high | Personal |
Pros of Investing in Gold
If you’ve ever asked yourself, “Is gold a good investment?” this is the time to answer that question. Because of its inverse relationship with the economy, investing in gold means that when economically-sensitive assets go down in value, gold investments often go up. In other words, every day that goes by that sees the dollar decrease in its worth is one that sees more people turn to gold as a safe haven.
Diversification of your savings
As any financial advisor will tell you, diversification is the key to a well-built investment portfolio. If you put all your eggs in one basket, then you run a very high risk of losing everything if the investment goes bad.
But true diversification means spreading your investments into different types of assets. A gold investment, or similar investment in precious metals, can give your portfolio the diversification it needs to insulate your savings against the volatility of the economy as it fluctuates between boom-and-bust cycles.
Preservation of wealth
To plan a truly carefree retirement – without worry of debt or working for the rest of your life – then you need a plan that preserves (and grows) your wealth. Ideally, you want to be able to live tomorrow as you do today – or potentially even better.
For decades, gold investment strategies have been employed by investors of all ages and experience levels to safeguard their savings and plan for a more secure future. Gold and other precious metals are stable, liquid assets that have consistently increased in value over the years, enabling millions to achieve their long-term financial goals.
Hedge against inflation
As a finite resource, gold is an excellent commodity for hedging against inflation. The important thing to remember when making a gold investment is that you are not just diversifying your savings with an alternative asset. You are also taking proactive steps to combat the declining value of the dollar.
The value of the dollar has declined considerably over the last decade. Even if your investments were not affected by a declining economy, you still lost purchasing power as the dollar declined. Precious metals, however, tend to at least hold their value above inflation and even increase as the dollar declines.
Planning for your future
A lot of uncertainty still surrounds the global economy, which can influence investment values as well as the value of the U.S. dollar. Some have even speculated that the U.S. dollar may collapse completely, which would have drastic effects on every American.
No matter what your age or current investment strategy, there is no better time to start preparing for your future than right now. Investing in precious metals can protect your hard-earned money and allow you to preserve your worth and lifestyle into retirement.
Cons of Investing in Gold
While investing in gold offers a range of unique benefits, including inflation protection and growth potential, several key considerations should be taken into account. As with any financial decision, it’s essential to understand the potential drawbacks to ensure that investing in gold aligns with your goals. Keep these factors in mind if you plan to invest in gold:
- Storage and fees: When buying physical gold, whether for physical possession or placement in an IRA, you must consider associated storage costs and fees. With physical possession, you can choose to store your gold at home in a safe, but this can expose you to the risk of damage or theft. You can also choose a safe deposit box at a bank, which will come with associated fees. When investing in gold through a precious metals IRA, you will be required to store your metals in an approved depository, as well as pay administrative fees to your precious metals IRA custodian. These fees can diminish your returns.
- Volatility: Like most financial investments, gold is subject to price swings from external sources, such as geopolitical events and supply and demand fluctuations. Fortunately, among the various asset classes, gold has historically served as a store of value, holding its worth during times of economic uncertainty.
- Eligibility requirements: For those investing in gold through a precious metals IRA, the gold you buy must meet the IRS’s eligibility requirements. IRA-eligible gold must be 99.5% pure, with the exception of the American Eagle coin, which is 91.67% pure.
Gold Investment FAQs
BGG - FAQ Where can you buy physical gold?
For beginners looking at how to buy gold, buying physical gold is by far the easiest method. Below are some of the different ways you can buy gold:
- Mints: Government and private mints, as well as refiners, are qualified and licensed to produce gold bullion. When you buy from them directly, you ensure the authenticity and purity of your gold, backed by the manufacturer’s reputation. However, not all products are sold directly to individuals. The U.S. Mint, for example, offers proof gold and silver American eagles for sale online, but not bullion coins. Instead, they must be purchased from a precious metals dealer.
- Gold dealers: Reputable precious metals dealers such as Birch Gold provide a similar level of reliability to their customers, many of whom return as they continue to add to their stockpiles. As a premier gold dealer, Birch Gold is also able to supply precious metals IRAs with easy access to gold to help retirement accounts diversify and grow.
- Pawn shops: Many local pawn shops and online marketplaces sell various forms of gold. However, just because it’s easy to buy gold coins at the pawn shop, through eBay or from a neighbor, that doesn’t mean it’s a good idea to do so. Counterfeit and low-quality gold coins won’t fetch any real value, meaning that if you’re going to invest in gold bullion, you should do it the right way: through a mint or reputable dealer.
How do you store physical gold?
When it comes to storing physical gold, you have two primary options to consider: Do you want to store it yourself, or do you want someone else to handle the storage for you?
If you’d like to store it yourself, a dedicated room, vault or safe is your best bet. Ideally, you will want to be able to control the humidity and temperature in the room or container. Gold is classically resistant to corrosion, but you won’t want to leave anything to chance if your future funds are at stake (and any speck of other metal may corrode). Keeping the area as secure as possible is also key, meaning that you should refrain from discussing your physical gold stash with anyone you don’t fully trust. Furthermore, assets you self-custody can’t be purchased with your retirement savings. For most Birch Gold customers, that’s a dealbreaker.
If you would like someone else to handle the acquisition and storage of the gold for you, enlist the custodian of your precious metals IRA to utilize their precious metals IRA storage options. Custodians of these accounts are well experienced in providing storage areas that meet all qualifications for preserving the value of gold, along with full insurance in the extremely unlikely event of theft from such facilities.
How do you sell physical gold?
After you acquire your gold, whether in your own accessible storage or via a precious metals IRA, the time will eventually come when you’ll want to sell it.
If you’re selling your gold through a precious metals IRA, the process is incredibly easy. Simply contact a precious metals dealer such as Birch Gold once you’ve determined how much you’d like to liquidate, and let the transaction take place. You can liquidate your gold assets at any point in a precious metals IRA without penalty – as long as you aren’t withdrawing cash directly from the IRA itself. If you make a cash withdrawal, you’ll pay a 10% penalty fee if you’re under 59 ½, and you’ll need to pay taxes on the amount withdrawn.
Selling physical gold doesn’t come with an upfront fee, per se, but it does have its costs. If you want to liquidate your gold bullion, expect to pay shipping costs to send it to the dealer, as well as pay for insurance on the package in the event it gets lost or stolen. Lastly, dealers may charge a flat or percentage-based fee for liquidating. Be sure to find out in advance before moving forward with any particular dealer.
What factors should you consider before investing in gold?
To ensure that your gold investment aligns with your financial goals, several important factors should be considered. These include:
- Risk tolerance: Nearly every investment carries some sort of risk – some more than others. Gold carries some risk, including volatility during geopolitical events and fluctuations in supply and demand. However, gold is a relatively stable asset with a history of serving as a store of value, outperforming other asset classes during periods of inflation or economic uncertainty.
- Investment goals: Work with your financial advisor to outline your investment goals and what you hope to get out of your gold investment. Understanding your goals can help you determine whether investing in gold for physical possession or for placement in a precious metals IRA is best for you.
- Storage: Because gold is a tangible and highly valuable asset, it must be stored properly to prevent theft, loss or damage. With physical possession, you’ll also need to consider insurance costs to protect your gold, while a precious metals IRA will require your gold to be stored in an approved depository.
- Price, premiums, and fees: It’s important to assess gold prices to understand the spot price, dealer markups known as premiums, and associated fees, such as custodian fees for managing a Gold IRA.
How much does it cost to buy gold?
When buying gold, you will notice that it is sold in troy ounces, a unit that measures the weight of precious metals like gold. As you look at gold prices, you will typically see three prices: the spot price, ask price, and bid price.
- Spot price: The spot price of gold is the current market price set by global supply and demand in financial markets.
- Ask price: The ask price, sometimes referred to as the sell price, is the amount a gold dealer or seller is willing to accept for their gold.
- Bid price: The bid price, sometimes referred to as the buy price, represents the maximum amount a buyer is willing to pay for gold.
The cost of buying gold is influenced by several factors, including supply and demand, as well as current market conditions, which determine the price at which dealers are willing to sell.
Wrapping Up: Is Gold a Good Investment?
Gold’s historic track record shows its ability to serve as a good investment to diversify your wealth. Whether you plan to invest in gold through an IRA or take physical possession of coins, bars or rounds, gold investments serve as a hedge against inflation and a safe haven asset, safeguarding your wealth in periods of economic uncertainty.
More than anything else, investors who want to ensure that they will have access to funds in the future need to consider the importance of investing in commodities with lasting value outside the dollar. As a prized, finite resource, gold is the runaway favorite among precious metals investors worldwide.
If you are ready to diversify your savings and achieve financial peace of mind, call Birch Gold Group today at (800) 355-2116.
Learn more about gold investments and start buying today!
BGG - About the Author 
About Peter Reagan
Peter Reagan has covered precious metals and the economy for Birch Gold Group for over 15 years. His articles have been featured in several leading publications, including Newsmax and Zerohedge. At Birch Gold Group, Peter leverages his deep market insights to help educate website visitors and customers on why they should consider diversifying their savings into gold and other precious metals, and how that process works. Due to this commitment to education, his content has become a trusted source of information throughout the industry.
BGG - About the Reviewer About the reviewer Phillip Patrick
Phillip Patrick is a Precious Metals Specialist and spokesman for Birch Gold Group. Born in London, he earned a degree in politics and international relations from the University of Redding, and began his career as a wealth manager at Citigroup in London’s financial center. Since joining Birch Gold in 2012, Phillip has become a trusted voice on economic policy and precious metals, appearing as a guest on dozens of television and podcast platforms, including Newsmax, The Ben Shapiro Show, The Megyn Kelly Show, and Stephen K. Bannon’s War Room. In addition to his contributions on Birch Gold Group's blog, you can watch his interviews on Rumble and follow him on Gettr.
Sources
- Internal Revenue Service. Retirement plans FAQs regarding IRAs. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras
- Internal Revenue Service. Topic no. 409, Capital gains and losses. https://www.irs.gov/taxtopics/tc409
- World Gold Council. 24 Facts about Gold. https://www.gold.org/about-gold/gold-facts
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