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Buying gold in your IRA is one way you can diversify your retirement savings and try to hedge against economic downturns or inflation.
Gold can be held in an IRA in several forms: coins, rounds, and bars. In turn, coins can come in three different forms: bullion, proofs, and numismatic coins.
Knowing the differences between the various forms of coins and rounds and what forms are allowed in an IRA can be helpful on your path to securely building your wealth and retirement savings.
The first thing to know about gold coins and rounds is that they must be minted, or manufactured according to specific standards. There are public mints run by the government; the United States Mint doesn’t just make gold coins, but rather is in charge of the production of all circulating currency. There are also private mints, which don’t have government backing but become reputable by producing high quality precious metal rounds and bars.
Typically, a mint takes a metal—like refined gold—and presses an image onto it to make a coin. There are many different approaches to finishing these coins, and several different reasons why you may want to mint coins to begin with. Coins and rounds, even from the same mint, can have different weights, grades, and dimensions.
The specific standards used to mint coins and rounds tend to go hand-in-hand with their purpose. Some coins are generally purchased as collectibles, while others are primarily used for investing.
Let’s examine each of the three main types of gold coins—bullion coins, numismatic coins, and proof coins—as well as gold rounds.
The term “bullion” refers to high-quality or pure precious metals in bulk, measured out by their weight and used as a store of wealth.
Bullion can range in form from bars to coins and rounds. Governments store bullion to either back their own currencies or to be used as an emergency currency. Individuals use bullion to diversify their savings and to even trade on the price of gold. The reason is simple: gold bullion’s price closely mirrors the spot price of gold. As we get into the other types of coins, you’ll see why that’s important.
Bullion coins and rounds differ based on their mint. A precious metals coin is made by a government mint, while a precious metals round comes from a private mint.
The most widely traded coins in America are the American Eagle bullion coins. Gold Eagles are 22-karat and guaranteed by the U.S. Mint. There are two reasons why they are such a popular form of gold to buy in an IRA: they maintain high liquidity, and they reflect gold prices well.
When you think about investing in physical gold, you may consider bullion coins and rounds. If they meet the requirements dictated by IRS code, you can place bullion coins, rounds, or bars in your Precious Metals IRA.
A numismatic coin carries a different value than what it would be worth melted down. Its value is determined by three factors: (1) its gold content/weight; (2) how rare it is; and (3) its condition.
Obviously, if you melt down a gold coin from Ancient Rome and an equally sized and graded American Eagle, the gold itself would be worth the same. But, to show how numismatic coins work, historical coins like that can be worth several times as much as more common, modern-day ones.
When many people think about gold coins, they think about numismatic coins. These are sold at a premium to their metal content based heavily on their worth as a collectible. Coin collectors generally focus on numismatic coins, but they’re also often purchased as an investment. While you can be sure that a gold bullion coin will be worth about the same as the price of gold in a decade or two, during that same timespan, the value of a numismatic coin will be influenced by more factors.
According to Merriam-Webster, “The first metal coins are believed to have been used as currency by the Lydians, a people of Asia Minor, during the 7th century B.C.E., and it is likely that folks began collecting coins not long after that.” Since civilization has been creating and collecting coins for thousands of years, there are many different types you can collect. But, again, the value of these different coins doesn’t always reflect the spot price of gold or silver.
For gold, numismatic coins date back before 1933, which is when President Roosevelt passed Executive Order 6102, also known as the “Confiscation Act,” in response to the Great Depression. This Act prohibited “prohibit the hoarding of gold coin, gold bullion, and gold certificates.”
Proof coins, or semi-numismatic coins, have their origins as the small batch “proofs” that mints used to make before fully minting a coin. As these proof coins started to catch on with collectors and their values rose above the spot price of gold, many investors began to purchase them for their portfolios. Today, they are held in high regard by enthusiasts and investors alike.
Semi-numismatic coins are usually date-stamped and are sometimes commemorative. Since these coins can be anything from extremely rare to common, their prices don’t always match up with their metals price. They are therefore semi-numismatic.
Proof coins might sound very similar to numismatic coins. However, a key distinction between the two is their mint date. For gold coins, proof coins were minted after 1933—again, after FDR’s Confiscation Act.
As you consider buying gold for your retirement accounts, proof coins are another option to consider. As long as they satisfy the requirements laid out by the IRS code, proof coins may be placed into a Precious Metals IRA.
While the American Eagle bullion coins are the most commonly traded bullion coin in the United States, another American Eagle option is the proof coin; both of these come from the U.S. Mint. The bullion version isn’t sold directly by the Mint and is easily circulated. The proof version is sold directly from the Mint and is uncirculated. This gives proof a higher rarity value than bullion, and the proof coin is both minted and held in better condition.
These are the three primary types of coins an investor might want to own. If you are looking to buy any of these coins inside of your IRA, your choices are narrowed. The IRS sets certain requirements for what is allowed to be held inside a retirement account. Please refer to our chart below for further clarification.
Obviously, you can buy and own gold that is not in coin form. Bars and ingots are a common form to take physical possession of gold, and can be stored in the same depositories as coins. And depending on whether they meet certain requirements, all of these forms can also be bought inside an IRA.
But there are some significant differences between these forms:
Owning gold inside an IRA wasn’t always allowed. The Taxpayer Relief Act of 1997 opened self-directed IRAs (SDIRAs) up to alternative assets, including precious metals. It also put specific restrictions on which pieces you could own inside of one.
The current law allows for only gold coins and rounds that are at least 99.5% (.995) pure. The one exception is the American Gold Eagle, which is about 92% pure. Foreign minted coins are also accepted, as long as they meet the minimum for fineness.
You can see the list of eligible coins and rounds below.
Your Precious Metals Specialist can go through the eligible list of options with you.
Once you decide to open a Precious Metals IRA, you will get to choose how much gold you want to buy and in which forms. With coins and rounds, you will have a range of options eligible for placement into your IRA, from which your designated Precious Metals Specialist can help you select.