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The word “gold” is often used to describe exclusive or privileged status, with “gold tiers” trending as signifiers of high esteem within a club or organization. Often in these very same places you’ll find one level higher: “platinum tiers.” Platinum is often viewed as a more elite and precious metal than even gold; its value as a very precious metal has persisted over time.
Buying platinum within your self-directed individual retirement account (SDIRA) allows you to further diversify your precious metals holdings and potentially safeguard your retirement savings. Let’s explore why platinum is so val
Palladium may not be quite the same household name as “gold,” but its long-term price performance shows that it might have similar potential to maintain value over time, independently of what happens with fiat currency.
Many people choose to diversify their retirement savings with the purchase of palladium within their Precious Metals IRA.
Like gold and silver, palladium has a range of applications. Palladium has been used in jewelry, electronics, and even dentistry, although currently its usage in the automotive industry—combined with its limited supply—is the key factor driving its high value.
Approximately 85% of mined and extracted palladium is used in catalytic converters in gasoline cars and trucks, where it helps to remove harmful pollutants from exhaust fumes by turning them into carbon dioxide and vapor.
As reducing vehicle emissions becomes more of a global priority, the demand for palladium only continues to grow. Most of the world’s palladium is mined only as a byproduct to other metals like platinum. And with profitability declining at South Africa’s platinum mines over the past handful of years, the supply shortage of palladium has been an ongoing concern.
Because this demand outpaces supply by such a large margin, palladium prices continue to increase. Through 2020, palladium continues to be priced above gold as the demand for palladium continues to grow while the shortage persists.
Palladium’s price performance over the last decade has also garnered it more attention as a precious metal worth holding for investment and hedging purposes. In 2017, the U.S. Mint introduced the American Eagle One Ounce Palladium Bullion coin for the first time; now, we’re seeing demand from long-term savers seeking to add it to their retirement portfolios.
Two decades ago, the federal government saw the long-term performance potential of assets like precious metals and acted on it. In the Taxpayer Relief Act of 1997, Congress opened up precious metals as a potential asset that could be purchased and held inside of an IRA.
While the IRS places strict rules on exactly which precious metals and which kinds of coins and bars can be held in an IRA, individuals continue to purchase metals like palladium within these accounts. So how do these metals fit in with their retirement strategy?
Similar to other precious metals like gold and silver, palladium is seen as both a hedge against market volatility and as a potential way to maintain retirement savings if other asset classes like stocks and bonds fall.
Someone might choose to hold palladium alongside more common metals like gold and silver in order to diversify their retirement savings further. Diversification can help provide hedges against market volatility and price fluctuations. The ongoing utility of palladium in the automotive industry combined with its limited supply bodes well for its long-term price outcomes.
But it’s not just volatility in the stock and bond markets that make precious metals like palladium so valued. With the large liquidity protection programs at central banks around the world, as well as historically low interest rates—including some negative rates—fears of inflation can easily creep back into financial markets. While major currencies like the U.S. Dollar haven’t seen massive inflation in decades, fears of it are not very far off. That makes metal assets like palladium, gold and silver even more precious.
You cannot buy palladium or any other precious metals within a conventional IRA. Instead, you will need to open a self-directed IRA (SDIRA).
The asset options available for purchase in conventional IRAs are tightly controlled by the financial institution offering them, and are generally limited to things like bonds, mutual funds, and stocks. An SDIRA gives the account holder total control to select from the widest possible range of assets, which effectively includes anything not explicitly excluded by the IRS.
SDIRAs aren’t exactly new, but they saw a significant boost to their power in the early 1990s. Investors were demanding more control and options for diversification in their IRAs. When the 1997 Taxpayer Relief Act was passed, Congress and the IRS expanded the options for precious metals holdings that were allowed in IRAs—and expanded the power of SDIRAs as retirement vehicles.
More palladium options may emerge in years ahead, especially with prices now gaining the attention of more of the precious metals market.
In almost all cases, you cannot buy and hold assets like precious metals in your 401(k), which can only hold a selection of assets as defined by the plan. These assets usually include things like stocks, mutual funds, and bonds, much like a conventional IRA. And since 401(k)s are employer-sponsored plans, companies will often push employees to buy their stock.
If you want to diversify your retirement savings beyond the limited range of assets permitted by your 401(k), you will first need to check if your 401(k) is eligible for a rollover. If it is, you can then rollover eligible funds into a new self-directed IRA (SDIRA), which the IRS allows to hold precious metals like palladium, gold and silver.
Every 401(k) has its own plan terms, which define the conditions under which distributions may occur as well as the eligibility criteria for rollovers. Your Precious Metals Specialist can help you review the terms of your existing retirement plans and accounts to determine which ones are eligible for rollover.
There are two ways that individuals tend to roll over funds from an eligible 401(k) into an IRA.
Again, your Precious Metals Specialist is available to answer any questions you may have as well as go through any required paperwork.
We’ve streamlined the process of opening a Precious Metals IRA into five easy steps, making it easy to diversify your retirement savings.
Remember, at each and every one of these steps, your Birch Gold Precious Metals Specialist is on-hand to review your options and help you navigate the process.
Palladium is just one example of the approved metals available through a Precious Metals IRA. If you’ve got any questions about opening one or if you’re ready to open an account, call and speak to a Specialist today at (800) 355-2116.