Gold IRA myths and lies are prevalent throughout the precious metals dealer community for one reason alone – profit margin.  You might easily be hoodwinked if you don’t read the following information on “How to Wisely Buy Metals for Your Precious Metals IRA”.

I actually had the chance to speak to a salesperson at a competing Gold and Silver IRA company.  They advertise on tv and the radio, so thousands have called to learn more about storing precious metals in their Self Directed IRA.  I was crushed as I hung up the phone, having learned the unethical sales tactics that probably thousands of people have fallen victim to.

Let me outline the typical unethical sales pitches you will likely hear with one of the “big name” Gold IRA companies:

You should buy Proof Coins for your IRA.

Yikes.  No you shouldn’t.  The only reason proof coins would go in to a precious metals IRA are so that the dealer can make a greater profit margin.  This salesperson actually gave me some hocus pocus pitch on why your Proof Silver Eagles would always be worth more than a common US Silver Eagle when you went to liquidate and withdraw from your precious metals IRA.  Maybe.  But the large premium (amount you pay over the spot price) on proof coins is typically 20% to 70% higher than what you would pay for common US Silver Eagles.  What they also don’t tell you is that Proof Silver Coins are less liquid (dealers pay less for them because there is not high demand for them), and you will likely lose a good percentage of the premium you paid for the proof coins when you liquidate.

Let me show you the math:

  • Today’s silver spot price is $16.86
  • 1 oz Proof Silver Eagles are currently selling for $59.99 – $43.13 OVER the spot price of silver
  • 1 oz common US Silver Eagles are currently selling for $20.04 – $3.18 over the spot price of silver

Let’s say you wanted to liquidate and the silver spot price is now $20 (for ease of math).

  • Dealers (note, that many do not publish a buy back price for proof coins because they don’t want to buy them) are currently paying $27.14 for Proof Silver Eagles – $7.14 over the spot price.  The net loss is $15.99 per oz. on the proof coins.
  • Dealers are currently paying $21.00 – $1.00 over the spot price.  The net gain per ounce is $0.96 per oz. on the common Silver Eagles.

So there you have it.  Buy mainstream, low premium IRA approved items for your precious metals IRA  – ALWAYS!  We only recommend the following items for any precious metals IRA:

  • 1 oz United States American Gold Eagle coins
  • 1 oz Canadian Gold Maple Leaf coins
  • 1 oz Unites States American Silver Eagle coins
  • 1 oz Canadian Silver Maple Leaf coins
  • 100 ounce silver bars .9999 pure
  • 1000 ounce silver bars .9999 pure

Precious Metals Home Storage IRAs are a Wise Idea

No, no they are not.  Precious metals home storage IRAs are actually one of the greatest risks facing precious metals investors today.

Dealers who advertise “home storage” commonly propose using a “checkbook LLC” to try to circumvent IRS enforcement of the laws that prevent an IRA owner from possessing IRA assets. “Checkbook LLC” refers to a self-managed limited-liability company that is set up by the IRA owner to purchase and hold bullion in his or her IRA. Dealers sometimes offer the opinion that the IRA’s “indirect investment” in bullion through a checkbook LLC enables the IRA owner to do indirectly what they cannot do directly: store in his or her home because the bullion is a direct investment of the LLC, and not directly owned by the IRA.   This is completely false information, putting the precious metal investor at risk.
The IRS has made it very clear, that what these dealers are purporting is completely false.  The IRS states that home storage of IRA-invested bullion will convert IRA-qualified bullion to a “collectible,” which is not allowable in an IRA. In this regard, the IRS explicitly states that purchasing bullion through an LLC does not circumvent the “physical possession” requirement or otherwise legitimize a home-storage arrangement.

If you have opened a Checkbook LLC Home Storage IRA, you may face taxes, penalties, and fees on your entire IRA should the IRS decide to call you on your self-storage of precious metals.   And, the IRS has the ability to pursue investors doing this at any time.

And the early withdrawal penalty applies as well, because bullion is defined as a collectible if stored at home, and collectibles are not eligible for self-directed IRAs, it is deemed to be a distribution from the IRA in the purchase amount of the bullion, and a 10% early withdrawal penalty will be tacked onto that. Even worse, if the IRS considers home storage of bullion to be “self-dealing” (i.e., the IRA owner has provided a “facility” for storing his or her IRA assets), then all of the IRA assets—not just the bullion that is held at home—will be deemed distributed, the IRA owner will pay a 10% penalty on all assets in the IRA, and the IRA will lose its status as a qualified retirement account.  Ouch!