Silver IRA: A Definitive Retirement Investment Guide
June 23, 2023
What if every dollar you invested in your IRA would purchase the same amount of goods in twenty years that it would purchase today? What about 30 years or fifty years? What if each dollar would purchase more in the future than it would purchase today?
It all depends on what your IRA dollars are invested in. Today we will discuss the advantages of owning physical silver and why you may want to consider owning some of it in your IRA. Investing $1,000 in silver fifty years ago would mean owning over 392 oz of silver bullion. Investing thirty years ago would mean owning 232 oz, and twenty years ago would be 204 oz. How’s that for a way to turn $3,000 into $20,000 to spend in retirement?
Converting those ounces of silver back into dollars today would total $20,000. This is why many have allocated a portion of their retirement funds into a Silver IRA. $20,000 today will purchase more than the $3,000 would purchase when the silver was initially purchased. Whether purchasing silver for your own retirement, your children’s retirement, or your grandchildren’s retirement, silver would have served you well. The recent pullback in silver prices affords us an opportunity to buy the shiny metal at a discount, which would allow us to spend a little more freely in retirement.
Silver’s 2,000 Year Track Record
Even if we look back to the year 200 BC, the amount of grain or bread we could buy with an ounce of silver, we could still purchase it today. Granted, no one stays retired for 2,223 years, but you get the idea. Whatever silver there is left in our IRA when we leave this earth would still be working to protect our families’ financial future as well. There are not many financial assets out there we could trust to survive and perform well for multiple generations; silver is one of them. One of the questions often asked is how you can get physical silver into an IRA.
IRA is short for “Individual Retirement Account.” All IRAs have what is known as a custodian or trustee. If you have an IRA at the bank, the bank is usually the custodian. For those with an IRA in an annuity, the custodian is usually the insurance company who issued the annuity.
For those with an IRA in mutual funds or an investment brokerage account, it will often be the firm where the funds are held or one of their banking partners that serve as custodians. Usually, these custodians will only allow paper investment products in the IRA accounts they offer. If you tell your investment broker you want some silver in your IRA, he or she will most likely offer you a paper silver investment, such as an ETF or mutual fund that has “silver” in the name. These are not the same as having a Silver IRA; let’s discuss the differences.
Paper Silver vs. Physical Silver
Paper Silver Investment
Paper silver investments, such as mutual funds, exchange-traded funds (ETF), or exchange-traded notes (ETN), do not provide your funds access to physical silver. They provide your funds access to a paper derivative that somewhat tracks the spot price of silver. There are no guarantees that the price of these paper instruments will accurately reflect silver prices, and there will often be long disclosure statements in fine print explaining this. But even if they could guarantee that the price would reflect spot silver, this is not an accurate representation of the real price for physical silver.
Physical Silver Investment
Have you ever purchased physical silver from a dealer below the spot price? Not likely. In times of high demand and constrained supply, you can usually sell physical silver for higher than the spot price. Often the highest gains go to those who own physical metal but not to the owners of paper and silver investments designed to track the spot price.
In order to own a Silver IRA, you will need a different type of custodian than you have dealt with before.
IRAs can hold other investments besides banking, insurance, and stock market-based products. IRAs can also hold investments like real estate, small businesses, and precious metals. But you don’t necessarily want a custodian that will allow everything because you will likely be paying more fees than necessary. You need an IRA custodian that allows or specializes in precious metals investments. An account executive at the United States Gold Bureau can help steer you in that direction. You will then need to “fund” your Silver IRA, so your account executive can purchase the physical silver to put in your Silver IRA. This can be easier than you may think.
Investing in Silver: Using Funds Already Available
Those interested in purchasing silver often wish they had additional funds available to buy more silver. But for those who would like to add silver to their IRA, often the additional funds already exist if you know where to look. By doing what is called a “direct rollover” or “IRA Transfer,” funds you currently have in a retirement account elsewhere can be used to create a Silver IRA without owing income taxes on the transfer. When done correctly, a direct rollover from a previous employer’s retirement plan or an IRA transfer from an existing IRA is a tax-free event. These are funds you may already have that are available to help fund your Silver IRA.
Something to keep in mind about IRA accounts, in general, is that they all have annual reporting requirements. Every year, the custodian will send a report to the IRS about your retirement account(s) and what they are worth. Owning a Silver IRA does not increase or diminish the amount of information reported on your retirement assets. But if you have funds outside of normal retirement accounts such as 401k, 403b, or IRA accounts, you might want to consider just purchasing some silver outright in addition to what you own in a Silver IRA. Physical silver you own outside of an IRA has no annual reporting requirements, and no one but you and your family will know you have it (unless you spill the beans). Owning physical silver privately is one of the most discreet ways to store and grow your wealth and purchasing power.
Suitable IRA Silver Investment Options
For those interested in a Silver IRA, there are certain types of silver that are eligible. Best to discuss this with your account executive, who can help steer you to the eligible products.
Besides properly graded bullion, there are also “Proof Coins” to consider. An analogy I use to describe the difference in stock market parlance is common stock vs. preferred stock. There are times when common stock (more volatile) does better than preferred stock, but preferred stock can perform better when common stock languishes.
During periods when the price of silver bullion has gone sideways, proof coins have often outperformed bullion. I have found it best to own some of both; an account executive can help you get a balanced portfolio for your Silver IRA.