With the stock market and current economic climate being volatile, many people are considering purchasing precious metals for investment purposes. Adding approved precious metals to your retirement portfolio is known as purchasing a precious metals IRA. Although, as with all investments, there are risks, purchasing precious metals has a number of distinct advantages.
Stability
Precious metals are a stable investment, as values tend to increase over time and prices do not fluctuate widely, as with stock purchases. Confidence in even American financial markets has wavered over 2011, making buying precious metals even more attractive, as their value is internationally recognized.
Defensive Asset
One of the reasons the price of a precious metals remains so stable over time, is that value does not depend on a company or even a government’s performance. The value of precious metals is also independent of the value of the United States dollar. In fact, the opposite is true. In times where other investments drop in value, precious metals tend to remain stable or even rise, as people lose faith in financial markets. That is why adding precious metals to your portfolio is known as a defensive asset.
Determining Quality
Include only precious metals of very high quality in your IRA. Purchase gold that is at least .995 fine, or 99.5 percent pure. The American Gold Eagle is specifically listed in the legislation as acceptable. Other coins, such as the Canadian Gold Maple Leaf and the Austrian Philharmonic also meet the pureness standard.
Silver
Add silver of at least 0.999 fineness or 99.9 percent purity to a defensive asset. The Silver Eagle has specially been mentioned in United States law as acceptable for an IRA, although a coin such as the Royal Canadian Silver Maple Leaf, which is 99.9 percent pure, is also acceptable.
Platinum
If you are considering adding platinum to your IRA, choose coins or bars that are at least 0.9995 pure. The Platinum Eagle is an acceptable IRA purchase, as is the Platinum Maple Leaf and the Australian Platinum Koalas coin.
Palladium
Palladium, a white silver metal, is more valuable than silver and more rare than even gold. Ensure your purchases are of at least .9995 fine or 99.95 percent pure to add to an IRA. Palladium, as with both gold and silver, is collectable in either bar or coin form. The Palladium Royal Canadian Maple Leaf coin is an example of one of few palladium coins minted.
Find Trusted Sources
Only approved rollover custodians can manage precious metals IRA assets. These companies follow their incorporating state’s banking commission rules. Look for a long, stable business history. After completing paperwork, the purchaser funds the account, usually from an IRA he or she has already purchased. The authorizing rollover custodian is then directed to begin purchasing approved precious metals. The metals themselves, once purchased, are usually stored securely in a bank vault.
Portfolio Security
Balance your portfolio by combining stocks with more stable assets such as bonds and defensive assets. By rolling over between five to ten percent of your stock into a precious metals IRA you can add security to your retirement plans.
Fran Delaney is a finance writer in Los Angeles.
