There are some precious metals companies out there who try to sell consumers on investment products and get them to sign up for precious metals IRAs in order to boost their own profits. The truth is you can open IRAs through which gold, silver, platinum or palladium can be purchased, or they can even roll over a 401k into an IRA. But if you've never done it before, you should start with this beginner's guide so that you know what's involved with it.

The IRA Should Be Based In Physical Gold And Not ETFs

Some investment experts may try and discourage consumers from buying gold in physical bullion because they believe gold ETFs are better. ETFs aren't bad because they can have benefits that include not having to handle bullion or risk it being stolen. Also, if the price of the gold held by the ETF rises, you could sell your shares at higher value just like you would stocks. But the problem is owning a gold ETF does not allow you to visit the bank or mining company and take any gold home. There could be occasions where you need to take physical possession of your precious metals, and by buying physical bullion you have the option to do that. If you have it in an IRA, it will have to be held in an approved storage facility, but once you reach the right age, you can have it shipped to you if you wish.

Your Gold Will Need To Be Approved Bullion

Not just any bullion can be used in an IRA. It needs to be specific coins or bars as specified by the IRS. Bullion you can buy for an IRA includes the following:

-American Gold Eagle bullion

-American Gold Eagle proof

-UK Queen's Beasts coins

-Canada Gold Maple Leaf

-American Gold Buffalo uncirculated versions

Note that these cannot be coins that you already have in a home collection. If you have more questions about what kind of coins or bars you can invest in, you should go to the IRS website or ask your custodian if possible.

The IRA Will Need To Be Self-directed

When you open up your IRA for your precious metals, you'll want to make sure it's a self-directed IRA. Note that it could be a traditional IRA which you may need if you're rolling over a 401k, or a Roth IRA for post tax investing. But you will want it to be self-directed so that you can choose your investments. Most traditional investment brokerages don't have self-directed options for the following reasons:

1. Assets like physical precious metals, tax lien certificates, restaurant franchises (non-stocks), and other real estate may be outside the scope of their advisors

2. Many of these hard assets are considered too much of a risk for regular brokerages

3. Self-directed IRAs put far more decision making and responsibility in the hands of the investor and not the advisor.

If you're looking to open a self-directed IRA, you might want to go with a local bank, a lesser known brokerage, or if you have to go this route, opening an IRA through registering an LLC. But you'll want to pay attention to gold IRA reviews regarding the custodian to make sure you are going with a reputable one. It's up to you to know what you're doing with your investment decisions, and to know the applicable tax laws.

Other Benefits And Risks Of Gold

Questions you may ask yourself are whether your physical precious metals should be mostly gold, all silver or a mix of both or with platinum added in. The answer to those questions isn't always clear. You have to consider how much you can invest, the volatility you can handle, how much liquidity matters to you, and other factors. Gold is usually more expensive to buy than silver, and it doesn't have quite the demand and liquidity of silver. However, its market is less volatile, and it takes up less storage space and doesn't tarnish the way silver does. But it usually is a good idea to have both gold and silver in your portfolio.

The bottom line is investing in gold is usually better if you're planning on holding it for many years and can handle some price swings. You just need to be fully prepared for all the steps it can take to setup your IRA or rollover your 401k.