Your Guide to Choosing Precious Metals IRA Products
Understanding IRA Product Selection: Impact on Investment Value
Selecting the correct gold, silver or platinum products for your Precious Metals IRA is by far the most IMPORTANT part of the entire process.
If you get this piece wrong, you’ll be starting off your Precious Metals IRA in the hole 30%, 40% and we’ve even seen 100%.
For example, if you invest $100,000 in your Precious Metals IRA, but you purchase the wrong products to place inside your IRA, you could easily lose half of your value day one. This means that your $100,000 could be worth $50,000 in real value.
This is a real example. We see this happen time and time again.
To avoid this, you need to avoid any high pressure, scarcity sales tactics and simply purchase the products that have the lowest premium compared to the current gold and silver spot price (we cover these specific products below).
Let’s look at how this plays out in real time. Just like any other commodity or stock, gold, silver and platinum prices are constantly changing.
If you were looking at buying a share of Tesla stock and Tesla was trading for $400 per unit, you would want to pay as close to $400 for your stock as possible right?
The precious metals market is no different. If the price of gold is $2,700 per ounce (gold and silver are priced by the ounce) then you’d want to pay as close to that number as you could. There are a few variables here that we will discuss.
First is the “premium price.” Because you are buying a physical coin or bar (versus paper) there is a premium price attached to the product you will purchase for your Precious Metals IRA. This covers the cost to mine, refine, mint and distribute the physical bar.
Second, each product has a different premium price attached to it. This is because each specific product has a unique premium price attached to it from the Mint/Manufacturer before it goes on sale to the wholesale market.
As an example, the US Mint makes the US Gold Eagle coin. They sell the US Gold Eagle into the wholesale market at a 3% premium. This means 3% over the current spot price. In our $2,700 gold price example, the premium into the wholesale market would then be $81.00 (3% of $2,700).
On the contrary, private (non-government mints) might sell their gold bars into the wholesale market at a premium of $20. The difference here in this theoretical example is $61.00 per ounce/unit.
And even though there’s a $61.00 difference per unit, there’s still good reasons to buy both. We’ll cover that in a bit.
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Here's What To Avoid
Summary
- Bars are normally cheaper than coins.
- You should pay close to spot price as you can.
- Gold: If the price of gold is $2,700, you shouldn't pay more than $3,000 (and that's on the high end).
- Silver: If the price of silver is $30, you shouldn't pay more than $38 (and that's on the high end).
- Bad Acting Dealers use false claims to try and justify high premiums - don't fall for it.
The example above is very basic but you should really pay attention here. We just showed you the most expensive and least expensive gold options on the market. The Gold Eagle coin is normally the highest price and gold bars are normally the lowest price option.
What you need to understand is the simple math there. If the price of gold is $2,700 per ounce, then you want to pay as close to that number as possible.
So if a dealer is charging you significantly more then you need to find another dealer.
The tactics will be the same. They’ll sell you on how exclusive a product is. That you’ll be able to sell this specific product series for more in the future. They’ll give you 100 reasons why their specific gold coins are extremely valuable.
But it’s all LIES. The math makes is all simple. If the price of gold is $2,700, then you shouldn’t be paying more than $3,000 per unit. And that’s at the high end.
But what we see time and time again is dealers hard selling “unique coins” to novice gold investors at super high premiums.
How high you ask? The most recent one we’ve heard of was a premium $3,280 per ounce. Do the math. In our $2,700 scenario, that’s $5,980 per ounce!
This means the price of gold has to rise to $5,980 just for this customer to break even. This is a very real and very sad scenario that goes on every day in our industry.
Let’s take a look at silver. Silver product premiums are much less than gold because silver is much cheaper than gold.
For example, if the price of silver is $30, you shouldn’t be paying more than $38 per unit. And, again, that’s on the high end. In most scenarios, you’d likely be paying $32 to $35 per unit (assuming a $30 silver price.)
The thing to always keep in mind is the math. If you wouldn’t pay a massive premium to buy a share of Tesla or a share of Apple, then why would it make sense to pay a massive premium for gold or silver?
So Which Products Should You Buy?
Bullion Coins
Coins are a great place to start and we recommend starting with US Eagles. The US Eagle is the most popular coin in the world. So it benefits from easy liquidity. It also benefits from premium appreciation. Because the US Eagle, made by the US Mint, is the most poplar coin in the world and the US Mint only makes a certain amount each year, US Eagle coins tend to appreciate at a better rate then it’s peers.
You will notice that US Eagles do have a higher premium than it’s peers. But if you hold them long enough, history has shown they more than pay for themselves by the value you can get when selling them in the future vs other products.
Other bullion coins to consider are the Canadian Maple Leaf, Royal Mint Britannia and the Australia Kangaroo. These are all very well-known coins all over the world and carry a lower premium than the US Eagle. So if you want more gold or silver for your dollars, then these are great options too.
Low Mintage Bullion Series
The other recommendation here comes in bullion coin series that have limited quantities. Our Truth Coins Series is a great example of this. Each year, we only make a limited amount of these coins and each year they contain a different “Truth” inscribed on the coins. Best of all, these coins are typically the lowest price option when it comes to coin buying.
Bullion Bars
If you don’t opt for bullion coins, then your next best option is bullion bars. Most people that buy bullion bars over bullion coins do so because they carry a lower premium. While this isn’t a bad decision, keep in mind that bullion bars are the most generic form of gold or silver out there. This means that when you sell back in the future, you’ll get the lowest bid price for these products.
Bullion bars don’t carry any limited mintage or collectible value to them. If you’re holding metals in an IRA for a long time, you should consider bullion coins due to their limited annual availability and their historic ability to bring more value when you sell in the future.
Proof Coins
Proof coins should only be considered for purchase if their premium price is the same or lower than a bullion coin. A proof coin is a coin with a shiny finish and normally comes with a box and COA. Bad actors will try to use these as selling features. But they are not. We’ve seen many customers that have bought thousands of dollars of overpriced proof coins only to find out how much money they’ve lost when they try to sell them in the future.
