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When it comes to investing in precious metals for retirement, one key consideration is the secure storage of your valuable assets. This is where a precious metals IRA depository comes into play.
A precious metals IRA depository serves as a highly secure and regulated facility designed specifically to store physical precious metals on behalf of individual investors who hold a precious metals IRA.
In this article, we will delve into the world of precious metals IRA depositories, exploring their purpose, features, security measures, and the benefits they provide to investors.
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Precious Metals IRA Depositories: What Investors Need to Know
There are few things more important to anyone's long-term financial survival than ensuring that you have appropriate levels of savings built up that will allow you to retire with ease and comfort.
A big part of achieving these savings means putting away enough money to allow you to retire and take advantage of natural increases in the stock, bond, or precious metal market.
A key component of achieving these savings is diversifying your holdings, and this makes precious metal IRAs highly important to your retirement. When used correctly, a precious metal IRA can ensure you diversify your savings, access a consistently growing asset class, and grow your long-term nest egg.
However, taking advantage of such an IRA isn't as simple as snapping your fingers, and there are many things you need to keep in mind when opening a precious metal IRA.
What is a precious metal IRA?
An IRA stands for Individual Retirement Account. In most cases, people use IRAs as a key component of their overall retirement savings strategy.
IRAs are financial portfolios - usually managed by financial experts - that enable individuals to save for retirement. Depending on the specifics of the IRA, you will be able to achieve tax savings when making deposits or withdrawals. However, all IRAs allow people to save money in a tax-free manner, and investments within the IRA are not taxed.
A precious metal IRA is an IRA that uses the purchase of precious metals, such as gold, silver, platinum, or palladium. As long as the precious metal meets relevant IRS standards, you should be able to purchase such precious metal. This can include bars, coins, or bullion. A precious metal IRA can also hold a limited number of stocks, including stocks that deal with gold mining.
Precious metal IRAs allow individuals to invest in a diverse method of retirement savings. Gold and other precious metals have many advantages over traditional investment vehicles: They typically move up as economies become more turbulent, and they can be excellent hedges against inflation.
Most experts urge that individuals allocate at least a portion of their retirement savings to precious metals and a precious metal IRA can make this possible.
To take full advantage of a precious metal IRA, you must use a depository.
What is a depository?
As noted above, precious metal IRAs have to adhere to a series of somewhat complex regulations. Chief among them: The precious metals must be stored with a non-bank trustee. This means that the precious metals you purchase have to be stored in a third party that is unrelated to the vendor you purchased from.
Furthermore, this depository must meet regulations that are set by the IRA, including safety, security, monitoring, access, insurance, and more.
Other regulations that precious metal IRA depositories have to include are:
The precious metals stored have to meet minimum levels of purity, including 99.5% for gold, 99.9% pure for silver, and 99.95% for platinum and palladium.
You cannot simply see the precious metal whenever you want - you can't just walk into the depository and request access to your gold. This also means that you cannot make withdrawals at will: The precious metal must remain in your depository unless you make a sale.
Appropriate levels of safety, monitoring, security, and insurance.
Precious metals must be purchased, not simply given over. This means that you cannot take gold jewelry you have lying around your house and put it into your IRA. Instead, you have to make a regular business transaction from an appropriate vendor, and the item you purchase must meet all investment eligibility criteria.
What types of depositories are there?
When you are trying to find a precious metal depository, keep in mind that multiple types of depositories may be able to fit your needs. First, some depositories offer segregated storage, which means that each piece of gold that you own is held separately from anyone else's.
Imagine this as a safety deposit box system. There is also comingled storage, in which all gold and other precious metals are held together. Comingled storage separates who owns what gold by maintaining highly accurate records of the gold owned by each investor.
As you would imagine, comingled storage is cheaper than segregated storage. While each investor may have their preferences, comingled storage is usually more than adequate for the average investor, provided you can ensure that accurate records are kept of your investment.
Most depositories will send regular "statements" that lay out how much of each precious metal you have and where it is being stored, and savvy investors regularly check these records to confirm their accuracy.
What should You look for in a precious metal depository?
In some cases, your financial agent will offer a depository that they have worked with. This is fine, provided that the depository charges a reasonable price and that it meets relevant IRA regulations.
Other times, you may be able to look for a depository that meets certain criteria of yours. When checking for precious metal depositories, you need to keep a few considerations in mind:
Price
It is important to shop for the best price possible. All depositories are allowed to charge fees in exchange for their services, but given the wide range of depositories on the market today, it is possible to get a good deal on storage space.
Furthermore, many investors will offer a year of free storage as part of their effort to get you to do business with them. While these deals may be worth it, it is important to look at the free print and make sure that your price won't increase exorbitantly after the trial period has ended.
Speed and reliability
All depositories should be able to get you your precious metals at a good speed, as well as assist you in completing any sale. Completing the sale of precious metal may be a somewhat complex process, as you have to engage multiple parties, including the depository and the broker you are using to sell the gold.
You can work directly with the depository or have the gold shipped to you, then ship it to the broker who is selling it. Regardless, you need to ensure that there are guarantees about how quickly you can get the precious metals sent to you.
Security
Thankfully, full-fledged gold robberies are mostly a thing of Western novels. However, any depository should be able to explain its security measures and how they protect your investment and the investment of others.
This means that depositories should have the latest in technology and personnel. Furthermore, accidents and thefts do still happen. As such, you'll need to confirm that your investment is protected and that any investment you store is appropriately insured by the vendor.
Compliance
As anyone knows, IRS regulations are not easily complied with. Precious metal vendors must adhere to a strict set of regulations to protect your investment and ensure that your tax breaks are preserved. You'll need to confirm that the precious metal vendor you use adheres to all relevant regulations and that they are currently up-to-date and eligible to preserve your investment.
Reviews
As always, it is worth doing a quick search of the internet, including on Google and a variety of other review websites, to confirm that the precious metal depository you are considering using has high reviews and is held in good regard by consumers.
It is also worth doing a Google News search to confirm that the depository hasn't been in the news for any negative reason. Keep in mind that even the best business will occasionally have negative reviews, but that more regular negative reviews may discourage you from doing business with a depository - particularly if the reviews all say the same thing.
Sources of Depositories
How you choose to store your gold is ultimately up to you. In many cases, precious metal brokers will make recommendations based on previous working relationships. It is also possible that these vendors get a discount for recommending clients and that they can pass a portion of that discount over to customers - or not.
Regardless, it is always worth checking with your bank or the internet to determine if the financial depository you are using will get you the best deal and meet your needs.
Final Thoughts
Selecting a depository is an important decision: It will determine how easily you can access your investments and turn your investments into cash. It's also not an easy decision: Investors have to balance the need to save as much money as possible with the convivence, service, and security that come with dealing with a high-quality depository.
By adhering to the steps above, you put yourself in a better long-term position to save money and ensure that you can create a solid foundation for future retirement investments.
Remember to read our list of the Top Gold Companies.
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