Gold IRA: What It Is, How It Works, and Risks of Investing

This article is a complete guide to gold IRAs, covering all key aspects of the investment process. Read on to learn what a gold IRA is, how it works, and the pros and cons of investing in one.

Written by Rick Erhart

Rick Erhart is an experienced precious metals professional with more than ten years in the field. He earned a degree in finance and is widely regarded as a specialist in self-directed IRAs.

During periods of rising inflation or economic uncertainty, many investors turn to gold to preserve their wealth. Why? Gold is often seen as a secure asset that holds its worth over time, and tends to appreciate during times of uncertainty. If you’re considering adding physical gold to your retirement portfolio, you’ll need to set up a specialized account called a gold IRA.

However, gold IRAs often involve significant costs and may not provide the same wealth-building potential as conventional investments like stocks or bonds. Before deciding to open a gold IRA, here are key details you should understand.

What is a Gold IRA?

A gold IRA (sometimes called a precious metals IRA) is a unique type of individual retirement account designed to let investors include gold as part of their retirement savings. Unlike traditional IRAs and 401(k)s, gold IRAs allow holding gold coins and bullion, as well as silver, platinum and palladium.

A gold IRA can be funded with pretax dollars or set up as a Roth IRA using after-tax contributions. Physical precious metals that you buy as a part of a gold IRA must be securely stored. Consequently, gold IRAs rely on a custodian, such as a bank or brokerage firm, to oversee and manage the account.

A gold IRA follows similar regulations for contribution caps and withdrawals as a regular IRA. Contribution limits for 2025 are $7,000 and $8,000 if you’re 50 or older. To open a gold IRA and fully comply with IRS regulations, investors typically work with a gold IRA company and a gold IRA custodian.

Key Points About Gold IRAs

A gold IRA (or a precious metals IRA) is another name for a self-directed IRA that holds gold. A self-directed individual retirement account permits investors to include gold coins, bullion, or other precious metals as part of their portfolio.
You can establish a gold IRA using pretax or after-tax funds by working with a specialized custodian or broker.
The IRS allows self-directed IRA investors to acquire approved physical forms of gold, silver, platinum, or palladium, such as bars or coins.
Gold IRAs sometimes involve higher fees than standard IRAs due to the costs of buying and storing physical metals.
The IRS contribution limits for a gold IRA are the same as for traditional IRAs.

Types of Gold IRAs

Gold IRAs are available in several types, similar to conventional investment accounts. Investors have the following options:

Traditional Gold IRAs: These retirement accounts are funded with pretax income. Contributions and any growth are tax-deferred, meaning taxes are applied only when withdrawals occur during retirement.
Roth Gold IRAs: These are funded with after-tax dollars, offering no immediate tax benefit. However, if you meet the necessary conditions, qualified withdrawals during retirement are tax-free.
SEP Gold IRAs: Designed for small business employees or self-employed individuals, SEP gold IRAs follow the same structure as traditional SEP IRAs. Taxes apply only to withdrawals in retirement, not contributions. The IRS caps contributions at 25% of compensation or $66,000 for 2023 ($69,000 for 2024), whichever is lower.

Key Pros and Cons of Gold IRAs and Things to Consider

Pros	Cons
Gold IRAs offer the same tax advantages as traditional IRAs. Your investments grow tax-deferred until you begin withdrawals in retirement. With a Roth gold IRA, qualified withdrawals are tax-free.	Gold IRAs involve fees that are typically higher than those for traditional IRAs, which many brokers offer at no cost. Custodians charge storage fees for safeguarding physical gold, and annual maintenance fees can further reduce returns.
Gold often moves independently of stocks and other conventional assets. Including a small portion of gold in your portfolio can enhance diversification.	Gold does not generate income like dividends or interest. Its value depends solely on market price changes. For example, if you buy 10 ounces of gold, you’ll still own 10 ounces later, with its worth tied to the price at that time.
Many investors consider gold a reliable way to preserve value and safeguard wealth against prolonged inflation.	A gold IRA is restricted to holding physical gold or other approved precious metals. It cannot include traditional assets like stocks or bonds. To invest in those, you’ll need a separate IRA, though the total contribution limits across all your IRAs remain unchanged.

The conventional view argues that holding gold in an IRA is generally not ideal due to storage costs, lack of dividends or earnings, and its primary role as a static store of value in bank vaults. However, rising gold prices and Trump’s tariffs make gold a strong choice for an IRA, despite past views against it.

Gold protects against inflation, stabilizes portfolios, and thrives in 2025’s trade war uncertainty. Storage costs and no dividends are downsides, but gold’s price growth and reliability in tough markets make it a smart pick for IRA investors wanting to safeguard and build wealth now.

Gold prices have recently spiked to $3,200/oz in 2025 (up 44% yearly), outpacing the S&P 500. Analysts project $3,000–$3,700 by mid-2026 as tariffs fuel inflation and trade war fears. Ultimately, you should weigh all the pros and cons of investing in a gold IRA and decide if it’s right for your specific situation.

How to Open a Gold IRA?

To open a gold IRA, you need to have earned income. If you’re filing taxes jointly, either you or your spouse must have earned income. You can choose to open either a traditional or Roth gold IRA, based on what best fits your financial circumstances.

Opening a gold individual retirement account involves three straightforward steps:

Select a Gold IRA Company
Add Funds to Your Account
Choose Your Precious Metals
Track Your Investments’ Performance

Step 1: Select a Gold IRA Company

The first task is to pick a top-rated gold IRA company to guide you through the process. These companies assist with opening your account, transferring funds, purchasing metals, and arranging secure storage in an IRS-approved depository.

In some instances, the company may also serve as your account’s custodian, handling IRS paperwork and ensuring compliance. With many gold IRA providers available, each offers different fees, services, and levels of customer support. Take time to research and choose a company that provides quality service at a competitive price.

After selecting a provider, you’ll complete the necessary forms to open your account. Be ready to provide a driver’s license or other state-issued ID, along with details of any existing retirement accounts (like a 401(k) or IRA) if you plan to transfer funds.

Step 2: Add Funds to Your Account

Once your account is set up, you’ll need to deposit money before you can invest in precious metals. There are three main ways to fund your gold IRA:

Cash Contribution: You can deposit cash, write a check, or use a wire transfer, similar to funding a regular savings or investment account. Note that your bank may charge a fee for wire transfers.
Rollover: If you want to move money from an existing retirement account, you can request a distribution and roll it into your gold IRA. Contact your current account administrator to start the process. Alternatively, you can take a cash distribution and deposit it into your gold IRA, but this must be done within 60 days to avoid a 10% penalty (unless you’re over 59½).
Direct Transfer: If you already have an IRA, a direct account-to-account transfer is another option. You’ll fill out a form with your current account administrator, or your gold IRA custodian may handle this for you. Direct transfers typically take up to five days and are free of taxes or penalties.

When transferring an IRA to a gold IRA, most investors prefer direct transfers for simplicity and to avoid potential penalties.

Step 3: Choose Your Precious Metals

Once your account is funded, you can begin selecting gold, silver, or other precious metals for your IRA. The IRS sets strict standards, allowing only specific types and purities of metals in self-directed IRAs, so ensure your purchases comply.

The process for buying metals varies by provider. Some gold IRA companies sell IRS-approved metals directly, allowing you to purchase coins or bullion through them. Others require you to buy from a separate precious metals dealer, with your custodian then acquiring the items using your IRA funds on your behalf.

Fees and Costs Associated With a Gold IRA

The fees related to a gold IRA can be divided into fees for initial setup, ongoing administration, and secure storage. Keep in mind that this is a rough estimate of fees. These fees can differ depending on the precious metals company and custodian you select.

Setup Fees: Setting up a gold IRA usually involves a one-time custodian fee of approximately $50.
Administration Fees: The yearly cost to manage your account is generally around $100.
Storage Fees: Custodians typically charge about $100 per year to store your gold IRA assets securely.

Consulting a knowledgeable precious metals specialist can help you understand the full cost structure, ensuring transparency before you proceed.

Is Gold IRA a Good Investment?

Whether a gold IRA is a smart choice depends on your financial goals and investment preferences. These accounts can diversify your retirement portfolio and act as a buffer against certain economic risks. However, it’s generally advised to allocate only a small fraction of your retirement savings (typically 5-10%) to gold IRAs to maintain a balanced portfolio.

A gold IRA may be a good fit if you’re concerned about inflation, market crashes, or currency risks and want tangible assets in your retirement plan. However, it’s less ideal for those seeking high growth, income, or low-maintenance investments. Evaluate your timeline, risk tolerance, and fees before investing, and consult a financial advisor to align it with your retirement goals.

How Much Can You Contribute to a Gold IRA?

The contribution limits for a gold IRA align with those for traditional and Roth IRAs. For 2025, the contribution limit is $7,000 per year for individuals under 50, and $8,000 for people over 50.

Contributions to a gold IRA must come from earned income (e.g., wages, salaries, self-employment income), and you cannot contribute more than your earned income for the year. For example, if your earned income is $5,000, your contribution is capped at $5,000.

Can You Hold Gold in an IRA?

Yes, a gold IRA allows you to own physical gold, provided it meets IRS purity standards (at least 99.5% pure). The gold must be managed by an IRA trustee (not the account holder), and stored in an IRS-approved depository.

Eligible gold includes specific bullion bars and coins, such as American Gold Eagles or Canadian Gold Maple Leafs, but collectibles like rare coins are not permitted. The gold must be managed by an IRA trustee or custodian, not the account holder, and stored in a secure, IRS-approved depository.

For more details on IRS regulations regarding gold IRAs, visit IRS.gov or consult a tax professional.

Conclusion

A gold IRA is a self-directed retirement account that permits investment in physical gold, silver, platinum, or palladium. It functions much like a traditional IRA, offering similar tax benefits but with the unique option to hold precious metals. Investors often use gold IRAs to protect against inflation or economic instability. Be aware that gold IRAs come with specific IRS rules, so consulting a financial advisor before proceeding is highly recommended.