A gold IRA or ETF may be just the inflation hedge you need in your retirement plan. In fact, many investors are flocking to safe-haven investments like commodities to protect their portfolios. Such moves may counter market volatility as well as inflation. One asset class that has shined through some of the darkest economic times is gold.
The value of gold has been climbing in 2025, reaching all-time records above $2,925 per ounce. This rise came as year-over-year inflation in January rose to 3% — above analyst expectations and the Federal Reserve’s 2% target range. At the same time, President Donald Trump’s tariff proposals continue to raise inflationary concerns.
Gold, however, has held steady against periods of high inflation by many accounts. It has outperformed inflation by 3% on average per year throughout the past four decades, according to data gathered from the World Gold Council.
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In addition, Goldman Sachs analysts expect gold to reach $3,100 per ounce by the end of 2025, citing the need for countries around the world to increase their gold reserves, as reported by Reuters.
But do precious metals like gold belong in your retirement portfolio? The answer to that depends on several variables. Those interested in incorporating gold into their retirement savings can consider a gold IRA.
What is a gold IRA?
A gold IRA is a self-directed individual retirement account (SDIRA) that holds precious metals like gold, silver and platinum.
SDIRAs work differently than IRAs from major brokers that invest in traditional assets like stocks and bonds. SDIRAs allow you to create a retirement nest egg through alternative investments such as precious metals, real estate, and crypto.
However, SDIRAs operate on a buyer-beware basis. Custodians or providers of SDIRAs are not obligated to evaluate the quality or legitimacy of investments in your SDIRA.
SDIRA custodians also don’t sell investment products or provide financial advice. Many are not registered investment advisors (RIAs). So, they don’t fall under the regulatory scrutiny that major firms like Vanguard or Schwab do.
Still, gold IRAs have all the bells and whistles of more common IRAs. This means contribution limits, tax advantages, and RMD rules remain intact.
Contribution limits
For 2024 and 2025, you can contribute up to $7,000 worth of precious metals to a gold IRA. Those aged 50 or older can contribute an additional $1,000 for a total of $8,000.
Tax advantages
You can open a gold IRA as a traditional IRA or Roth IRA. With traditional IRAs, your contributions are tax-deductible. However, you’d owe taxes on qualified withdrawals when you reach age 59.5.
Roth IRAs don’t allow you to make tax-deductible contributions. But you can make withdrawals tax-free as long as you’re at least 59.5-years-old and you’ve been contributing to the account for at least five years.
Moreover, you can withdraw your contributions penalty-and-tax-free from a Roth IRA at any time. That’s because, unlike traditional IRAs funded with pre-tax dollars, Roth IRAs are funded with after-tax dollars. In other words, you’ve already paid income tax on your contributions to Roth IRAs.
However, withdrawing earnings from a traditional or Roth IRA before reaching age 59.5 would generally hit you with taxes and a 10% early withdrawal penalty.
Required minimum distributions (RMDs)
If you have a traditional gold IRA, you generally need to make withdrawals or required minimum distributions (RMDs) by a certain age, depending on your birthday. Here’s how it breaks down based on birthdays.
- On or before 6/30/1949: Age 70 1/2
- 7/1/1949 through 12/31/1950: Age 72
- 1/1/1951 through 12/31/1959: Age 73
- On or after 1/1/1960: Age 75
The amount is based on factors like your life expectancy. You can calculate these using IRS RMD tables.
When it comes time to take a distribution, your custodian can help you liquidate the physical gold and transfer cash to you, or it can send you the physical precious metal. The latter may be best if you intend to sell the physical gold at a later time.
But before you commit, make sure you ask your gold IRA custodian how they handle RMDs. The process isn’t as simple as having your broker sell the stocks in your IRA. So you need to make sure the custodian has a reliable process in place to satisfy your RMDs and avoid any trouble with the IRS.
How to open a gold IRA
Before you open a gold IRA, you typically need to find a gold broker that can help you purchase the physical metal. Moreover, gold in an SDIRA must meet specific IRA fineness requirements.
The gold must have a fineness of at least 99.5%. This gold must also be stored in an IRS-approved depository. In most cases, the gold broker can help you find an approved depository. The company can also help you find a gold IRA custodian that would help you open an account and handle all the administrative work.
Risks of gold IRAs
As you can see, there are many players involved in running a gold IRA. With that can come various fees like the following.
- Gold seller’s mark-up fee
- Storage fee for depository
- Account set-up fee
- Ongoing custodian administrative fees
- Transaction fees
And remember, gold IRA custodians don’t undergo the same regulatory oversight as traditional brokerage firms. They won’t evaluate the legitimacy or reliability of the investments you put into your SDIRA. They merely handle the administrative work regarding your account. It’s entirely your responsibility to evaluate your investments, custodian, depository and everything that comes into play.
But there are other risks you should know about gold. For one, it’s not always a solid inflation hedge. In fact, between 1987 and 2001, when inflation hovered around 3% a year, the price of gold declined.
In addition, gold doesn’t always outperform other asset classes and has shown little in the way of long-term potential.
Between 1984 and 2024, the S&P 500, with dividends reinvested, returned an inflation-adjusted annualized total return of 8.6%. In the same time frame, gold generated an inflation-adjusted annualized return of 1.5%.
Gold ETFs
You could avoid high fees and other hassles that come with investing in physical gold by investing in gold ETFs (exchange-traded funds).
A gold ETF tracks the gold markets and aims to mimic their performance. But you can buy shares of a gold ETF through a standard brokerage account in the same way you’d purchase shares of a company’s stock. Plus, you won’t have to hold any physical gold. This would allow you to bypass the costs associated with purchasing and storing gold, as well as the extra leg work of evaluating an SDIRA custodian and other providers.
ETFs have long been known for their instant diversification and low fees. In fact, the Franklin Responsibly Sourced Gold ETF has an expense ratio (management fee) of 0.15% or $15 for every $10,000 invested. The typical annual maintenance fee for a gold IRA alone ranges from $75 to $250.
However, investors should know that paying taxes on commodity ETFs like gold can be complicated. Depending on how the ETF is structured, you may owe taxes even if you haven't sold shares. Be sure to consult a financial adviser or tax expert before you purchase a gold ETF.
Is gold for you?
Gold has historically stood strong against inflation and other periods of economic and geopolitical turmoil. This precious metal could add a layer of diversification to your portfolio and protect you from downside risk.
However, investing in gold as a retirement asset is different from building a nest egg with stocks and bonds. Gold IRA providers aren’t subject to the same rules and regulations as traditional brokers. It’s up to you to do your due diligence when it comes to vetting a custodian as well as the actual gold you’re investing in. The process can also involve high fees. So, you must ensure gold aligns with your risk tolerance and long-term financial goals.
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