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IRA Proofs or buillion?

Invest in proof coins or bullion? thank you.

Comments

  • derrybderryb Posts: 36,108 ✭✭✭✭✭
    Be aware that you do put coins that you hold into an IRA. You have to buy them from a dealer that ships directly to a third party IRA custodian set up for bullion IRA's. You never take possession of the coins. Do a lot of research. It's expensive, there are storage fees and you can't just liquidate quickly when and if you need to. I thought that a bullion IRA was for me until I checked it out. I think I'm better off with a self-managed IRA through an online broker (Scottrade). I have more options available to me especially with ETFs and mining stocks.

    If you are sure about the bullion IRA, gold is gold, get the most for your $$.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • DrBusterDrBuster Posts: 5,301 ✭✭✭✭✭
    I would not put coins in the ira, take possession for hundreds less....
  • There are tax advatages DrBuster that is why many do it. Heritage has and is always paying strong on proof AGE's do to this reason.
  • AboutAgAboutAg Posts: 201 ✭✭


    << <i>There are tax advatages DrBuster that is why many do it. Heritage has and is always paying strong on proof AGE's do to this reason. >>



    Any idea why is there a higher demand for proofs in IRAs than outside of IRAs? Just a marketing gimmick, easier markup for the seller?

  • DrBusterDrBuster Posts: 5,301 ✭✭✭✭✭
    I know about the tax advantages. The processing/storage/maintenance/etc costs just seem ridiculous to me, especially if you're talking about anything under 100 coins/oz - talking gold or plat obviously.
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    When you close out the IRA you apparently do get the equivalent coins that you put in. At least that was the experience of one Kitco forum member who was a bit upset that it took a couple of months to finally get them. But he did finally get them. The question is, what happens if your custodian goes down the tubes in the interim, or is playing fast and loose like Morgan Stanley did a couple years ago when it was found out that they had no gold in storage for their designated customer accounts.

    If proofs or bullion were my 2 options I'd choose the bullion. If you are holding gold for the long term and it rises quite a bit from today's levels, do you really think the 50% premium for proofs will be maintained? As long as these can be promoted to retail buyers the proofs will cycle up and down strongly in price with pog. But at some point in time people are going to realize they're still just 1 oz of gold. MS64/65 $20 Saints currently carry similar premiums to the pog. If gold were to double in price would those same premiums remain intact?

    roadrunner
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • jmski52jmski52 Posts: 22,297 ✭✭✭✭✭
    There are tax advatages DrBuster that is why many do it. Heritage has and is always paying strong on proof AGE's do to this reason.

    I disagree about how much of an advantage you gain by even having an IRA, and I strongly suggest that putting precious metals into an IRA is a really dumb move. The selling points have always been that you will defer income on any gains from assets that you hold in an IRA, right? The problem is that you really never know how circumstances will change in the decades before you retire and decide to remove the funds.

    1) Example #1 - you put money into an IRA with mostly mutual funds. Inflation occurs over 25 years at a rate equal to the rate of gain in the mutual funds, yielding an after-inflation gain of zero, but a nominal gain in dollars. The stocks go from $10,000 to $25,000. You have a gain of $15,000 nominal dollars, taxable at your marginal tax rate the year you remove it, let's say maybe 33.3% tax. So, you end up with $20,000 in 2010 dollars from a $10,000 investment made in 1985. After inflation, you have lost money, not increased it.

    The "tax advantage" of deferred taxes is NOT ENOUGH when you consider that inflation is causing much of your gains.

    2) Example #2 - same thing, only with gold. The point - all the while that you have money in a tax-deferred account, you cannot remove it without paying a 10% penalty, plus a higher tax rate if the gain puts you into a higher tax bracket when you finally do sell it. And, the real kicker - the government can see your account and can make any kind of changes to the rules concerning deferred tax retirement accounts - any time they so deem.

    What if your investment, gold or stocks either one - goes down instead of up? You can't get your hands on YOUR OWN MONEY without paying a penalty if you need the money for some reason before retiring.

    Having said all that, My Main Reason against putting Precious Metals into an IRA is: if you buy precious metals outside of an IRA, you don't have to sell it before retirement. If you don't sell it before retirement, then you don't incur any taxable gains before retirement. That's easy enough to understand. Contrast that to a "conventional" investment in a "conventional" IRA. With an interest-bearing investment or a dividend-bearing investment in an IRA, there is income to defer the taxes on. If the assets were not in an IRA, you would have to add the gains to your regular income, but that is not the case with gold - because there isn't any dividend or interest to deal with. Putting gold or precious metals into an IRA makes absolutely no sense at all, because the only thing that it accomplishes is to subject your retirement money to a potential 10% penalty if you need the money early for any reason.

    Holding physical precious metals already accomplishes what an IRA is meant to accomplish. You can simply not sell anything until you retire and there will be no tax, no transactions, nothing. You can put away as much as you want, with no limits. You can sell a portion of it without a 10% penalty any time you want for any reason. Why involve the government at all? It doesn't make sense.

    If you trust the politicians with your retirement savings, have at it. But you might want to review what Argentina did when the government habitually overspent and needed the money that was sitting in people's government-run retirement accounts. Our politicians are worse, if anything.

    Proof Bullion vs. Bullion - The Mint gets 35% to 45% premium for Proof Bullion off the top, and the promoters have bumped Proof Bullion up another 50% in the past 6 months or so. If you buy Proof Bullion from anyone other than the Mint, you are taking a big chance that the promotional trend which has bumped Proof Bullion Prices up by 50% over and above the Mint's initial premium - will continue. I'd bet against that. If you like it, buy Proof Bullion direct from the Mint and do not put it into an IRA. Putting any type of bullion into an IRA does not make sense.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
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