Risks of Holding Precious Metals in an IRA
Holding gold or silver in an IRA carries six main risks: prices can fall, the metal produces no income, fees and dealer premiums reduce returns, selling takes time, IRS rule mistakes can trigger taxes, and fraud exists in parts of the industry. None of these make metals unsuitable for everyone, but each is worth understanding before you move retirement money.
Risk 1: Gold and Silver Prices Move
Precious metal prices are set in global markets, including the LBMA auctions in London and futures trading on exchanges like COMEX. They respond to interest rates, the dollar, central bank buying, industrial demand and market sentiment. Prices have had long stretches of decline as well as strong gains. Silver has historically moved more sharply than gold, and platinum and palladium are heavily tied to industrial demand.
Some people hold gold as a potential hedge against inflation, and there are periods when it has risen alongside inflation. There are also periods when it has not. The LBMA gold price history shows both. Our page on gold price history covers the major periods.
Risk 2: No Income
Bonds pay interest and many stocks pay dividends. Gold and silver pay nothing. In an IRA, that means the only return is a change in price, and any holding costs come straight out of that return. When interest rates are high, the opportunity cost of holding a non-yielding asset may be greater, as discussed in gold and interest rates.
Risk 3: Fees and Premiums
A metals IRA usually involves several layers of cost:
- Dealer premium over the spot price when you buy, which varies a lot by product.
- Spread between the buy and sell price, so metal is usually worth less to a dealer the day after you buy it.
- Custodian fees for setup and annual administration.
- Storage fees at the depository, sometimes higher for segregated storage.
- Transaction fees for purchases, sales, shipping and distributions.
Each company publishes its own terms. Compare them line by line, as covered in our guide to metals IRA fees explained.
Risk 4: Liquidity and Timing
Selling metal in an IRA is a multi-step process: you instruct the custodian, a dealer bids on the metal, the trade settles and cash reaches the account. That can take days or longer. If you need money quickly, or if a required minimum distribution is due, delays matter. The price can also change between your decision and the sale.
Specialty or commemorative coins can be harder to sell at a fair price than widely traded bullion like American Eagles or Maple Leafs, because fewer buyers want them.
Risk 5: Rule Mistakes
The IRS rules for metals in IRAs are strict. Common errors include:
- Buying coins that do not meet fineness standards, which is treated as a distribution.
- Storing IRA metal at home, which the Tax Court treated as a distribution in a 2021 case. See home storage risks.
- Missing the 60-day window on an indirect rollover, or doing more than one indirect IRA-to-IRA rollover in 12 months.
- Engaging in a prohibited transaction, such as selling your own coins to the IRA.
Risk 6: Fraud and Misleading Sales
The Commodity Futures Trading Commission has issued customer advisories about precious metals fraud, including schemes that use fear about the economy to steer people into overpriced coins, misrepresent storage, or sell metal that never exists. Its Learn and Protect section collects these warnings. Typical warning signs include pressure to act immediately, claims that a coin is "IRS-approved" to justify a high price, and offers that sound free but are funded by markups.
Our page on metals IRA scams and red flags has a full checklist. If you suspect fraud, you can report it to the CFTC or the FTC.
Risks That Are Often Overstated
Depository storage is generally insured and audited, so outright loss of stored metal is a less common concern than costs or pricing. And metal held by a custodian is generally held for your benefit and not as the custodian's own asset. Still, ask which depository is used, how it is insured and how holdings are verified. See metals IRA depositories.
Reducing the Risks You Can Control
You cannot control prices, but you can control costs, product choice and who you work with. Ask for all fees in writing, prefer widely traded bullion, keep metal to a share of your savings you are comfortable with, and verify every company. Goldco, a precious metals company, publishes its terms and stores IRA metals at an independent insured depository; its precious metals specialists are not licensed to give financial advice. Our Goldco review looks at its terms in detail.
Frequently Asked Questions
Is gold in a retirement account protected by FDIC insurance?
No. FDIC insurance covers bank deposits, not precious metals. Depositories carry their own private insurance.
What is the biggest risk with gold in an account like this?
For many people, cost is the risk they underestimate most: premiums and fees can take years of price gains to recover.
Can a metals company go out of business and take my gold?
IRA metal is held by the custodian at a depository in the IRA's name, not by the dealer. Confirm this arrangement in writing.