On March 19th, 2013 we hosted a Q&A session on Facebook and Twitter with Pete LaTona, Director of VIP Services. Pete answered several questions about investing in a Precious Metals IRA. Below is a transcript. Please like us on Facebook page and follow our Twitter profile to participate in upcoming chats and let us know if you have any questions.
Q: Can you keep the metal in your possession?
A: This is one of most commonly asked questions about Precious Metals IRAs.The Precious Metals are stored in a depository. If you were to take possession of the metals it would be considered a withdrawal and you would owe taxes at that time. This works just like any IRA. When you take a withdrawal, then it is time to pay taxes.
Q: Do you foresee an increase in the price of Gold/Silver/Platinum for the far future?
A: Everyone wants to know if prices are going up, but no one really knows for sure. If a Precious Metals dealer shouts from the rooftops that prices are going up, then consider their motive. The man who runs the world’s largest hedge fund, Ray Dalio, says he does not know what prices will do, yet he believes in a 5% Gold allocation because of its value as a currency. Central banks became net buyers of Gold in 2010, and they just keep buying more. Gold has become a currency. Gold belongs in everyone’s portfolio who wants protection from all of the financial risks we face in today’s environment. How much (4-20%) depends on how much risk you think is out there.
Q: Why do you think the government will keep their promises regarding IRAs? See Cyprus, for example. IRAs are the major source of wealth for Americans. The tax deal is so good, that I can’t help but to think there will be some level of confiscation.
A: I do not believe the government will change IRA rules because there are no more pensions in today’s world. The government has a vested interest in people being able to take care of themselves, at least to some extent. I do not believe confiscation will occur ever, but that is my opinion. The cost to send the Army door to door for confiscation would be much more than the amount of Gold they would find.
Q: Am I able to open an IRA through APMEX and deposit funds whenever? Or is there a defined plan?
A: There are defined plans. First, you choose your IRA custodian and then fund your account. Once the money is in your account, you call APMEX and we help you with your purchase.
Q: In your opinion, what is the number one reason to own physical Gold and Silver?
A: The primary reason from a financial planner point of view is wealth protection through portfolio diversification. There are others, but that is probably number one by far. The six main categories of investors we find at APMEX are those who want to protect their money; those who want to make money; those who are skeptical of big business and governments; those who fear a major currency collapse and metals would be needed to buy bread; people who like to collect beautiful coins from around the world; new investors who just are waiting to make their first purchase.
Q: With the credit crises in Europe spreading and the slow uptick in the stock market here, how do you foresee the price of metals increasing in the next ten years?
A: You are pointing out that the global economic concerns have only been given Band-Aids as politicians lack the will to make hard decisions. Most people would expect Gold prices to rise in such an environment. Central banks continue to trade paper assets for Gold. That alone should tell us something. Countries across the globe are printing money, and it is hard not to imagine inflation setting in sooner or later. Let’s just hope we never see hyperinflation. I met a man from Argentina several years ago who told me at one time during their hyperinflation when he woke up in the morning, it was as if someone had taken another zero out of his bank account.
Q: Do you think Silver will hit $50 an ounce sooner rather than later?
A: Define sooner or later. I am not trying to avoid an answer, but timelines need to be clear. I believe the same economic uncertainty that could drive Gold prices up will take Silver along with it. I will tell you we have many sophisticated clients who would say sooner. We also need to keep in mind Silver industrial uses. It is a key component of solar panels. Silver has hit $50 before, so it would not be a shock to hit it again.
Q: Can the depository be at our home bank?
A: It would depend on whether your bank is approved to handle IRA deposits. Most banks are not set up for this type of depository service.
Q: Would it be better to open a Precious Metals IRA or keep them on hand to help my children when they are older?
A: If you have the funds outside of an IRA to buy what you want, I would use those funds outside of your IRA. Sometimes, most of the money you might have to invest is in an IRA.
Q: I collect Silver and store it myself. Is there a minimum amount required to take all of my Silver and turn it into an IRA?
A: If you have Silver in your possession already, you cannot create an IRA with the actual physical metal. An IRA is funded with cash, and then you buy the metals.
Q: I remember when 1 oz of Silver only cost me 5 dollars… how times have changed. Precious Metals will hit the moon soon…
A: Silver seemed like it traded at $20 or below for forever. It has been trading in a range for some time the past year. Let’s see if a break out occurs. Also remember that Silver has become a key component in solar panels. If that industry really takes off…?
Q: Let’s say I requested to cash out today, when would the metals arrive in my hands?
A: Processing will vary by depository; most people cash out, but you can also take physical possession. My best guess is around 2 weeks, but you’ll have to check with your specific IRA custodian.
Q: How would you take delivery of the physical metals if you have them in a Precious Metals IRA?
A: Your depository will ship your metals to you, or you can choose to cash out your account.
Investing in a Precious Metals IRA: A Q&A with APMEX Director of VIP Services Peter LaTona