EPS 20 - Precious Metals 101: Should You Put Gold in Your Retirement?

In this episode, Jerry tackles the ever-present ads urging people to “buy gold for your IRA” and breaks down whether that’s really a good idea. He explains the different ways investors can gain exposure to gold and other precious metals—from physical gold bars and coins to mutual funds and ETFs—and highlights the pros and cons of each approach.

Key points include:

• Physical gold in IRAs: Allowed under IRS rules, but it must be stored with a custodian (not at home), and storage carries added costs.
• Risks of holding gold: While gold can act as a hedge against inflation and is uncorrelated with stocks, it’s also volatile and comes with liquidity and security challenges.
• Portfolio role: Experts generally suggest keeping no more than 20–30% of a portfolio in precious metals to avoid concentration risk.
• Alternative options: Mutual funds and ETFs offer easier diversification, lower storage hassles, and professional management, though at the cost of higher expense ratios (for mutual funds) or trading fees (for ETFs).
• Outside vs. inside your IRA: Jerry suggests that if you’re drawn to the beauty of gold coins or bullion, it’s probably best to hold those outside of your IRA, where you can enjoy them tangibly rather than treating them strictly as retirement assets.

Ultimately, gold can be a useful diversifier, but it’s not a “set it and forget it” solution—rebalancing and risk tolerance remain key.

💬 Have a question or comment? Contact Jerry here

Transcript

UNKNOWN: 0:03

Thank you.

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Your love gives me such a thrill But your love don't pay my bills I need

SPEAKER_00: 0:55

money Hey, hello, hello, hello. This is Jerry and welcome to the Pink Money Podcast where we talk about all things related to money from a gay perspective. And, you know, today I was driving and what I... kept hearing is this commercial that kept talking about gold. Buy gold for your IRA. You can buy precious metals and minerals for your IRA and put your IRA into gold because it's a good hedge against inflation. And all that is good, true, right? But do you really want to? That's what I would tend to think because if you hold... If you hold something like actual gold itself, then you got to decide what you want to do with it, right? Meaning, do you want to hold this gold coin that you bought forever in a day? Or, you know, are you buying it just for an investment purpose and you're going to, you know, someday sell it, you know, liquidate it, turn it into cash? And I guess I'm just saying... You have to decide why you want to buy gold, okay? Because it's nice to have, I suppose, if you like tangible assets. But, you know, it can also be a pain in the neck because you got to put the gold somewhere. Like, let's say you're safe, either at home or maybe it's in a deposit box, you know, at the bank. But regardless, holding something tangible like that Can be fun, again, if you're collecting for a particular purpose or just for the fun of it. But would you really want it in your IRA? Because, believe it or not, you can actually hold physical gold inside of your IRA. So the IRS says that you can hold certain types of metals inside of your IRA, like gold, silver, palladium, things like that. You can't hold things like artwork or maybe some, like a car or something like that. Those things are not allowed by the IRS. Secondly, if you do buy, let's say, gold, and you want to hold it in your IRA, you have to hold it with a custodian. So that means that you cannot hold it at home in your safe. So if you want to take physical possession of any type of mineral, you know, you want to buy some silver, you want to buy some gold, you want to buy palladium, whatever, platinum, then... Again, you can just put that stuff in your home safe. I wouldn't consider it for my IRA. Now, if you do decide, hey, I want to diversify my portfolio. I've got a lot of stocks in it. Maybe I have a few bonds in it. Maybe I have a 60-40 split in my portfolio, 60% stock, 40% bonds. That's a typical portfolio for a moderately aggressive person. But You know, a lot of people will do that kind of mix because they're looking at the correlation between stocks and bonds, meaning you want things that don't move together in the market versus things that do move together, like stocks, whether they're large companies, medium, small, for the most part, okay? Those are all going to rise at the same time. and bonds, on the other hand, stocks go up, bonds go down, and again, general terms, then those two are not correlated assets. So stocks would be, correlated assets bonds would not be and that ends a that has a certain amount of diversification right and we can go on and on and on about that and the different types of stocks and bonds etc you can hold in your portfolio but again at a high level okay so let's say you have that 60 40 split and you're worried about inflation and the toll it's going to take on your portfolio you you You could decide, hey, you know what? Maybe precious metals, minerals, gold might be a good way for me to diversify some of my portfolio, right? So you would not want to put your entire portfolio into gold, although some people do, right? You can. You know, if you're holding a$250,000 portfolio, let's say, you could sell all that and you could buy actual gold, right? Again, you can't hold it in your safe at home, but you could hold it through your IRA custodian. So the point is that when you're holding these physical assets, you can have someone buy them for you or you would buy them for yourself in a self-directed IRA. Self-directed just means you pick and choose your own investments versus someone doing it for you. So self-directed is always going to be the cheapest way because... You're doing all the legwork. You do all the picking, choosing. If your portfolio goes up, great. Good for you. If it goes down, well, too bad. Too bad for you. So you can't blame anybody but yourself. So again, gold... it works counter to stocks. So they are uncorrelated, uncorrelated assets. And people like that generally, because again, if stocks are starting to head downward, they want something that's going to insulate their portfolio and gold has a tendency to do that. Now gold, however, can be very volatile, as well as all these, you know, precious metals can be volatile. And that means you might see more fluctuations in that particular investment, maybe more than you are comfortable with, but it does fluctuate. So with that being said, again, you have to determine the level of risk you're willing to take for that amount of investment. Now, generally, they say 25, no more than 30% of your portfolio can be invested in precious metals and minerals, and maybe even less than that. Because again, The more you put into this asset class, then the more volatility you're going to see in your portfolio. And the more that you concentrate in this particular asset class, then the more risk, again, your portfolio is subjected to overall. Will you lose all your money? You know, unlikely because gold in and of itself is not like a company where the company can go belly up. It could go bankrupt and you lose all your investment in that particular company. But gold in and of itself is not going to go bankrupt. In fact, I mean, of course, we know gold's been around forever and a day. So it continually trades for all sorts of reasons. But it's always there, always going to be there. And it is always going to be used. So if, let's say, again, for our illustration purposes, you decide to buy gold inside of your IRA, and you have a chunk of your portfolio, again, let's just say, you know, 20%. 20% of your portfolio you've chosen to invest in gold. So now you find this IRA custodian. And they are well-respected, and you trust them, and they've been around, and all that good stuff, not just some fly-by-night place. But anyway, so you've got this custodian. You decide you want to buy some gold bars. bars or bullion. So that has to be at a certain level. And they would tell you all this, they would tell you this is a purity that it has to be at according to the IRS standards. And this is the type of, you know, gold that you can buy, etc, etc, because there are some parameters around that. I won't get into all that. Again, if you really want to look at all that cold, a dealer and you can figure all that out. But Again, just keeping it at a high level. Once you buy that gold again, then it has to actually be stored. And it's stored with that custodian. And that carries a certain cost, right? Because nobody does nothing for free. So you at home with your own gold, Outside of your IRA, it doesn't cost you anything. However, that is subjected to a certain level of risk as well, right? I mean, it could be stolen. Someone could come in your house, take your safe, rent out the door with it, and then all your gold is gone. You can always be, you know, someone robs you while you're carrying that gold. I've heard of people walking out of the bank after going to their safety deposit box and picking up a bunch of gold jewelry, and they get robbed outside of the bank. That has happened. So again, you've lost that physical asset. Hopefully, you have some insurance on that. But nevertheless, it's gone. So inside of your IRA, that's not going to happen. However, at some point, you will liquidate the assets inside of your portfolio, whether they're stocks, bonds, mutual funds, whatever it is, gold. At some point, you reach a stage where you have to liquidate this asset. Now, if it's a Roth IRA, you're not going to have mandatory distributions. But if it's a traditional IRA that everything in there has never been taxed before... Essentially, you've taken a tax deduction on that. And I've covered the traditional IRAs before. But again, we'll just say that nothing has been taxed in there for the most part. So when you take the distributions, that's when the taxes come due. So in your portfolio, you would sell X number of, let's say you need, I don't know, let's say$2,000. So you would liquidate$2,000 worth of stocks or whatever to liquidate free up the cash, and then that cash you actually take either as a redemption if it's a mutual fund, or again, you just take a distribution out of your IRA and it goes to your bank account, okay? And then you pay taxes at the end of the year when you get your 1099-R. So the gold in and of itself could be transfer to you in kind as well but it would have to be let's say whatever that gold bar is going for because they're not going to cut it in half right so that distribution you would have to just work with that company to get something that's close to whatever you're trying to liquidate So now, you know, of course, gold, it trades at, you know, wildly different prices. You know, what it traded for 20 years ago, maybe substantially less versus what it's trading for now. You know, spot prices are always all over the board. Now, again, in high inflationary times, a lot of people flock to gold. Because, again, they want to protect their portfolio. So, you know, demand is high. Prices go up. You could be paying more for that gold than you want to. But, hey, if that's your concern and that's what you want to do, then that's the choice you have to make. Now, let's say that, again, you want to invest in gold. You don't like the fact that you have to pay these storage fees and you have to liquidate it and, you know, all that stuff. But you like the idea of gold. Well, you could hold a precious metals and minerals fund or a gold mutual fund. That's always a possibility. That's an easy way to diversify your portfolio. Something like a precious metals and minerals fund would be generally invest in not only the actual commodity itself, but they would usually invest in different companies within your portfolio, meaning these companies that mine gold. They are oftentimes the best way that the portfolio managers will choose to cover that entire asset class. So That's just a common way. Plus, the total cost of ownership, if you're buying physical gold, could actually be higher because, again, you have the trading costs that are part of the component of holding it. Now, you may not pay a bunch up front, but you may pay a lot more when you liquidate it. It's hard to say. But you would have to take all that into account. So in a mutual fund, you don't have that kind of carrying costs, let's say. You just have the expense ratio. And that typically is going to be a higher expense ratio than your usual stock-based mutual fund. So let's say it's an S&P 500 mutual fund. You know, the expense ratio on that is going to be pretty low. It's probably going to be, you know, you know, for something like that, it's going to be really low because again, in that type of an index mutual fund, there's not a whole lot going on. So the, there's not a lot of trading that has to take place and the portfolio manager doesn't have to go out and do a lot of research and kick tires. Now, on the other hand, if you are, are buying a precious metals and minerals fund, a mutual fund that is actively managed, then yes, um, you can see your expense ratio go up to something like 1.2%. Now, in that case, you're paying more because there's a lot more legwork that the portfolio manager has to do. He or she, again, has to usually travel to these places. They want to interview the companies themselves, see what their operations are like, see what kind of competition that they have. see how stable they are, what kind of management structure they have, on and on and on. So there's just a lot more that goes to that. And then again, they have to work on getting the asset classes right and keeping it in a way that it's not overly risky. It takes some risk, but not too much risk. So they just have to make sure that that entire balance is right. So that's an easy way to gain some exposure to precious resources. to the precious metals and minerals arena via a mutual fund, okay? There's also exchange-traded funds, ETFs. So you could go to the marketplace and you could buy a gold ETF, like a gold spider. You could do that. Those typically, again, have lower costs because you're buying it like a stock in the open market, meaning that particular... ETF is just like a stock. Stocks trade generally throughout the day. You buy it in the morning and you sell it in the afternoon, which you could do, you know, because that's just the flexibility you have with buying stock. You have the same flexibility with an ETF. You could buy in the morning, sell in the afternoon. So you have trading fees that go along with that as well. But, you know, for the most part, again, mutual funds only trade once a day. So if you decide to sell, You sell with whatever the NAV, the net asset value, is going to be for that day. Generally, that's mutual funds are priced at 4 p.m. Eastern at the closing New York Stock Exchange. And then you sell at that and you buy it at that same price as well. So they only trade, again, once a day. And you may or may not have any kind of fee. You might have a redemption fee. It's hard to say. All that aside, what I'm saying is you could buy physical commodities, right? Gold coins, bullion, et cetera. Hold it in your IRA with the right type of custodian and pay the storage costs, et cetera, that go along with that. You could buy a mutual fund that has, again, that same similar type of exposure, maybe broader diversification because you're not buying just the commodities itself. You're getting exposure to companies that mine for gold, et cetera, all the ones that are in that particular arena, or an ETF. You could buy that again at your leisure and you could decide how much of your portfolio you want to put into that. And you could shave off some, you could buy a little more again. That's the flexibility you have. So my point is that these are options that you control, or you can speak with your financial advisor, counselor, whomever you have. And again, he or she can help you construct the right type of portfolio for you. And then certainly it would be based on your level of risk and risk tolerance, et cetera. What are your goals are, you know, and how long you want to hold this. So all your portfolio, you don't want to really let it go forever and a day and sit there. You have to typically rebalance your portfolio occasionally. That doesn't mean once a quarter, once a month, you're probably looking at at least once, maybe twice, Once a year, twice, probably at the most. That really, again, just depends on you, what's going on, how actively you want to manage it or keep it in mind. So that's really my spiel about it. I think that... It is a good idea to have some exposure to that. I'm a big fan of mutual funds because, again, they have that diversification, that professional money management, and it just takes all the guesswork out of it. If you might pay a little bit more, but again, what are you gaining? You gain all the benefits with a lot less risk overall. If you want to hold gold in and of itself, you like this Billie Jean gold coin that is out there in the market, and you're willing to pay, you know, I don't know,$5,000 for it. I'm not sure what it's trading for, but let's say it is, then buy it outside of your IRA. And put it in your safe and look at it, you know, whenever you have the desire, you show it off or whatever. And, you know, enjoy it that way. Because I think that's a far and away better option to hold a physical asset like gold. So that's it for me. What was I going to say? Contact me on our social media pages or through the website. Okay. Have a great day.

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I can't stand the rain against my window