Gold and Roth IRA

[jackely]

From the FAQ on gold....

"Gold would be the last asset I’d put into a retirement account if given the choice. Fill these accounts first with stocks, bonds and cash."

I'm getting ready to roll over a company Roth-IRA into an individual Roth-IRA which I will integrate into my overall PP (will eventually amount to about 10% of the total value).

My thinking was the opposite of the advice given above, however. It seems to me that this is an opportunity to do something a bit speculative while still staying within the overall safety net of the PP. If I have a pot of money that I can hold for say 20 years and then tap into tax free why wouldn't I want that to be a pot of gold?

Somebody correct me if I'm wrong. Wouldn't be the first time.

[moda0306]

jackh,

Gold is very tax-efficient.  That said, I think some gold should be in your roth or IRA for the following reasons.

1) Ease of selling w/o tax consequence.  If gold truly is growing fast enough during the accumulation stage to at some point be triggering rebalance, it'll be good to have some in accounts that can be sold without tax consequence.

2) Roth: In a roth, your gold will never be taxed, even at distribution.  If you are confident it will be continuing its upward trend, instead of earning 72 cents on every dollar of gain, you can earn $1.

[l82start]

i keep some gold in my Roth IRA, its a small percentage kept there for tax advantaged re-balancing, i think the above advice you quoted is given because gold only generates income when it is sold, and because also holding physical gold is preferred over funds,  

[rickb]

From the FAQ on gold....

"Gold would be the last asset I’d put into a retirement account if given the choice. Fill these accounts first with stocks, bonds and cash."

I'm getting ready to roll over a company Roth-IRA into an individual Roth-IRA which I will integrate into my overall PP (will eventually amount to about 10% of the total value).

My thinking was the opposite of the advice given above, however. It seems to me that this is an opportunity to do something a bit speculative while still staying within the overall safety net of the PP. If I have a pot of money that I can hold for say 20 years and then tap into tax free why wouldn't I want that to be a pot of gold?

Somebody correct me if I'm wrong. Wouldn't be the first time.

Also from the gold FAQ: "Gold is a powerful asset that protects against inflation or threats of inflation. Gold also offers protection against problems that may threaten a currency or banking system. Finally, gold is an asset that is not someone else’s paper promise to you and can be physically controlled. In this sense it is what you’d call an “asset of last resort.”?"

That last part about gold being an asset that is not someone else's paper promise and able to be physically controlled is often overlooked.  By holding gold (in any form) in a retirement account, you're nullifying the "physical control" aspect of its value.  What this is good for is a truly SHTF scenario where the government institutes draconian measures to survive.  For example (not that I've ever heard anyone suggest this, but I think it's not inconceivable), due to a national emergency X% of all assets in retirement accounts are seized (taxed).  If you also choose to hold gold in a paper form (such as an ETF like GLD or even a closed end fund like GTU) in a retirement account, you're nullifying the "not someone else's paper promise to you" bit of this as well - turning gold from an asset that is exclusively yours to an asset that is fundamentally just another piece of paper.

[jackely]

If you are confident it will be continuing its upward trend, instead of earning 72 cents on every dollar of gain, you can earn $1.

Not confident of anything any more but it strikes me as a pretty safe bet. Seems to me the worse thing that could happen is you won't have as much tax free money as you hoped. The best that could happen is you've got a nice pot of tax free gold. I think I'm willing to take that kind of risk unless someone points out something I'm missing.

[l82start]

on a related note, a precious metals IRA can be expensive (high storage fees) and it also separates you from having easy access to the gold and the ability to sell quickly,  from personal experience (before i fully switched to a pp), it took over a month for the paperwork to go back and forth between the precious metals IRA the buyer, myself and the company i was rolling the IRA over to...  and i think i got lucky...  i saw a lot of shortcomings and potential for far worse problems holding a precious metals IRA, i wouldn't use one or recommend them as being PP compatible...  i am now using GTU for the small amount of tax deferred gold holdings i have..

[moda0306]

Regarding physical gold in an IRA, I think in most cases where we're actually selling our physical gold, tax compliance may have become an afterthought in person-to-person exchanges

I'm not suggesting you actually plan on ignoring capital gain rules in the case of societal breakdown... well maybe I kind of am... but just keep in mind that when gold is exploding it's almost saying on its face indicating a lack of legitimacy and trust in government, and if bartaring is wide-spread and society is ignoring the tax code in many ways (likely to go hand-in-hand) I don't think it's too unreasonable to think of the tax code at that time like a 55 speed limit on a Montana freeway.

I'd feel much more comfortable with $10k in gold coins that the gov't doesn't know I have than $10k in gold coins that I got a tax-deduction for buying, but the gov't now knows I have it. 

I think I'll play my tax-deferral game with my ETF's and other assets within my retirement and taxable accounts, and leave my physical gold as secret as possible while I own it.

[jackely]

Regarding physical gold in an IRA, I think in most cases where we're actually selling our physical gold, tax compliance may have become an afterthought in person-to-person exchanges

I will have to google "physical gold in an IRA" to see what you are talking about. I'm not sure how that even works. I was thinking of investing in IAU or GTU.

I was in Hong Kong a couple of months ago and after reading some posts on here about buying gold in Hong Kong, I was thinking about how this would fit with a strategy of retiring in my wife's home country of the Philippines. I was thinking I could fly there a couple of times a year to cash in some gold, flying under the radar of both the U.S. and Philippine governments with just enough pesos in my pocket to make them both happy.

This sounds even better. Invest in all the gold you want and keep all the profits, no questions asked. What could be better?