Gyroscopic Investing

Just a random question. Does it ever make sense to hold a gold ETF in a Roth IRA?

I sure HOPE it makes sense because I have a bit of IAU in both my regular Roth and solo 401(k) Roth.

I realize that for tax efficiency, taking up space in IRAs with gold is a negative. But I hold enough there to (hopefully) give me a rebalancing alternative within those tax-free accounts. What to hold in which account can shift around a bit depending on what the current environment is. For example, as KevinW posted recently, HB recommended in Fail-Safe Investing to place assets in "Pension Plans" in the following order: T-Bills, T-Bonds, Stocks, Gold. But he then notes that "Treasury Bills produce interest every year...". Clearly conditions have changed since he wrote that book in 1999.

What I am working toward in my IRA (Roth, SEP & Regular) accounts is probably 40% LTTs, 40% stocks, 10% STTs, and 10% Gold. But that could change if STTs start yielding something (or if one of you talks me out of this allocation!)

I don't see anything wrong with it, and I have some IRA money in gold ETFs.  As Barrett pointed out there may be a tax advantage (one way or the other) to holding it in a taxable account, but that depends heavily on your current tax rate, interest rates, whether gold rises significantly before retirement as well as future tax rates.

With interest rates as low as they are today, and the possibility of a stock or bond market correction there even could be a significant tax advantage to having some gold in your IRA, at least in the short term.  You could, for example, harvest future bond or stock market losses (if they do happen) from a taxable account instead.

It makes sense if you want the Roth to be a complete self-contained 4x25 PP. I do this.

MangoMan wrote: If you do your own tax returns using TurboTax or similar, trying to correctly keep track of cost basis in gold ETFs is maddening due to the daily removal of expense ratio. Totally worth keeping in a tax-deferred account just for that reason alone, IMHO.

Yet another advantage for GTU! Yes, you have to file the 8621, but that's about it as far as tax complexity goes. And you probably get normal LTCG treatment too, as far as I know.

MangoMan wrote: If you do your own tax returns using TurboTax or similar, trying to correctly keep track of cost basis in gold ETFs is maddening due to the daily removal of expense ratio. Totally worth keeping in a tax-deferred account just for that reason alone, IMHO.

I believe that falls under the "de minimus" category, and can safely be ignored.

goodasgold wrote: Just a random question. Does it ever make sense to hold a gold ETF in a Roth IRA?

I think of the Roth IRA as the longest of my long term investments as it will probably be spent last.

Given that way of thinking I did consider putting mostly gold into it at one time when I first started the PP and gold was going bonkers.

I'm moving more towards stock nowadays however because I'm preferring physical gold.

All depends on what you think will do the best in the long term, I guess. Mostly I follow the PP strategy of not trying to predict what is going to happen in the future but when you juggle funds between taxable, tax-deferred, and tax-free it's hard not to think about it.

If I could start over, I'd put gold ETFs in my Roth and other IRAs only with physical coins for taxable gold.
The reasons are pretty much covered in this thread by others.