Gold nugget

Precious Metals As A Retirement Fund


John E Chambers
August 21, 2021

Precious metals rank among the top safe-haven investments and for good reasons.

They increase in value or at least maintain the same value during economic unrest and stock market crashes. This can provide lucrative returns, especially for retirement accounts where you can invest in the metals for the long term.

However, it is in your best interest to consider the many factors involved in putting your retirement funds into precious metals.

This article will highlight the pros and cons of using precious metals as a retirement fund. It will also show you the different ways to put your money into these valuable pieces.

Why Should You Invest in Precious Metals?

Gold bar, ingots and coins on financial report. Growth of gold

Investing in precious metals is a great way to diversify your portfolio, especially if you are looking to invest for a long time, such as building a solid financial future for retirement.

Most people think of potential capital appreciation when they think about investing in gold, silver, and other valuable metals. Of course, these metals don’t go bankrupt even when a financial crisis bites hard.

Besides this obvious motivation, here are some other reasons for putting your retirement funds in precious metals:

Precious Metals Offer a Hedge against Inflation

In an economic crisis, governments print more paper money. This devalues the purchasing power of fiat money.

On the other hand, the value of precious metals tends to go up when there is currency devaluation.

Protection from Stock Market Volatility

stock maarket

Significant drops in the stock market can wipe out years of hard-earned savings and retirement funds in a matter of hours. Market crashes have happened several times in history.

Fortunately, the value of precious metals increases, even when the stock market is in a state of unrest. By diversifying a portion of your paper assets to gold, you can avoid worrying and achieve your retirement goals, regardless of what the stock market is doing. 

Precious Metals are Tangible Assets

Unlike fiat money, precious metals cannot be printed or debased on a whim. These are tangible assets with historical growth potential, making them great for retirement savings.

Secured Storage Oversees

A gold IRA provides secure storage overseas for your precious metals. This keeps your investments safe and away from local legislations that may try to confiscate your valuable metals.

Protection from Damaging Policies

You never can tell what policies governments can enact out of the blue, especially in an economic meltdown. A gold IRA can protect your retirement funds from the whims and caprices of scheming politicians and damaging laws.

Precious Metals to Invest for Retirement

The reasons above are great and if you have a retirement account you probably are wondering how to get on with it already!

But here’s the thing, you can’t invest in precious metals using the retirement accounts offered by most brokerage houses and banks. To put your retirement funds in gold and other IRS-acceptable precious metals, you need to set up a self-directed IRA (gold IRA).

Also, you can’t buy and hold just any precious metals for retirement. The precious metals must conform to specific purity standards.

Here are the purity standards of IRS-approved valuable metals you can use for retirement:

  • Gold – 99.5% purity
  • Silver – 99.9% purity
  • Platinum – 99.95% purity
  • Palladium – 99.95% purity

Pros and Cons of Investing in Precious Metals

Precious Metals to Invest for Retirement

Take some time to consider the following advantages and disadvantages before putting your retirement funds into precious metals.


  1. Hold value over time: Whether you invest in gold, silver, or other metals, they tend to maintain their purchasing power over a long period, regardless of the state of the economy.
  2. Performs better than other assets: Precious metals put up a better performance than many other assets because they don’t correlate tightly with traditional asset classes, such as real estate, bonds, and stocks.

Instead, investors who are worried about the market focus more on precious metals, and in turn, push their value up. This is why gold and other precious metals are great diversification tools for a retirement investment portfolio.

  • Does not rely on the internet: Unlike digital accounts, physical precious metals cannot be hacked or erased even if the online world comes crashing down. That’s because they don’t rely on the web or electricity.
  • Growth potential: Precious metals have always appreciated throughout history. The recent historic spikes are a huge plus for anyone with a retirement account in a gold IRA.
  • Value dense: Physical metals, such as gold coins, can easily fit into your palms compared to their dollar bill equivalent. You can literarily store them in a small space compared to a pile of dollar bills.


Regardless of the many advantages of investing in precious metals, it is important to consider the following drawbacks before putting your retirement money in gold, silver, platinum, and other precious metals.

  1. Cost: One of the biggest downsides to investing in precious metals is the high premium. Typically, you will pay more than the market value when you are buying gold, silver, or other metals.

Also, you need to pay for storage if you are not storing it yourself. You will be charged for transporting the metals to your location if you want to store them. Even if you invest in certificate metals, those too have storage fees.

  • Theft: While gold, silver, and other physical metals can’t be hacked or erased because they are not in digital form, there is a risk of the metals being stolen, especially if you store them at home. Not all types of insurance cover metals stored in a safety deposit box at a bank. Make sure the bank has specific insurance that protects your investment before storing a physical metal in the bank.
  • Does not pay interest: Unlike real estate, stocks, and bonds, an investment in precious metals does not generate income in the form of interest or dividends.
  • Taxes: Precious metals are taxed as collectibles. That means if you hold the metal for over a year, you will pay up to a 28% tax rate on capital gains, which is higher than long-term capital gain.
  • Liquidity: In most places, precious metals are not considered legal tender, meaning they are not readily liquid. You will have to go through a few hoops to convert your physical precious metals to recognize money.

Physical Metals

Purchasing physical precious metals is a good way to increase your retirement income.

It might seem unnecessary to go through the hassles of investing in physical gold, silver, or other precious metals for your retirement, but the benefits are worth it in the long run.

However, before you buy physical metals for retirement, it is important to consider the following factors:

  • Find a trusted precious metal investment dealer: The precious metals world, like any other investment vehicle, requires expertise to navigate. Make sure you choose a reliable and well-established precious metal investment dealer. A reputable dealer will handle the buying and selling process for you and ensure that you are getting the most out of investing in these valuable pieces.
  • Be realistic about how much you want to invest: Ideally, investing in precious metals should be something you do with a portion of your retirement funds. The potential gains can be high but you’re not going to get any cash flow from it, as you may get from real estate rentals. For this reason, you should think about how you want to live in retirement and how much money can support that lifestyle before putting money in physical metals.
  • Think about how much you have in your retirement account: You will need to come up with a substantial amount of at least six figures to buy physical gold and silver. While you can take money out from your tax-advantaged retirement account, the funds are only available when you are over 60 years old in most cases.

How to Invest in Physical Metals

invest in precious metals

There are a few different ways to invest in physical gold and other precious metals. The most apparent way is to purchase the metals in coin form from genuine bullion dealers. This makes it easy to transport and store the metals.

You can also buy wafers, bars, and other forms of physical precious metals. Whichever form of precious metal you choose, you need to hoard them long enough and hope that the value increases in the future. Fortunately, they do increase in most cases.

Precious Metals Stocks

Investing in precious metal stocks is another way to diversify and grow your retirement portfolio.

Like any other stock, you buy them and hope that the value of the company goes up. Fortunately, precious metal stocks are known to withstand market fluctuations.

Some of the precious metal stocks you can buy include:

Mining stocks

Companies that mine precious metals issue shares known as mining stocks. The prices of mining stocks can be influenced by fluctuations in the economy, political unrest, and even striking miners.


Exchange-Traded Fund (ETF) is arguably a less costly method for adding gold to your retirement portfolio. Gold ETF offers the advantage of allowing you to hold precious metals in a traditional 401k or conventional IRA account.

However, unlike in conventional exchange-traded funds, capital gains tax breaks do not apply to gold ETF in some cases. Also, you need to factor in the significantly higher market risks associated with gold ETF.

Precious Metal Certificates

Another way to buy metals stocks is to invest in certificate metals. With this method, you don’t take delivery of any physical gold or silver.

Instead, the metals are stored for you in a safe and secured location, and a certificate indicating how much metal you own is issued to you.

How to Buy Precious Metals with Your 401k

How to Buy Precious Metals with Your 401k

In most cases, you can’t own precious metals or gold derivatives in a 401k retirement plan – at least, not directly. Thankfully, there are other ways to add these assets to your 401k.

You can put your money into gold mutual funds or paper gold. This option allows you to hold stocks of gold mining, exploration, and production companies using your 401k plan.

A gold IRA or self-directed IRA is another special individual retirement account that gives you access to just about any type of gold investment, including commodity futures, stocks, options, ETFs, and mutual funds. You can add gold coins or bullions and other IRS-approved precious metals to your gold IRA.

Also, you can rollover your 401k fund in a self-directed IRA account whether you are with your current employer or you leave your job. There is usually no tax penalty for this type of in-service withdrawal, as long as you re-invest the funds within 60 days.

Traditional or Roth IRA

Generally, tax regulations for holding precious metals in IRAs also apply to both traditional and Roth IRAs. You will need to consider the same pros and cons for choosing between these two types of accounts.

In a nutshell, contributions in traditional IRAs are tax-deductible and it allows for tax-deferred growth. However, you will pay taxes when you take money or gold out from the account.

On the other hand, you make contributions to a Roth IRA account using after-tax dollars. Withdrawals are tax-free.


Adding precious metals to your retirement portfolio can minimize volatility. But it is particularly most suitable for the saver or investor with a healthy portfolio, looking to diversify some of the investments.

Consider these metals if you are concerned about inflation and market volatility. However, it is recommended to limit your investment in precious metals to about 5% to 10% of your retirement funds.

Although it can be risky and costly to put your money in precious metals, your investment is not likely to turn out worthless as may happen in stocks, bonds, and other annuities most people put into individual retirement accounts.


John E Chambers

John E Chambers is an experienced financial advice expert. Born in Chicago, he has a master's in Industrial Finance, but he has spent decades offering investment advice to businesses and individuals alike. He is the founder of and wants the website to be valuable for retirement advice. In addition, he writes articles that help users jump-start their retirement plans and choose the best investment options. If not pondering over stock market statistics or reading some magazines, you can find John spending time with his family. As an early retiree, John also offers unique insights into what post-retirement life is like.