Investing in Gold: Where to Stash It

Estimated reading time: 2 minutes

Most people interested in alternative assets understand why you might choose to invest in gold. Gold prices tend to act in opposition to the stock market: when equity prices are low, gold typically rides high. It’s considered a store of value, a hedge against inflation, and protection against currency deflation. Gold prices may ebb and flow, but its worth as measured by its purchasing power, is relatively stable over time.

With that said, a lot of people feel confused about what happens after they use their IRA funds to invest in gold. The questions we hear asked the most often are: where is the gold stored? Can I store the gold I invest in with my IRA funds in my house?

The Gold Must Go

As tempting as it might seem to line the back of your closet with the gold bars you’ve invested in, the reality is this: you cannot take possession of your gold while it’s held in your IRA. If you take physical possession of your gold for any reason, it is considered a distribution from your IRA, which is a taxable event and may be subject to the early distribution penalty.

The gold in your IRA must be acquired for you through your custodian and transferred directly into a depository under your IRA’s name.

Where to Store It

The IRS requires all physical metals invested in with an IRA to be securely stored in an approved metals depository or vault for safe keeping. The Entrust Group currently works with four IRA-approved depositories in the US. As with any other part of the investment process, doing due diligence on the depository you choose to store your gold in is key.

Types of Depositories

Precious metal depository storage has two types: allocated and unallocated. Allocated storage holds your metals separately. It ensures that the metals you deposit into the facility are the very same ones that will ship out of the facility at point of distribution.

Unallocated storage organizes metals not by their ownership, but by factors such as type, weight, refinery, or year minted. The metals you purchased co-mingle with metals owned by others, so while the metals shipped out at point of distribution will be identical in specification to those you deposited, they may not be the exact same ones.

Fees vary by depository, so it’s important to shop around for comparison. Annual depository fees must be paid from your Self-Directed IRA, and not your personal funds.

Have more questions about investing in gold with your Self-Directed IRA? Check out our Precious Metals Guide.