Gold IRA vs. Physical Gold – Which is the Best Option for You

Gold IRA vs. Physical Gold: Which is the Best Option for You?

Last Updated on April 14, 2023 by Jussi Hyvarinen

Whether newly employed or in your sunset years of employment, most financial experts recommend diversifying your investment portfolio.

The suggestion makes even more sense amid the looming inflation and an unpredictable stock market.

Investing in precious metals like gold is one of the best ways to hedge against inflation, a volatile economy, and an unstable stock market.

When it comes to buying gold, you have two main options. You can either hold it in a gold IRA or buy physical gold.

That said, there are downsides and upsides to each method.

This post explores the pros and cons of a gold IRA vs. physical gold.

And if you read end to end, you'll discover why operating a gold IRA is the best way to buy gold.

Gold IRA vs. Physical Gold – What You Should Know Before You Invest

There are vital considerations that come into play when deciding whether to invest in gold directly or in the form of physical gold.

Top on the list of what you should know include:

  • Limitations and options available with each
  • IRS regulations
  • Tax implications
  • The extent of your responsibility
  • Related costs
  • How you'll store and secure your precious metals

Let's dive right in.

Gold IRAs

A gold IRA is a type of investment retirement account.

It is a self-directed IRA that allows you to hold gold and other alternative investments that aren't mutual funds, bonds, or stocks.

Here's what you should know about a gold individual retirement account (IRA).

  • Gold IRAs are Self-directed: There are two types of gold IRAs; a traditional IRA and a Roth IRA. You can manage your self-directed IRA, unlike a traditional IRA.
  • You must appoint a trustee or custodian to hold your investment. The custodian, however, cannot act as a financial advisor.
  • You Can Hold Alternative Investments like Precious Metals in a Gold IRA: Besides gold, you can invest in other precious metals like silver, platinum, and palladium in gold IRAs.
  • Since the IRS has complex regulations and reporting regarding buying gold, most traditional IRA providers don't offer precious metals IRAs.
  • Tax Benefits: Just like a standard IRA, a gold IRA offers tax deductions on your investments. In fact, the tax benefit offered by self-directed gold IRAs is one of the reasons investors prefer them.
  • With traditional IRAs, you can defer paying taxes on your IRA-deposited income until you withdraw your funds.
  • A gold Roth IRA requires you to pay your income taxes upfront instead of withdrawing the funds.
  • You Must use a Custodian with a Gold IRA: The IRS requires investors to go through a custodian. This means you can't physically store or hold your gold. The custodian serves as the gatekeeper between you and your gold investments.
  • In addition, the custodian will handle compliance and disbursements, and other processes.
  • Fees: You must pay taxes for any IRA account. However, a self-directed gold IRA carries additional costs.
  • Apart from the setup, annual and miscellaneous transaction charges, a traditional gold IRA also attracts brokerage fees. You also have to pay storage and shipping costs. 
  • Contribution Limits: The maximum amount for gold IRA accounts is $6,500 in 2023. You can contribute an extra $1,000 if you're 50 or older. 

Physical Gold

Physical gold

Physical gold is available in various forms. These include gold bullion, like ingots, bars, and gold coins. Even though gold in whatever form has intrinsic value, you're better off investing in gold bars.

That doesn't mean you shouldn't purchase gold in other forms, including physical gold coins.

Unlike a gold IRA, you can invest in physical gold to hedge against inflation or for other purposes like wearing or as a collection.

Still, gold bullion offers the best returns if you're buying gold as an investment. Besides, you're more likely to find a buyer interested in gold bullion than physical gold coins.

Here's what you should know before you make a gold investment.

You're in charge of everything from buying, holding, and storing gold. You don't have a custodian, as with a gold custodian.

You're responsible for keeping up with gold prices. So, you'll solely determine when to sell your gold collectibles at a profit.

  • You'll incur handling and shipping costs.
  • You'll be responsible for finding a good gold IRA dealer.
  • You'll be responsible for finding a buyer for your gold holdings.


The IRS categorizes gold in any form in its precious metal grouping. It also considers all precious metals as collectibles that attract capital gains tax.

You'll pay tax at standard income rates if you sell your physical gold within one year of purchase. If you sell your precious metal one year after buying it, you'll pay a capital gains tax equal to your marginal rate of up to 28 percent, even if you're in a higher tax bracket. 

IRS Reporting Requirements 

The IRS has precise requirements and regulations regarding selling precious metals. If you purchase physical gold, you must ensure you get well-acquainted with these regulations. 

For instance, you must report some specific forms of gold as soon as you sell, while you can report others when filing your taxes.

Side Note: The IRS requires that you pay any tax liability resulting from selling gold together with regular taxes for that year. 

What's the Difference Between Gold IRA and Physical Gold?

We can derive the following differences from the above points.

Gold IRAs hedge against inflation and stock market volatility, making them ideal for investing in your retirement funds.

Physical gold allows you to purchase physical gold in coins and bars.

The main difference between the two boils down to storage.

With a traditional and Roth IRA, an IRS-approved custodian holds your investments. The custodian also handles everything, including storing and managing your assets.

Side Note: You must pay storage fees to the custodian for holding your physical metals. 

With physical gold, you must directly purchase the precious metals without involving a custodian. You'll also store the gold yourself and track the prices.

Physical gold and IRA gold also differ in taxation regulations.

The profits gold IRA investors make are tax-deferred until withdrawal when the person is 59 ½ years. Profits made from trading physical bullion, on the other hand, incur capital gain taxes depending on the nature of the transaction.

In addition, most traditional IRAs allow a single rollover per year without being penalized. If you want to invest in gold regularly, buying physical gold is the best strategy instead of relying on gold IRA companies.

Moreover, there's a significant difference between physical gold and gold IRA regarding liquidity. You can offload gold assets in an IRA in one or two days. 

Once the custodian completes the sales process, you have your money wired to your account immediately, something that's not common when dealing with bullion coins and bars.

You might have to wait a little longer if you invested in precious physical metal because of the potential delay caused by shipping and ownership transfer, especially if you're selling gold in bulk.

Pros and Cons of Golds IRAs and Physical Gold

There are several upsides and downsides to owning gold in an IRA and purchasing gold in physical form.

Pros and Cons of Gold IRAs


  • Traditional or Roth gold IRAs allow alternative investments such as cryptocurrencies and real estate. This makes gold IRAs ideal if you want to diversify your retirement portfolio.
  • Gold individual retirement accounts carry a tax deferment advantage of standard IRAs. In addition, they aren't subject to capital gains rate taxations of collectibles, as is the case with physical gold.
  • A custodian handles their reporting and disbursement paperwork.
  • The IRS requires that the custodian holding gold on your behalf be insured, which makes gold IRAs more secure than self-storage.
  • Gold retirement accounts are ideal if you're looking for a long-term inflation hedge.


  • You can hold anything the IRS considers gold collectible in an IRA.
  • You'll incur more fees with a gold IRA than with physical gold.
  • Because of custodian and IRA rules, you cannot access your investments as soon as possible. This means you cannot have your gold held in a self-directed IRA in case of emergencies.
  • You end up paying hefty amounts in custodian storage fees compared to storing your gold at home or in a bank. 
  • There's a way around these fees, though. Choose an IRA provider that offers free storage. Augusta Precious Metals covers custodial fees for up to 10 years, based on your account. 
  • You can incur fees and penalties if you withdraw your investments earlier than the stipulated timeline.

Pros and Cons of Physical Gold


  • You can access your gold investments anytime because you're in charge of storage.
  • You don't have to incur any storage-related fees.
  • You can buy gold in any form, including gold bars, coins, and collectibles. 
  • You're not subject to any rules regarding withdrawals. You can sell your gold anytime.


  • You're in charge of storing your precious metals safely.
  • You'll incur shipping and handling costs when selling your metals. You also have to find a trustworthy dealer. Note; selling precious metals on your own can be a rigorous and complex process.
  • The IRS considers gold that's not in an IRA as a collectible. The agency sees your profits as capital gains, so you must report sales and pay taxes.
  • You won't enjoy the tax deferment advantage of an IRA.

Gold IRA or Physical Gold - Which is the Right for You? 

You need to consider a few things to help you determine whether it'd be best to invest in physical gold or IRA.

Who is a Gold IRA Suited For?

Gold IRAs are ideal for you if:

  • You're looking to diversify your retirement portfolio and want to include a non-traditional asset like gold.
  • You're concerned about inflation and want to hold a tangible asset that has historically maintained its value over time.
  • You're worried about economic and political instability and want a safe haven asset in your portfolio.
  • You have a long-term investment horizon and are willing to accept the potential volatility of gold prices in the short term.
  • You want to reap the tax advantages of IRAs
  • You're about to retire and want to invest in a gold asset against inflation.

Who is a Physical Gold Suited For?

Owning physical gold is ideal for you if:

  • You want to hedge your investment nest against inflation.
  • You want to broaden your portion beyond bonds and stocks.
  • You understand the ins and outs of the gold market and aren't afraid of the risks of owning physical gold and other approved precious metals.
  • You don't like the rules and regulations of a self-directed IRA custodian regarding when you can withdraw your assets.
  • You want to invest in gold for long-term gains.
  • You appreciate that gold and silver coins can grow in value over time.

How to Invest in a Gold IRA and Physical Gold

Here's how to go about investing in both options.

How to Invest in a Gold IRA 

Here's what you need to do when investing in Gold IRAs. 

  • Find a reputable gold IRA provider. Augusta Precious Metals is my #1 recommendation. You can read my in-depth Augusta Precious Metals review to find out why.
  • The company will be the go-between you and the gold dealer.
  • Open and fund your IRA account. The provider will buy the precious metals on your behalf.
  • You can initiate a 401K to gold IRA rollover to fund your account. Gold IRA rollovers are increasingly becoming popular with people interested in investing in gold.
  • You can withdraw the gold upon retirement or let it sit in your IRA account.
  • You'll submit taxes if you take it out. If you let it sit in the account, you can withdraw as required without incurring taxes.
  • Withdrawing the gold early attracts a penalty, so you'll want to wait until you're 59 ½ years old to liquidate your investments.

How to Invest in Physical Gold

Investing in gold is pretty straightforward. Here's how to go about it.

  • Find a trustworthy gold dealer.
  • Decide how much gold you want to buy.
  • The dealer will handle the shipment to your preferred storage destination, which can be your home or bank. 
  • You'll incur a monthly charge if you store the gold elsewhere other than your home.
  • As stated, you're responsible for finding a buyer. You'll incur shipping costs if you've stored your precious metals in a facility.

Gold IRA vs. Physical Gold – FAQs

Are gold IRAs Worth It?

Yes, gold IRAS can be a good idea if you want to diversify your retirement savings and hedge against inflation.

One notable advantage is that gold has traditionally increased in value over time, especially during economic uncertainty or inflation.

Still, an IRA makes more sense if you invest in safeguarding your retirement. So, to reap the maximum benefit, it'd be best to allow your gold asset to sit in the IRA until you retire.

Plus, you don't have to withdraw all your investments at once. You can decide to liquidate your assets as and when you need some funds.

Can an IRA Hold Physical Gold?

Yes, you can hold physical gold in precious metal IRAs. However, there are some specific rules that you need to follow.

First, the gold must have a purity of at least 99.5 percent and the form of coins or bars approved by the IRS for use in an IRA. This includes American Gold Eagle, Canadian Maple Leaf, and Austrian Philharmonic coins, among others.

Second, you must store the gold in an IRS-approved depository.

Finally, you must work with a gold IRA to set up your account and purchase the gold.

What is a Roth IRA?

A Roth IRA is an individual retirement account that allows you to save for retirement while reaping tax advantages. Roth IRA contributions as made in the form of pre-tax dollars. As a result, qualified withdrawals from a Roth account are tax-free, including any investment earnings.

Tax-free withdrawals can be beneficial if you expect to be in a higher tax bracket in retirement than you are currently.

Additionally, unlike traditional IRAs, there are no required minimum distributions (RMDs) for Roth IRAs during the owner's lifetime. This means you can leave the money in your Roth IRA to grow tax-free for as long as you wish.

What Does a Self-Directed IRA Mean?

A self-directed IRA means the account holder can choose their own investments instead of being limited to investments offered by financial institutions.

The account offers more control and flexibility over the assets you can hold as long as the IRS allows the investment.

Common investments in a self-directed IRA include real estate, private businesses, precious metals, and cryptocurrency.

In contrast, traditional and Roth IRAs are typically limited to investments such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs).

Self-directed IRAs are subject to the same contribution limits and tax rules as traditional and Roth accounts.

The Bottom Line

Investing is crucial for any forward-thinking individual.

Still, a significant percentage don't know how and where to invest their money.

When investing in an IRA or physical gold, you must deal with a reputable gold IRA company or dealer.

Which one is the right investment option for you? Gold IRA or physical gold?

Investing in physical gold makes sense when you grasp the gold market and prices well.

A gold IRA is ideal for hedging your retirement investment against inflation, volatile stock markets, and economic uncertainties.

And the beauty of it is that you don't have to handle the buying and selling.

Your quest to invest in a gold IRA starts by choosing the best gold IRA company.

Jussi Hyvärinen

Jussi Hyvärinen is an online entrepreneur from Finland who has over 25 years of industry experience. With his expertise in digital marketing, he is committed to helping others achieve their goals and aspirations.

Join Jussi on his journey and discover how his guidance can help you achieve your own dreams. Get inspired by Jussi's story today!

Jussi Hyvärinen is an online entrepreneur from Finland who has over 25 years of industry experience. With his expertise in digital marketing, he is committed to helping others achieve their goals and aspirations.

Join Jussi on his journey and discover how his guidance can help you achieve your own dreams. Get inspired by Jussi's story today!

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