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A physical silver IRA is an individual retirement account in which the investor holds physical silver bullion rather than paper assets.
Physical silver IRAs offer several advantages over traditional paper asset IRAs, including protection from inflation and currency devaluation.
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What Exactly is a Physical Silver IRA?
While most IRAs invest in stocks, bonds, and other paper assets, a physical silver IRA allows investors to invest in one of the oldest and most valuable forms of money.
Silver has been used as a currency for thousands of years, and its value has maintained well over time. Silver is enjoying a renaissance as an investment vehicle as more and more people discover its benefits.
Since a physical silver IRA represents a real asset, it is not subject to the same fluctuations as paper assets.
This means that investor retirement savings will be much more stable, and they won't have to worry about losing their nest egg to a sudden market crash.
A physical silver IRA also offers excellent protection against inflation. Over time, the purchasing power of paper currencies tends to decline as government printing presses cranking out new money erode the value of each unit.
This process is known as "inflation," which can eat away at investor savings if they're not careful.
In contrast, the value of silver tends to increase as inflation increases. This is because silver is a finite resource, and its supply can't be raised like paper money at the drop of a hat.
As inflation goes up, silver's value goes up along with it, protecting retirement savings from its effects.
A physical silver IRA is also a great way to guard against currency devaluation. Over time, Paper currencies tend to lose value as governments debase their currencies by printing more and more money.
This process is known as "currency devaluation," It can destroy retirement savings if an investor is not careful.
Fortunately, a physical silver IRA offers excellent protection against currency devaluation. Silver is priced in dollars, so it doesn't matter how much the dollar declines in value; the price of silver will still be the same.
This means that retirement savings will be safe from the effects of currency devaluation, no matter how bad things get.
How To Open a Physical Silver IRA
A silver IRA is an excellent way to invest in one of the oldest and most valuable forms of money. A few different ways to get started with a physical silver IRA exist. One option is to roll over existing retirement accounts into a silver IRA.
Another option is to set up a new account and purchase silver directly. The process is relatively simple if an investor wants to roll over an existing retirement account.
They need to contact their current custodian and let them know they want to roll over into a physical silver IRA. The custodian will take care of the rest, and there should be no tax consequences or penalties.
Once they find a dealer, they can purchase silver and deliver it directly to their custodian. Once the silver arrives at the custodian, it will be stored securely and insured against loss or theft.
Investors can take physical possession of the silver at any time or leave it alone to grow in value over time.
Common Silver IRA Companies
Several companies can help investors set up and maintain a physical silver IRA. They must research before choosing a company to work with, as not all dealers are created equal.
They must read reviews and compare pricing before making a decision. Some common choices include:
Equity Trust Company
Equity Trust Company is a leading provider of self-directed retirement accounts. They offer many different options for investors, including precious physical metals. The company has been in business since 1974 and is headquartered in Ohio.
Regal Assets
Regal Assets is a popular and well-known dealer of precious metals in the USA. The company offers a wide range of options for IRA-approved metals, including physical silver.
Most orders are shipped within 24 hours, and Regal Assets offers free storage and insurance for all purchases.
Gold Silver
The company was founded in 2005 to give investors a way to invest in precious metals without the high costs and hassle of working with a traditional dealer. Gold Silver offers a wide range of IRA-approved metals, including physical silver.
A 100% satisfaction guarantee backs all purchases, and the company offers free shipping on all orders.
Goldline International
Goldline International is one of the largest and most well-known precious metals dealers in the United States. The company offers a wide range of IRA-approved metals, including physical silver.
Goldline offers free shipping and storage on all orders and a price lock guarantee backs all purchases. Since 1960, Goldline has helped investors purchase over $5 billion in precious metals.
JM Bullion
JM Bullion is a precious metals dealer that offers IRA-approved gold, silver, platinum, and palladium. They provide free storage and shipping on all orders. The company also has an A+ rating from the Better Business Bureau.
Quality customer service is a top priority for JM Bullion, and they offer a live chat option on their website. It works with mints and distributors around the globe to get the best prices on precious metals for its customers.
Why You Should Consider a Physical Silver IRA
The advantages of a physical silver IRA are numerous, but here are just a few reasons to consider adding silver to the retirement portfolio.
Silver is a tangible asset that investors can hold in their hands. It is unlike stocks or mutual funds, which are only pieces of paper. Investors who are worried about a potential collapse of the financial system find comfort in holding physical silver.
The price of silver has historically been much more volatile than gold, which means it has the potential for higher returns. Over the past decade, the cost of silver has outperformed the stock market by a wide margin.
This is because silver is a precious metal with industrial uses, so economic factors and market sentiment influence its price. Silver is an industrial and precious metal, which means it has both investment and practical uses.
It is a hedge against inflation and economic uncertainty. If the economy were to collapse, silver would still have value as a barter item. Also, many believe that we are in a silver bull market, which means the price will likely continue to rise.
Silver is a finite resource. There is only so much silver in the world, and it's not being mined at the same rate as other metals like gold. This makes silver rarer than gold and more valuable as an investment.
The likelihood of finding new silver deposits is very low, so the price will likely continue to rise over time.
Silver is tax-advantaged. IRA-approved silver is exempt from capital gains taxes, making it a more tax-efficient investment than other assets like stocks or mutual funds.
Tax-advantaged accounts like IRAs allow investors to defer or even avoid taxes on their investment gains.
Ways To Invest In a Silver IRA
There are several ways to invest in physical silver through an IRA. The most common way is to purchase silver coins or bars and store them in a depository.
Some of the most popular silver coins for investment purposes include American Eagle coins, Canadian Maple Leaf coins, and Austrian Philharmonic coins. You can also purchase silver rounds, which are private mint coins that are not legal tender.
Another way to invest in physical silver is through a silver pool account. A silver pool account allows investors to pool their money together and purchase silver bullion at a discounted price.
The downside of this method is that investors do not own the silver, so they will not be able to take physical possession of it. Investors can also invest in silver futures. These contracts allow investors to purchase silver at a specific price in the future.
Investors put up a margin, a small percentage of the total contract value, and then they can buy or sell silver at the future price. This method is considered more advanced and is best suited for experienced investors.
The downside of this method is that it's very speculative and risky. Silver futures are not suitable for most investors as long term investments.
EFTs, that own silver bullion is also an option. The most popular silver ETF is the iShares Silver Trust (SLV). This fund owns physical silver bullion and is backed by the U.S. government.
The downside of this investment is that it's not as volatile as other precious metals, which means it doesn't have the same potential for returns.
ProShares Ultra Silver (AGQ) is a leveraged ETF that invests in physical silver bullion and is designed to track the daily movements of silver prices twice. This fund is best suited for experienced investors comfortable with taking on more risk.
Investors should be aware that leveraged ETFs are reset daily, so they can lose money even if silver prices go up over the long term.
Do Banks Offer Physical Silver IRAs?
No, banks do not offer physical silver IRAs and most do not make silver IRAs available to the public. They avoid offering it because price fluctuations of silver are more frequent than other metals, which presents a higher risk for the bank.
Also, banks tend to favor more liquid investments, which means they can be sold more quickly. Silver is not as liquid as other assets like stocks or mutual funds, so it's not as attractive to banks.
Setting up a physical silver IRA at a bank is similar to setting up any other IRA account. You will need to open an account and then fund it with cash or investments.
Once your account is funded, you can purchase silver coins or bars and store them in a depository. The downside of using a bank to set up your IRA is that they typically do not offer as many investment options as other institutions.
What Happens if an Investor Decides to Sell Their Physical Silver?
An investor can decide to sell their physical silver at any time. They can either sell it back to the institution where they set up their IRA or sell it on the open market.
If an investor decides to sell on the open market, they must find a buyer willing to pay the current market price for silver.
The downside of trading on the open market is that it can take some time to find a buyer, and the selling price may be below the current market price.
If an investor decides to sell their physical silver back to the institution, they will typically be able to do so at the current market price.
The downside of this option is that the investor will not be able to take advantage of any price appreciation that may occur over time.
Fees Associated with a Physical Silver IRA
The fees associated with a physical silver IRA can vary depending on the institution and the type of account. Some institutions may charge an annual fee, while others may only charge a one-time setup fee.
The fees associated with storage and shipping may also vary. Here are some of the most common fees that investors should be aware of:
Annual fee: This is a fee some institutions charge to maintain the IRA account and do administrative work. The fees vary from $75 to $200 per year.
Application fee: This is a fee some institutions charge to set up an IRA account. On average, this fee is around $50, but it can be as high as $100.
Storage and shipping fees: Precious metals are kept in a secure location known as a depository. The institution that holds the account will typically charge storage and shipping fees.
These fees can vary depending on the size of the account and the type of precious metal being stored.
The cost of silver metals: An investor must purchase the actual silver coins or bars stored in the account. The cost of silver can vary depending on the current market price.
Conclusion
When one is ready to retire, a physical silver IRA can give them the peace of mind of knowing their savings are safe from inflation and currency devaluation.
With a physical silver IRA, they can rest easy knowing their retirement savings are in good hands.
Furthermore, by diversifying their portfolio with precious metals, they can protect themselves from the potential losses that come with stock market volatility.
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I started BMOGAM Viewpoints as a way to compile all my views on investing in one place. I own my home, have some real estate, and own a few stocks like most people, but what really drives my interest in investing is I have a strong love of precious metals, especially gold.
