30 Mar Should I put gold bars in my IRA?

Q. I hear these ads for holding gold bars in an IRA. Is this a good idea?
— All that glitters

A. For many centuries gold has been a cornerstone commodity and measure of wealth.

During the 1970s gold was an effective inflation hedge, said Michael Leanza, a certified financial planner with The GenWealth Group in Maplewood. More recently, he said, since the economic crisis of 2008, gold has again come to the fore as an effective investment that serves as an alternative to stocks and bonds.

He said gold may be effective in diversifying a balanced portfolio.

“The fast price swings in commodities and currencies could result in significant volatility in an investor’s holdings,” Leanza said. “However, it tends to do well during inflationary times and volatile times in the stock market — likely when your portfolio needs the most help.”

That makes gold an effective weapon when considering a truly balanced portfolio.

But, Leanza said, owning gold in an IRA is not that simple.

“Certain gold coins and gold bullion are acceptable investments for your IRA,” he said. “The challenge however, is that you cannot hold the gold coins or bullion yourself.”

You must have your coins/bullion held by an IRA trustee, Leanza said, and most major brokerage firms are not interested in holding gold for clients. You will need to do some research on a reputable trustee that will hold the gold and do the requisite IRA tax reporting, he said.

A simpler alternative to holding the commodity itself would be the purchase of a gold-based investment product that can be held in a standard IRA account, Leanza said.

“This may suffice in achieving the same investment objective without the complications present in holding the actual gold bullion or coins,” he said.

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This story was first posted in March 2016.