Should You Consider Adding Platinum to Your IRA?
Platinum IRA’s are a type of portfolio that allows the investor to hold precious metals in their individual retirement accounts also known as IRA. The goal of this article will be to understand the workings of platinum backed IRAs and how they may help diversify a portfolio.
Platinum-IRAs are only allowed to hold specific types of Platinum bars or coins. IRS regulations govern the coins and bars, detailing approved assayer/refiners or national government mint manufacturers. Only certain types of precious metals are eligible for Platinum IRA’s. IRS also detail: the minimum purity levels of 99.95 percent, the purchase of the precious metal must be done through a qualified broker/dealer, in addition, they require you to store the precious metal in a secured vault at an approved depository. Navigating the rules is not difficult but it is something to be mindful of when investing.
Let us take a look at the various precious metal choices for our Platinum IRA. Silver, Gold, Platinum, and Palladium make up the various eligible metals for Platinum Approved IRA’s. With these metals you can choose to purchase bullion bars or coins. As a trader, the purchase of coins or smaller weight bars tend to be more common, as these are easily transferred between parties, and require less overhead. Each metal has its own trading characteristics and will trend differently depending on the global environment.
One example, is gold. Historical trends indicate gold moves inverse of the equity and bond market. In times of political uncertainty and market corrections, gold along with other precious metals have been seen as a hedge against the larger equity and bond market. The other metals also have their trends that follow certain patterns. Silver for instance is widely used in technology and many industrial applications. Silver is often viewed as one of the more volatile metals due to its large industry applications. As the market and economy downturn, silver tends to follow suite. The same can be said for both platinum and palladium. Both metals are wildly used in the auto industry. Changes in the auto industry along with regulations for clean vehicles are going to continue to drive volatility and prices around these metals. As an investor it is import to understand what outside factors can affect the underlining investment.
There are a few benefits that come from holding precious metals. In today’s economic climate, the value of currency is constantly changing. By holding precious metals, we help eliminate part of the concern about devaluation of currency, additionally, we can help hedge inflation. Historically, when currency valuations drop, the price of precious metals like gold increase. Platinum IRAs can help protect against inflation and the devaluation of a given currency. A public company valuation could go to zero, but an oz. of gold will always hold its worth. Long term appreciation is another benefit to investing in precious metals in your Platinum-IRA. Historically the price of precious metals has increased, and continues to have potential for growth.
Platinum IRAs have their own set of drawbacks associated with them. Depending if you purchased bullion bars or coins, the investor often pays fees for storage of the precious metals, which hinder performance. Additionally, with any investment you have additional risks, volatility, liquidity, regulatory risks to name a few. The industrial applications for platinum can cause the price to fluctuate depending on demand and supply. As the auto industry begins to utilize less platinum, we may see prices begin to decline.
The image forecasts supply and demand of platinum. As an investor it is important to pay attention to the risks associate with investing in any precious metal.
Platinum has a number of benefits to help diversify your precious metal portfolio. There are many brokers and institutions that offer Platinum IRA’s. It is always in the investor’s best interest to understand all the risks and fees associated with any investment before committing. If you are interested in platinum, it may be beneficial to look at all types of investments that have exposure to platinum. There are mutual funds and ETF’s that target and focus specifically on certain precious metals. These alternatives to physical metal can help alleviate some of the risks associated with holding bars.
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