Individual Retirement Accounts (IRAs)
Since 1974 Americans have been allowed to set up their own Individual Retirement Account (IRA) in a tax sheltered account. Investment limits have increased to where you can now invest $5000 per year. Most of these IRAs use stocks, bonds or mutual funds as the basis for the investment, but using precious metals is also an option.
Traditional IRAs (which began in 1974) let you invest pre-tax money. That mean that for every $1 you invest in your IRA, you receive a $1 tax deduction. You IRA grows tax free, but when you take the money out upon retirement, it is all taxed as income.
Roth IRAs (begun in 1988 by Senator Roth), use after-tax money to invest. This means you've already paid the taxes on the money in your account, so you don't get to claim it as a tax deduction. The good news is that any interest can grow tax free, and when you take the money out to use it, it remains tax-free.
Because IRAs are controlled by laws, there are rules about what kinds of investments you can put into your IRA. Stocks, bonds, mutual funds and real estate are all allowed. When it came to putting precious metals in your IRA, it used to be that only Gold Eagles or Silver Eagles were allowed.
This was a disadvantage to those wanting to have a Silver IRA since the Silver Eagles carried a premium of about $1.80 per ounce over the price of silver bullion. Fortunately, Congress passed a law in 1997 the precious metals assets that could be used in an IRA. One of the newly allowed assets was bullion.
The premium on Silver Eagles was a lot higher that that on Gold Eagles. Allowing the use of silver bullion as an IRA investment was a boon to silver investors. Other coins are also now allowed, but they must be 99.5% pure and qualify as legal tender. Pre-1965 US silver coins don't qualify as they are only 90% pure.
It is also possible to invest in gold or silver mining stocks. These carry their own unique set of advantages and disadvantages. As an investment hedge against inflation and calamity, bullion is the better option.
You can also set up a silver IRA by buying silver exchange-traded-funds (ETFs). One problem with this is that it's possible for a disconnect between the ETFs and their assets. History has proved that the most reliable hedge against calamity has always been using precious metals such as investing in a gold or silver IRA.
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