Should Precious Metals Be Added to Your Retirement Portfolio?

Having a retirement savings plan is increasingly seen as necessary by many Americans. It has even become a significant part of incentive packages that come with several jobs in the country. 401ks and self-directed IRAs are just a few examples of some of the retirement savings plans open to workers.

Finding out the exact number of people that use these plans is quite challenging. This is because of conflicting reports from various bodies. However, we can work with the nation’s census bureau as we consider them a reliable source.

Their report in 2019 mentioned how around six out of every ten employees use an employer-sponsored retirement savings plan. You can click here to find out more about this report.

The good thing about most of these plans is that they do not just work for savings. They are structured in such a way that investment can be made using the contributions. However, this has to be done under strict guidelines to organize things and avoid penalties.

Speaking of investment options, it is possible to include precious metals in one’s portfolio. Is this a good idea? More on this will be disclosed in this article. You should continue reading to make educated investment decisions with your retirement savings.

Should You Invest in Precious Metals?

Investing in precious metals is a smart choice for those planning for life after retirement. However, investors need to make educated decisions to make the most of the market. To this end, some of the things that should inform their investment decisions include the following:

The Manner of Investment

Several precious metal investment routes can be explored by those planning for life after retirement. All the options have their pros and cons, but some are way better than others. For example, having direct control is one of the areas where some options outshine others.

All this goes to say that you need to make the right choice in choosing your investment path. Some of the investment paths that can be considered include the following:

Outright Purchase of Precious Metals

This option promises direct ownership. The reason is that the asset is held in physical forms such as coins and bars. It should also be noted that easy transference of assets is one of the major highlights of this option. However, it is not without its downsides.

A notable one is the cost of investing. Heavy taxation is high on the list of complaints that many people who explore this option have. Additionally, there are other accrued costs to be worried about. This could be storage, transaction cost, and insurance charges. Anyone who decides to explore precious metal investment using this very direct option needs to be prepared for all this.

Mutual/Exchange Traded Funds

There are a couple of ways that this option is considered better than the aforementioned. Top of the list is the cost of investing in this manner. More often than not, those that use this investment route are faced with lesser investment costs compared to the option discussed above. This is both in terms of taxes and fees such as insurance charges and transaction costs.

Additionally, its asset liquidation status may be considered second to none. It also does well in terms of offering investors convenience.

However, there are downsides just as with any other alternative. Having very little or no control over your investment is one of the major worries. This means that investors are seriously at the mercy of managers of their mutual/exchange-traded funds. As a result, there are management risks to worry about. For example, there could be tracking errors.

Mining Stocks Purchase

A lot of people with retirement savings plans invest in stocks. However, the chances of a stock market crash happening have forced some people to consider including precious metals in their portfolios.

Well, the irony is that it is possible to include precious metals in one’s investment portfolio through stocks. This is by purchasing stocks in a company that has direct involvement with precious metals. This is either through exploration or production operations.

There are various categories of stocks. Mining stocks could either belong to the categories known as value stock or growth stock.

Value stocks are traded at prices that are below the perceived, rather than the current value. Current assets, earning trajectory, and growth potentials are three particularly important yardsticks used to determine the perceived value.

A couple of precious metal investment paths are not dividend inclined. This is because they only offer investors profit as the purchased asset appreciates. This is most likely to happen in the long term. As a result, having consistent cash flow can be a problem.

Fortunately, this is different from how it is with this option. The reason is that it offers dividends regardless of how little it is.

On the other hand, growth mining stocks are not dividend inclined. They are also very volatile but may offer remarkably high returns. Typically having a high price-to-earnings ratio is another way they differ from value mining stocks.

Several things determine the status of a mining stock as either a value or growth mining stock. The market’s potential, the company’s developmental stage, and financial performance are some of them. For more information on the value and growth of mining stocks, you can visit:

Diversification is one of the major benefits of investing using this tactic. For one, you can take advantage of a relevant company’s growth potential by getting growth mining stocks. On the other hand, you can play it safe by taking advantage of a relevant company’s profitability status by getting value stocks.

Both options have some shared risks. Some of them include being highly susceptible to political uncertainties, unfavorable market volatilities, operational risks, and even local & international regulations.

Another common challenge is how declared mining stock prices may not correlate with current precious metal prices. This could mean that the cost of getting the mining stock is higher than it should be. It could also make liquidation a challenge.

Trading Based on Price Movement

The precious metal market can be very volatile. This is considering how the value of these assets can experience swift rises and falls.

Often, volatility is perceived as a downside of the market. However, you can invest in a manner that takes advantage of the market’s volatility. Options & future contracts trading is one of the ways to go about this. It is about taking advantage of brief market price fluctuations.

It can be very profitable, but it is equally a very risky way to invest. Its complexities mean that in-depth knowledge of the market and capital appreciation is required. There is also the problem of market manipulation which can work to a trader’s disfavor.

Churning, wash trading, price fixing, spoofing, front running, and cornering are examples of ways the market can be manipulated, especially by dominant players. You can read this report to see a prime example of how the market can be manipulated by dominant corporations.

Self-Directed IRA

A self-directed IRA (Individual Retirement Account) allows account holders to have more control over their investments. A self-directed IRA can even allow investors to invest using some of the options discussed above – mining stocks and mutual/exchange-traded funds. You can equally have better control than these options can offer.

However, you should go for one that enables you to invest in precious metals. You can even choose a precious metal IRA, which is more suited for this purpose.

People who invest using this path are also guaranteed tax privileges. This alone makes this option better than many of the options discussed above.

However, there are guidelines on how to properly invest in precious metals using this path. These guidelines must be adhered to as failure to do this comes with severe consequences.

These guidelines include how to invest in precious metals, timelines for investment & withdrawals, asset storage, permitted precious metals, essential service providers, and more. You should be fully aware of all these guidelines by the IRS (Internal Revenue Service) to avoid facing the severe consequences of violating them.

Choice of Precious Metal

The precious metal market is a large one. This is given the long list of precious metals that investors can invest in. Some of the options that can be considered include:

  • Gold
  • Silver
  • Palladium
  • Platinum
  • Rhodium
  • Iridium
  • Ruthenium
  • Osmium

It is left for investors to identify the one that they consider best for their investment portfolio. Investing in more than one is also a good decision. However, knowledge of what each of the precious metals has to offer is crucial.

For the record, your investment decision should not only be influenced by popularity. For instance, a lot of investors choose to invest in gold simply because it is extremely popular. Popularity can be an influencing factor because it helps with liquidity and in a few other ways.

However, there is more to consider. Recent market value appreciation is one of them. For example, the lesser-known palladium has outdone gold and other precious metals for some years now.

Your investment route could also impact your choices. For instance, people investing through the self-directed or precious metal IRA path can only invest in gold, silver, palladium, and/or platinum. This is because these are the only options approved by the IRS for precious metals investment.


Working with the right precious metals company would help you choose the right precious metals and investment route. This is why this decision needs to be taken very seriously.

To this end, reading informed and credible reviews of precious metal investment companies is a good idea. For example, you can go through this Fidelity precious metals IRA review for information about the reviewed company.

We have shed light on how adding precious metals to your retirement portfolio is only worth it if you choose the right precious metals and investment route. So, take care to do this going forward.

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