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What Are the Differences Between a Silver IRA and a Gold IRA?

Many Americans recognize that precious metals, including gold, silver, platinum, and palladium, is an asset class with a long history as a financial hedge and store of wealth—and thus hold precious metals as part of their portfolios. In selecting their first physical precious metal to purchase or add to their individual retirement accounts (IRAs), some prefer silver while others prefer gold. But is one better than the other?

Both gold and silver have unique benefits they can bring to your personal or retirement portfolio, which is why many choose to purchase a variety of precious metals products. But if you’re opening a precious metals IRA and want to start with just gold or silver, you may wish to consider the differences between these precious metals before making your decision.

What is an IRA?

An individual retirement account (IRA) is a type of account you can set up with a financial institution to help you plan and save for retirement in a tax-advantaged way.

The two most common types of IRAs are:

  • Traditional IRA: Your contributions to this account might be tax-deductible and will grow tax-free until you retire and begin taking distributions (which are then taxed).
  • Roth IRA: Your contributions are made post-tax, allowing you to withdraw funds in retirement tax-free.

IRAs typically consist of paper assets like stocks and bonds, but another type of IRA can greatly expand both your asset options and your level of control over your asset mix: the self-directed IRA. This type of IRA can be either a Traditional or Roth IRA and allows for the addition of assets not typically offered by many IRA companies, including real estate and physical precious metals.

“Gold IRA” and “silver IRA” are terms used to describe self-directed IRAs that include physical gold or silver in their asset mix. This type of account is also referred to more broadly as a precious metals IRA. Gold and silver IRAs must be held by a custodian, with the physical precious metals held in an IRS-approved depository.

Want to learn more? Check out our IRA Beginners Guide.

The benefits of having an IRA

There are many benefits to owning an IRA. Our top four benefits of having an IRA include the following:

  1. Precious metals IRAs allow you to diversify away from “paper” assets.
  2. You can defer tax payments during your high-income, high-bracket earning years until retirement, when you might enter a lower bracket (Traditional IRA).
  3. IRAs are available to both those with employers and those who are self-employed.
  4. You have flexibility in choosing which assets make up your IRA, giving you control over your financial future (a self-directed IRA provides even more control over your asset mix).

If you want to learn more about the benefits of self-directed IRAs, check out our free Gold IRA Information Kit.

Can you own gold and silver through an IRA?

One of the most prominent differences between a standard Traditional or Roth IRA and a gold or silver IRA is that the assets in your gold or silver IRA are physical (gold bars or coins, for example) and stored in an IRS-approved depository, while most other IRA assets (stocks, bonds, etc.) are paper-based and intangible.

You can hold physical gold, silver, platinum, and/or palladium in a precious metals IRA in addition to traditional asset classes such as cash, stocks, and bonds. This allows you to use precious metals as a way to help diversify your retirement savings.

Are you limited to just one precious metal in your self-directed IRA? This is a common question, and the answer is no: If you wish to diversify your retirement portfolio with gold, silver, or other precious metals, you get to decide the extent to which each precious metal makes up your portfolio.

Differences between gold and silver IRAs

The main difference between a gold and silver IRA is simply its contents—which precious metal you choose to hold in your IRA. That said, understanding the differences between gold and silver can help you make a more informed decision about what ratio (if any) you wish to have between different precious metals in your precious metals IRA.

Historically, silver has seen stronger rises in its price in the short term compared to gold because of its larger potential industrial uses. As a malleable, strong, and electrically conductive metal, silver is used for consumer appliances, water purification, furniture, dentistry, LED chips, semiconductors, and more.

Gold, meanwhile, is rarer than silver, with 244,000 metric tons of gold having been discovered to date, compared with 1.74 million metric tons of silver. This relative scarcity can impact gold prices because of supply and demand.

Similarities between gold and silver IRAs

Whether you choose to have just gold, just silver, or a combination of precious metals in your precious metals IRA is up to you. There is no right or wrong answer, but there are similarities between gold and silver IRAs to note.

You can see a list of IRS-approved gold and silver products, as well as some products which are not approved for inclusion in IRAs, here.

  • For both gold and silver IRAs, you will need to store your physical precious metals in an IRS-approved depository, which U.S. Money Reserve can help arrange on your behalf.
  • Regardless of whether you hold gold or silver assets in your precious metals IRA, your account fees may be different from those for conventional Traditional and Roth IRAs.

Precious metals are a historically popular method for hedging and diversifying your asset mix when planning for retirement. You can further diversify your holdings within a gold/precious metals IRA by holding different precious metals within one account.

To find out to what extent your portfolio is diversified, take this Diversification Quiz.

Impacts on gold and silver prices

There are six main factors that can impact gold and silver prices in both the short term and long term, which in turn could affect the overall health of your precious metals IRA.

  1. Market volatility: The price of precious metals can increase or decrease in the short term if there is volatility in financial markets. For example, a downturn in the stock market might lead portfolio holders to turn to precious metals as a short-term safe haven.
  2. Wealth/economic prosperity: In an environment where the economy is strong and inflation is low, people tend to spend more. This means a greater demand for “luxury goods” like jewelry, which can impact the price of precious metals. Economic prosperity may also allow portfolio holders to set more money aside in long-term assets like precious metals, which may also increase demand.
  3. National gold reserves: Central banks often change how much of their reserves are held in precious metals, especially gold. In 2018, gold purchases by central banks reached a 50-year high. If central banks continue to demand more gold, prices could increase.
  4. Mining/production: How much gold and other precious metals are mined and produced each year can affect their prices because this impacts the ratio of supply and demand.
  5. The strength of the U.S. dollar: The dollar is the most widely used currency across international markets. A rise or fall in the strength of the dollar may also impact the price of precious metals. When the dollar is low, international currencies have stronger purchasing power when it comes to assets such as precious metals.

Evaluating the ratio of precious metals to other assets in your portfolio

There’s no one answer for the best amount of gold, silver, or other precious metals to have in your IRA—everyone’s financial situation and goals are unique. However, a well-diversified retirement portfolio, including precious metals, can be a great way to hedge against short-term fluctuations in the economy while providing yourself with more control over your financial future.

Want to learn more but not sure where to start? You can dive a little deeper into the reasons to buy silver as well as the reasons to buy gold. Talking with a U.S. Money Reserve IRA Account Executive in a no-obligation consultation is also a great way to understand how easy it can be to open, expand, and manage a self-directed IRA, as well as learn what options you have regarding your precious metals once you retire.

To chat with one of our Account Executives, schedule a call for a time that’s right for you by selecting a day and time for us to get in touch.


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