In this special Saint Patrick's Day episode of Ask the Hammer, the Retirement Daily reader's question is:
I was thinking about investing in gold partly as a hedge against inflation and uncertainty in the market (and the world), and partly because I’m celebrating Saint Patrick’s Day. What do you think?
Retirement Daily's expert Jeffrey "The Buckinghammer Levine" says that it is very important to mention that gold — as a hard asset — does offer some degree of protection from inflation, but it is not completely protected from inflation. If you view gold as safe in terms of inflation, you can get yourself into some trouble and lose substantial amounts of money.
After you understand that gold is not entirely risk-free, you should look into the logistics of owning gold. Will you have gold coins or bars in your home? If so, what are you going to do to ensure protection, prevent theft, and effectively store the gold? Are you going to own gold through ETFs? If so, will you put it in a taxable account, your IRA, or your Roth IRA?
Levine notes that, if you profit off of gold, the IRS treats it as a collectible, which means that it could be taxed up to 28%.
Additionally, if you own gold in an IRA, that means that you can not hold that gold in your house. You have to do it with a registered investment like an ETF. If you do hold gold in your IRA, it has to meet certain fineness requirements, and you have to do it with an IRA custodian.
Ultimately, you should ask yourself what your reason is for investing in gold and figure out if gold (or precious metals in general) is the best asset for you. This episode of Ask the Hammer gives you an idea of what you should start thinking about to determine if you want to invest in gold or not.
Stay tuned for more Ask the Hammer!