Gold IRA statistics 2024

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gold bars, coins and bullions inside a vault

A gold IRA is a self-directed individual retirement account that can hold physical gold and other types of precious metals, including silver, platinum and palladium. These kinds of alternative investments are barred from being held in standard IRAs, which gives gold IRAs special appeal for investors who are planning for retirement and drawn to gold’s long-term stability.

But investing with a gold IRA differs from other types of gold investing, like buying stock shares of gold mining companies or gold exchange-traded funds (ETFs). Gold coins, bars or other precious metals purchased for a gold IRA must conform to strict purity standards established by the IRS. And gold IRAs are subject to special regulations that investors must adhere to regarding where and with whom their gold will be stored.

Key insights

Nearly 10% of Americans invest in gold through retirement accounts, according to a 2020 survey conducted by Gold IRA Guide.

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A traditional gold IRA is the most common type of gold IRA and is funded using pretax dollars. No taxes are paid until money is withdrawn from the account.

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In order to be held in a gold IRA, gold bullion must have a fineness of at least 0.995, which can alternatively be expressed as a purity of 99.5%. The bullion must also be produced by a national government mint or accredited manufacturer.

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As of December 2023, gold had a 10-year return of 4.57%, whereas U.S. stocks had an average return of 12.75% during that period.

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Gold’s value tends to be more stable than the values of stocks in times of economic uncertainty. During the Great Recession, gold’s value increased by over 13%, while the value of the S&P 500 decreased by about 39%.

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General gold IRA background and statistics

Gold’s use in monetary policy and investment has evolved over time. The gold standard was a former monetary system in which a fixed amount of gold served as the standard economic unit of account. Although the U.S. eventually transitioned to a system of fiat money in the 1970s, gold remains a good investment as its value tends to hold steady or appreciate during periods of economic uncertainty and inflation. Investing in gold can also be a good way for investors to diversify their portfolios and balance out losses from higher-risk stocks, provided that investors limit gold and other alternative assets to no more than 10% of their portfolio’s asset allocation.

But despite gold’s benefits as an investment, relatively few Americans appear to incorporate gold into their retirement investing plans. According to a 2020 survey conducted by Gold IRA Guide, only 9.5% of Americans invest in gold through their IRA or 401(k) accounts. Men appear more likely to invest in gold through their retirement accounts than women, as 11.9% of that survey’s male respondents indicated that they used their retirement accounts to invest in gold. This figure increased to 14.2% for males ages 45 to 54.

In a similar study, Gold IRA Guide asked 1,500 American consumers about their ownership of precious metals, including gold and silver. The survey results indicated that about 10.8% of Americans own gold and 11.6% own silver. Drilling down deeper into the findings, millennial females aged 25 to 34 are the demographic surveyed that are most likely to own only gold and not other precious metals, as 5.8% of respondents in that cohort indicated that they owned only gold compared with 4.3% of all people surveyed.

Types of gold IRAs

Traditional gold IRAs: This type of gold IRA is the most common. These IRAs are funded using pretax dollars, which means you can grow your retirement account on a tax-deferred basis. Therefore, no income taxes are paid on the money you put in or any earnings until you withdraw funds.

Roth gold IRAs: This investment account is the inverse of a traditional gold IRA; a Roth IRA is funded using contributions that you’ve already paid taxes on. Funds in a Roth gold IRA can then be withdrawn in retirement without being taxed.

Simplified Employee Pension (SEP) gold IRAs: This is intended for self-employed individuals and employees of small businesses. Similar to traditional gold IRAs, contributions to a SEP IRA aren’t taxed, but withdrawals are.

Eligible and ineligible gold IRA items

The IRS has purity requirements for all metals in gold IRA holdings. They also must be produced by a national government mint or accredited manufacturer. The metals within an IRA holding must be kept in a third-party depository that is registered with the IRS and unaffiliated with regular bank vaults.

  • Gold bars and coins must have a fineness of at least 0.995, i.e., a purity of 99.5%.
  • Silver coins and bars must have a fineness of at least 0.999, i.e., a purity of 99.9%.
  • Platinum and palladium coins and bars must have a fineness of at least 0.9995, i.e., a purity of 99.95%.

Below is a short list of some of the gold bullion bar and coin models that meet IRS standards for IRA investments:

Gold bullion bars

  • PAMP Suisse
  • Valcambi Suisse
  • Perth Mint

Gold coins

  • American Gold Buffalo
  • Canadian Gold Maple Leaf
  • South African Gold Krugerrand
  • American Eagle Coin

The following items typically are not eligible to be held in a gold IRA:

  • Collectible coins
  • Gold jewelry and gold-plated items
  • Proof coins

Gold IRA value over time

Diversified stocks outpace gold on return on investment. As of December 2023, U.S. stocks had an average 10-year return of 12.75%, which is far higher than the 4.57% 10-year return for gold.

However, gold is nonetheless a sound investment against inflation, weak currencies and other economic disruptions. Ben Bernanke, former chairman of the Federal Reserve, stated that gold prices can act as an indicator of the health of the economy. In order to protect their principal, many investors elect to invest in gold during periods of economic crisis or inflation, which causes the price of gold to rise. When the economy is stable, investors generally turn to other investments, like stocks, bonds and real estate. During these times, the price of gold often declines.

The relationship between the economy, the stock market and the price of gold is illustrated by the below graph, which tracks the inflation-adjusted values of the S&P 500 and gold over more than 50 years.

As you can see in the line graph, gold’s value remained relatively stable or increased when stock values dropped sharply, like in the recession from 1973 to 1975, the dot-com crash in 2001 and the Great Recession, which lasted from the end of 2007 until mid-2009.

During the initial years and the years immediately following the Great Recession, gold was a higher-growth investment than the S&P 500 index. As shown in the chart below, the average annual growth in the price of gold was higher from 2007 through 2011 than the average annual growth for the S&P 500 index.

Pros and cons of gold IRAs

Investing in a gold IRA has many of the same risks and benefits as investing in any retirement account. But gold IRAs also have some of their own special considerations.

One of the most significant benefits of a gold IRA is that it allows an investor to diversify their retirement portfolio into an asset class that is typically stable in times of inflation or economic crisis. During times of major economic disruption, stock prices tend to go down, whereas gold prices tend to go up. Furthermore, because it is a rare metal and a finite resource, gold tends to hold its value in the long term.

On the downside, physical gold does not pay dividends or interest. Gains from investing in gold bullion are realized by selling the gold at a higher price than its original purchase price. Gold IRAs also come with expenses that won’t be incurred from standard IRAs, because gold IRA investors must pay storage fees to ensure the safety of their gold assets.

Gold IRA pros

  • Asset diversification
  • Long-term stability
  • Hedge against inflation

Gold IRA cons

  • Storage fees
  • No interest or dividends
  • High minimum investment requirements

FAQ

How do I begin investing in a gold IRA?

There are three main steps to investing with a gold IRA:

  1. Choose a “custodian.” To start investing with a gold IRA, you must work with an IRS-approved institution that will help you open your account, purchase your assets and protect those assets using an IRS-approved depository.
  2. Fund your assets. You can fund your gold IRA via either a cash transfer or a rollover of stocks, bonds, securities in another IRA, a 401(k), 403(b) or other retirement accounts.
  3. Choose your metals. After the account is funded, you can purchase any of the approved metals for the gold IRA.
How long should I keep gold in my IRA?

Gold is viewed as a long-term investment, and investors should plan on holding gold and other precious metals in a gold IRA for around 10 years. This will allow the metals to grow in value and outpace inflation.

Are there contribution limits for a gold IRA?

Yes, there are contribution limits for a gold IRA. For 2024, the gold IRA contribution limit is $7,000 for those under the age of 50 and $8,000 for those who are 50 and older.


References

  1. Cheng MM. “Gold IRAs.” Annuity.org. Evaluated March 22, 2024.Link Here
  2. American Bullion. “What is a Gold IRA?” American Bullion. Evaluated March 25, 2024.Link Here
  3. Young D. “2024 Gold IRA Contribution Limits & Rules.” Gold IRA Companies Bulletin. Evaluated March 22, 2024.Link Here
  4. Henson G. “What Gold Is IRS Approved?” BP Trends. Evaluated March 23, 2024.Link Here
  5. Bauder S. “10.8% Of Americans Own Gold, While 11.6% Own Silver, According To A New Survey.” Gold IRA Guide. Evaluated March 23, 2024.Link Here
  6. Statista. “10-year average return of gold and other assets worldwide as of 2023.” Statista. Evaluated March 25, 2024.Link Here
  7. Macrotrends. “S&P 500 Index - 90 Year Historical Chart.” Macrotrends. Evaluated March 25, 2024.Link Here
  8. Macrotrends. “Gold Prices - 100 Year Historical Chart.” Macrotrends. Evaluated March 25, 2024.Link Here
  9. U.S. Bureau of Labor Statistics. “Gold prices during and after the Great Recession.” U.S. Bureau of Labor Statistics. Evaluated March 26, 2024.Link Here
  10. Bauder S. “New Survey Reveals That 90.5% Of Americans Don’t Invest In Gold Through An IRA Or 401k.” Gold IRA Guide. Evaluated March 26, 2024.Link Here
  11. Ernst K. “Types of gold IRAs to know.” CBS News. Evaluated March 26, 2024.Link Here
  12. Little K. “How much should you invest in gold? Here’s what experts say.” CBS News. Evaluated March 26, 2024.Link Here
  13. Federal Reserve Bank of St. Lous. “Dates of U.S. recessions as inferred by GDP-based recession indicator.” Federal Reserve Bank of St. Lous. Evaluated April 03, 2024.Link Here

Figures

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