The Self-Directed IRA (SDIRA) Statement can cause some of the most savvy investors concern when received.
Typically, custodians send out quarterly statements to allow SDIRA owners the ability to see how their investments and account stand. One major issue that many investors see initially is their account balance and value is lower after they acquire the precious metals.
One of the top complaints, if not the most often complaint, that I have been reading for years on reviews sites for gold dealers is how they don't understand, why the statement shows less value after acquiring precious metals, than it did before the purchase.
I've been investing in the stock markets and real estate for over 30 years and in the precious metals niche for close to five years personally. The problem with most investors is they don't get a clear understanding before they purchase, and therefore have questions or concerns after they get their first Gold IRA Statement.
>>> Need a Gold IRA Dealer? See our list of the 5 Best Gold IRA Companies
When buyers remorse sets in, then complaints flow and an industry is shackled with negative reviews.
So, to get ahead of the curve, let's look at the Account Statement! Once we understand how the precious metals are priced and reflected in the statement, then we can move forward to understand the value of the account.
Watch the following video on account statements and then we'll move forward with additional information. I place this video on here to educate and inform. There is no compensation, only education. Every investor must do their own due diligence before working with a company or purchasing assets.
How to Value Gold or Silver in My SDIRA
Thanks to John Bowens and others in the precious metals field, we know a few things about valuing gold, silver, platinum, and palladium in our account statement.
- Precious metals are purchase based on a "RETAIL" or "Market Price"
- The Purchase Price or Market Price for a coin, bar, round or brick of metal is based on the "melt value" or "spot price" PLUS any premiums attached to the item.
- The Account Statement, recognizes the "spot price" or "melt value" of the precious metals.
- The Account Statement DOES NOT take into consideration the premiums paid for the precious metals.
Now we can take the information provided by the Precious Metals Dealer and do our own calculations to figure out how much we are paying for our premium. And we want to know this so we can have an understanding of why our SDIRA statement shows we have lost value even when the price of metals are climbing.
Calculating Premiums for Precious Metals
The best way to calculate the premium for any coin, bar, brick, or any other size metal that you are considering is by knowing the current "todays" spot price for that metal. We say "todays" spot price, but in reality this is an ever changing price, typically determined by the demand and supply in the market.
As an example only: Say you are looking to purchase gold or silver - follow along for our method of calculating the metal value along with the premium.
Steps to Calculate Metals Price
Know todays Spot Price
Check the current spot price for your metals. Typically, you are buying gold or silver so check the spot price - a good source is https://bullionvalues.org/
What is Your Quoted Price
Here is a little trickier proposition. Many reputable dealers will typically not give you an exact price as throughout the day the price for the bid vs. ask changes. Many online retailers will have the price for an item right their on the website. These online dealers use a formula and add a premium immediately and adjust their website pricing accordingly. What you need is to know or have an idea of what your "buy price" is for the metals. Even the online retailer will only guarantee a price for a short time once you put it in your cart.
What are You Purchasing
Okay, knowing what you are purchasing will influence your quoted price or retail price as found online. A 1 oz American Eagle Coin most likely will have a premium above a Gold or Silver Round. So, you need to know what you are purchasing and why. You want to purchase the most "in demand" bullion possible. Why? so you know there will be buyers when you sell. You could buy "exclusive" precious metals, but then you need to understand that they maybe less expensive to acquire, but they may not have a large pool of buyers when you are ready to sell.
Gold Pricing Examples:
Remember these are just examples based on spot price and retail pricing found as of the writing of this blog article. Please do your own due diligence before purchasing and precious metals.
2024 Gold American Eagle Coin - 1 oz
- Retail Price $3,052.90
- Spot Price $2,921.80
- Premium $131.10
- $50 Face Value on Coin
If you purchase one of these coins today, your custodian IRA statement will reflect the spot price. And, therefore you will assume you have lost value as the premium is not included in the statement. According the sellers website there is a $140 premium for the coin.
Prices are based on the price at the time this article was written. They do no necessary reflect the price for the day the article is being read.
American Gold Eagle Coin -
1/10th troy oz
- Retail Price $382.69 for 1/10th oz
- Spot Price $292.18 for 1/10th oz
- Premium $90.51
- $5.00 Face Value on Coin
Calculate 1/10th of 1 oz for spot = $2,921.80 / 10 = $292.18. Retail $382.69 - $292.18 = $90.51 is the premium. This retailer is advertising the premium of one coin at $99.00. Therefore, they are acquiring the coin at a spot price of $283.81. What you need to know is the "PREMIUM" being paid, because less the premium from retail is what your statement will reflect.
Prices are based on the price at the time this article was written. They do no necessary reflect the price for the day the article is being read.
2023 Ireland Tree of Life - 1/10th troy oz
- Retail Price $358.65 for 1/10th oz
- Spot Price $292.18 for 1/10th oz
- Premium $66.47
- $0 Face Value (this is a round)
Calculate 1/10th of 1 oz for spot = $2,921.80 / 10 = $292.18. Retail $358.65 - $292.18 = $66.47 is the premium. This retailer is advertising the premium of one round at $76.00. Therefore, they are acquiring the round below spot price. What you need to know is the "PREMIUM" being paid, because less the premium from retail is what your statement will reflect.
Prices are based on the price at the time this article was written. They do no necessary reflect the price for the day the article is being read.
The Perth Mint 1 oz Gold Bar
- Retail Price $2,996.50 for 1 oz Bar
- Spot Price $2,921.80 for 1 Troy oz
- Premium $74.70
- $0 Face Value as this is a Bar
If you purchase one of these coins today, your custodian IRA statement will reflect the spot price. And, therefore you will assume you have lost value as the premium is not included in the statement. This retailer is advertising the premium of one bar at $84.00. Therefore, they are acquiring the bar below spot. What you need to know is the "PREMIUM" being paid, because less the premium from retail is what your statement will reflect.
Prices are based on the price at the time this article was written. They do no necessary reflect the price for the day the article is being read.
Recap of What to Know When Buying Gold and Silver
Okay, so what are we going to know and understand with buying precious metals?
- We Need to Know What We Are Buying: different products will have different premiums. Even American Gold Eagles with have different premiums based on the year minted.
- We Need to Know What The Retail Price is.
- We Need to Know What The Spot Price is.
- We Need to Know How Popular the metal is. We don't want to buy "special offers" or "exclusive" if we are buying for our retirement SDIRA.
- We Need to Know if the Metals are IRA/IRS Approved. When you work with a honest company that is experienced with SDIRAs, you will buy the correct product.
Final Thoughts on Knowing and Understanding Your IRA Statement
Now, when you get your statement from your Trust Company or Custodian, you will better understand why and where the numbers come from. The statement will reflect the spot price and every time you check your statement there will be a different value.
If you are interested in knowing the true market value for your precious metals you should contact your Gold IRA Dealer and ask what they will buy back the items for. This will give you the best indicator of the market value of your bullion.
Many self-directed IRA expenses are able to be deducted. You should consult your tax accountant for the most accurate information. The premiums, insurance premiums, custodian fees, and storage fees could all be tax deductible.
FAQ
The Precious Metals statement shows the SPOT Price per ounce for the metals you have purchased. Each item has a premium attached that is not reflected in the statement. The Fair Market Value can be determined by requesting a buy from your Gold IRA dealer.
Each Precious Metals Dealer will have a different period that the metals are purchased within. You will purchase based on the day you place and agree to the order, but in many cases the metals are not owned by the dealer and they go into the market to acquire the metals sold. You should see your metals within your custodian statement within 15 days. You also should have confirmation that the metals are in your secured storage facility within 30 days.
You should ask this question to your dealer before purchasing to get a clear understanding of the timeframe.
There are several gold IRA Dealers in the market. Choosing one is based on your needs. We have a list of our top choices you can check out >> Click Here <<
Owning precious metals such as Gold can have it's downside. First, the metals could decrease in value. Second, there are maintenance fees for owning gold in a SDIRA including custodian fees, paperwork fees, and then their is a storage fee for the facility where you choose to store your metals.
The answer to this questions is - as much as you would like. But, most dealers would say a good balance of retirement savings in precious metals should be between 8-12% of your total retirement savings.
You can do both or either. The advantages of buying within an IRA is you have the ability to grow your investment tax free or postpone your tax till retirement or when you withdrawal from your IRA. The advantage of buying with CASH is you can purchase coins and bars at any local or online retailer. Know you stuff before you buy.
That will depend upon how you purchased. If you bought with CASH then yes you may hold or store your metals where you believe they are most safe. Many banks will not allow for gold storage in safety deposit boxes, so consider that when buying your metals. For IRA purchases you must store your metals at a secured storage facility. You Gold Dealer will help you find one that is near your home or has the safest storage facility.
When we are talking about distributions, then you have the choice to take the coins and bars as part of the distribution or you can sell the coins to a dealer and take payment in check or wire transfer.