The Pros and Cons of Investing in Precious Metals with a Self-Directed IRA

Notice something when you check the markets lately? In the early quarters of 2025, gold hit new record highs, finally hitting over $3,000 an ounce. And with many investors uncertain about where stocks were headed, that means more and more investors are thinking about the benefits of using a Self-Directed IRA to invest in precious metals. But even with outstanding returns like these, what are the pros and cons investors will need to know? Here are a few of the major upsides—and some risks to avoid—when you invest in precious metals with a Self-Directed IRA.

The Benefits of Precious Metals in a Self-Directed IRA

One of the biggest reasons investors turn to precious metals is stability. Looking at markets in early 2025—precious metals were among the most stable assets around.

Unlike stocks, which can swing wildly due to market speculation, precious metals like gold and silver have historically held their value over the long term. This is why many believe they act as a hedge against inflation, meaning they protect purchasing power even when the dollar weakens.

Precious metals also offer diversification. Traditional retirement accounts are often heavily weighted in stocks and bonds, leaving investors feeling vulnerable to market downturns. Adding gold or silver to a Self-Directed IRA balances risk and provides an asset that tends to move in the opposite direction of the stock market. That’s why many investors view metals as a form of insurance—they help keep a portfolio steady even when everything else is looking stormy.

The Challenges of Investing in Precious Metals

While gold and silver have undeniable benefits, there are also some challenges to investing in them. The first is storage. When you invest in metals through a Self-Directed IRA, you can’t just keep them in a safe at home. IRS rules require that IRA-owned metals be stored in an approved depository. That means extra costs for storage and insurance, which can eat into profits over time.

Another factor to consider? Liquidity. While you can sell metals relatively easily, they aren’t as quick to offload as stocks or mutual funds. Selling at the right time takes planning, and prices can fluctuate based on demand, economic conditions, and global events.

There’s also the issue of taxation. The IRS treats precious metal gains differently than traditional investments, and investors need to be aware of the implications of capital gains when they eventually sell. Working with a financial advisor who understands Self-Directed IRAs and IRS regulations can help avoid any unpleasant surprises. And if you use a Self-Directed IRA, you can potentially enjoy tax protections against capital gains sold within the account.

Is Precious Metal Investing Right for You?

If you’re looking for a way to safeguard your retirement savings from inflation and market swings, precious metals could be a smart addition to your portfolio. They offer long-term stability and diversification, two critical factors in protecting wealth over time. But they also come with added costs, potential liquidity concerns, and unique tax considerations.

Before making any moves, it’s important to weigh these factors against your investment goals. Some investors prefer to hold only a small percentage of their portfolio in metals, while others lean more heavily on them during times of economic uncertainty. Either way, doing your research and working with a knowledgeable custodian can make the process smoother.

Interested in learning more? Reach out to us here by dialing 866-7500-IRA.