Gold ETF Vs Physical Gold Vs Gold IRA
Short answer. A gold ETF is the simplest and usually the cheapest way to get gold exposure. Physical gold and a gold IRA add storage, spreads, and fees.
Side-By-Side
| Gold ETF | Physical gold (outside IRA) | Gold IRA | |
|---|---|---|---|
| What you own | Fund shares | Coins or bars | Coins or bars, stored for the IRA |
| Storage | None needed | You arrange it | Approved depository |
| Ongoing cost | Fund expense ratio | Storage and insurance | Setup, custodian, storage fees |
| Buying cost | Brokerage trade | Dealer spread | Dealer spread |
| Ease of selling | Very easy | Through a dealer | Through dealer and custodian |
| Tax wrapper | Only if held in an IRA | None | Traditional or Roth IRA |
Tax Note
In a taxable account, gains on gold and physically backed gold funds may be taxed at a collectibles rate that can exceed the usual long-term rate. In an IRA this differs. Confirm with a tax professional.
How To Choose
- Want simple exposure at low cost: a fund inside an existing IRA may do it.
- Want to own the metal itself: physical gold, with your own storage.
- Want physical metal inside an IRA tax structure: a gold IRA, accepting the extra costs. See costs.
What Kinds Of Gold Funds Exist
- Physically backed funds hold gold bars and track the metal's price.
- Gold miner funds hold mining company stocks, which behave differently from the metal.
- Futures-based funds use contracts and can behave differently over time.
Read the fund's description to learn what it actually holds before assuming it tracks gold.
Costs Compared
Fund expense ratios vary, and many physically backed funds charge a fraction of a percent a year. At 0.25%, a $50,000 holding costs $125 a year. A gold IRA also has setup, custodian, and storage fees, plus the dealer spread, which can total several percent in year one. See costs and fees.
How Taxes Differ
| Where held | Tax treatment in brief |
|---|---|
| Taxable account (fund or physical) | Long-term gains on gold and physically backed gold funds can be taxed at a collectibles rate that may be higher than the usual long-term rate |
| Traditional IRA | Growth is tax-deferred, and withdrawals are taxed as ordinary income |
| Roth IRA | Qualified withdrawals can be tax-free |
Tax rules change, so confirm the details with a tax professional.
Custody And Counterparty Risk
With a fund, you own shares and rely on the fund's custodian and structure. With physical gold you hold the metal but also its security and insurance. In a gold IRA, the depository and custodian hold the metal for you. Each has different failure points.
Which Fits Whom
- Want simple, low-cost exposure: a fund.
- Want the metal in your own hands and accept storage risk: physical gold.
- Want the metal inside an IRA and accept higher cost: a gold IRA.
Ready To Compare Companies?
Use our checklist to get written quotes, then see how gold IRA companies compare. If you have $50,000 or more, our Augusta review covers the strengths and drawbacks.
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Frequently Asked Questions
Can I Hold A Gold ETF In A Regular IRA?
Usually, if your brokerage offers it. Many standard IRAs can hold exchange-traded funds.
Is A Physical Gold Fund The Same As Owning Gold?
Not exactly. You own shares in a fund that holds gold, which is easier to trade but is not the same as holding the metal.