How Precious Metals Work in a Self-Directed IRA

Explore IRA rules for gold and other precious metals, storage requirements, dealer selection, and pricing basics.

Self-directed IRAs (SDIRAs) open the door to a broader set of investment options beyond traditional stocks and bonds. Along with assets like real estate, private equity, and promissory notes, eligible investors may also hold certain precious metals. For some, metals can serve as a portfolio diversifier or a potential hedge against market uncertainty.

Like any alternative investment, however, precious metals require a clear understanding of IRS rules, the roles of key parties, and the importance of due diligence. With the right foundation, you can make informed decisions that align with your long-term retirement strategy.

What metals does the IRS permit in IRAs?

The IRS limits which precious metals may be held within an IRA and establishes minimum purity standards for each metal. Eligibility is generally based on fineness requirements rather than rarity or collectibility. Most collectible coins are prohibited, even if they contain precious metals.

The four IRS-permitted precious metals include:

Gold is the most widely recognized precious metal, valued for its long history as a store of wealth and its potential to help hedge against inflation and economic uncertainty. It often serves as a core holding in precious metals portfolios.

 

Silver provides a more accessible entry point while still offering diversification benefits. In addition to its investment appeal, it has strong industrial demand, which can influence pricing and create additional market dynamics. 

 

Platinum is a rarer metal with both investment and industrial applications, particularly in automotive and manufacturing sectors. Its limited supply and specialized demand can contribute to price movement and long-term growth potential.

 

Palladium is a less common IRA holding known for its significant role in industrial applications, especially in emissions-related technologies. Its value is often driven more by industrial demand than by investor sentiment. 

 

As you evaluate these options, remember two important rules. First, eligibility is determined by purity, not collectibility. Second, all IRA-held metals must be stored in an IRS-approved depository rather than in your personal possession.

Understanding the custodian, dealer, and depository

The IRA custodian

The IRA custodian is responsible for administering the account, maintaining records, processing transactions, and completing required IRS reporting. Passive custodians, including STRATA Trust Company, do not provide investment advice, evaluate investments, negotiate pricing, or verify the legitimacy or suitability of investment opportunities. Their role is administrative in nature. For precious metals investors, a few important requirements to keep in mind include:

• Precious metals held within an IRA must be stored at an approved depository
• Assets must be titled in the name of the IRA, not the individual investor
• Investment direction must come from the accountholder or authorized representative
• Funds are only released after proper documentation and direction are received

 STRATA does not buy, sell, or exchange precious metals, nor does it endorse or promote specific investment sponsors, precious metals dealers, or investments.

The precious metals dealer

The dealer is the company from which the metals are purchased. Custodians generally do not buy or sell metals directly. Instead, the investor selects the dealer, negotiates pricing, and authorizes the IRA custodian to send funds for the purchase.

Because the choice of dealer is your responsibility, due diligence is essential. Consider the following:

• Pricing transparency and markup structure
• Reputation and operating history
• Customer reviews and complaint history
• Familiarity with SDIRA transactions
• Buyback policies and liquidation procedures
• Coordination experience with custodians and depositories
• Whether pricing is tied clearly to current market spot prices

Investors should also understand whether a dealer charges flat premiums, percentage-based markups, shipping fees, or additional administrative costs. If your dealer has not worked with STRATA before, they will be required to complete STRATA’s Precious Metals Dealer Representation Letter. Please note that STRATA reserves the right to decline or restrict transactions with certain dealers based on its internal policies and review procedures.

The depository

The depository is responsible for physically storing IRA-owned precious metals. IRS-approved depositories provide secure, insured, and audited storage facilities designed specifically for precious metals held in retirement accounts. Depositories may differ in storage options, geographic location, insurance coverage, and fee structures.

Common storage methods include:

• Commingled storage — Metals are stored together with metals belonging to other investors of the same type and purity. When distributed or liquidated, the investor receives “like” metals rather than the exact same bars or coins originally purchased. This option is often more cost-effective.
• Segregated storage — Specific bars and coins are stored separately and identified to a particular IRA account. The exact metals originally purchased remain allocated to that investor. Segregated storage may carry higher storage fees due to the individualized handling and tracking requirements.

Understanding these differences can help investors evaluate storage costs, preferences, and long-term expectations for their holdings.

A closer look at spot pricing and premiums

Precious metals are valued based on the spot price, which reflects the current market rate for immediate delivery. Spot prices fluctuate throughout the trading day and are influenced by factors such as interest rates, global events, and supply and demand.

When purchasing metals, you will typically pay the spot price plus a premium. This premium accounts for refining, minting, distribution, and dealer margin. During periods of strong demand, premiums can increase and meaningfully impact your total cost.

When selling, the process works in reverse. Proceeds are usually based on the spot price minus a spread. This means the price of the metal must rise enough to cover both the initial premium and the selling spread before reaching break-even. Investors can learn more about pricing methods by:

• Monitoring live spot prices from established market sources
• Comparing dealer premiums across multiple providers
• Reviewing buyback policies before purchasing
• Asking dealers how spreads and liquidation pricing are calculated
• Understanding the difference between bullion pricing and collectible pricing

Understanding these pricing dynamics can help you evaluate the true cost of ownership and set realistic expectations.

Weighing precious metals in your portfolio

Precious metals can play a role in a well-balanced retirement strategy, but they are not a one-size-fits-all solution. Market conditions, price volatility, liquidity considerations, and storage costs all factor into the decision. Self-directed investing places investment decision-making responsibility on the account owner. Neither the custodian nor the depository evaluates the quality, legitimacy, profitability, or suitability of an investment. Investors are responsible for conducting independent research and consulting financial, tax, or legal professionals as appropriate. If you are considering adding precious metals to your SDIRA, taking time to understand the rules and responsibilities can help you move forward with greater confidence. 

At STRATA, our role is to support your investment journey by providing efficient and reliable SDIRA administration. We do not make recommendations, but we are here to help you navigate the process with clarity and confidence.