what is the downside of a gold ira?

what is the downside of a gold ira?

Comprehensive Research Report on the Downsides of a Gold IRA

High Fees and Maintenance Costs

Gold IRAs are known for their higher fees compared to traditional or Roth IRAs. These fees include account setup, custodian fees, storage fees, and cash-out costs. These additional costs are due to the requirements of investing in physical gold, such as purchasing, storing, and insuring the metal. Investors need to consider these fees as they can significantly impact the overall returns of the investment.

Illiquidity and Selling Challenges

Gold is a highly illiquid asset, which means it can be difficult to sell quickly without potentially reducing the price. This illiquidity can be particularly problematic when it comes to taking required minimum distributions (RMDs) or if the investor needs to access funds in a hurry.

Limited Profit Potential and No Income Generation

While gold can serve as a hedge against inflation, it generally offers lower returns compared to riskier assets like stocks. Additionally, gold does not generate any income, such as dividends or interest, which can be a disadvantage for investors, especially retirees who may be seeking a steady cash flow.

Volatility and Market Risks

Despite being perceived as a stable investment, gold prices can be quite volatile in the short term. This volatility may not suit investors with a low risk tolerance. Moreover, like any investment, gold IRAs carry the risk of loss.

Tax Implications and No Tax Advantages from Income

Gold IRAs do not take full advantage of the tax benefits associated with traditional IRAs since the physical gold held within them does not pay interest or dividend. Distributions from a gold IRA are taxed as ordinary income, and there are penalties for early withdrawals before age 59 ½.

Restrictions and Regulatory Considerations

There are specific IRS regulations regarding gold IRAs, including restrictions on the types of gold investments allowed and annual contribution limits. Investors cannot move precious metals they already own into a gold IRA, nor can they personally buy precious metals and send them to their IRA.

Counterparty Risk

Investing in a gold IRA involves relying on custodians and storage facilities to safeguard the physical gold. There is always a risk of theft, fraud, or mismanagement, which could affect the investment.

Diversification and Economic Hedge

Despite the downsides, some investors choose gold IRAs for diversification and as a hedge against inflation and economic uncertainty. Gold’s historical role as an inflation hedge is due to its tendency to increase in value when the dollar decreases.


While gold IRAs can offer diversification and serve as a hedge against inflation, they come with a range of downsides, including high fees, illiquidity, limited profit potential, volatility, and regulatory restrictions. Investors should carefully weigh these factors against their investment goals and risk tolerance before deciding to invest in a gold IRA. It is often recommended to keep only a small portion of retirement assets in gold IRAs


  • https://www.investopedia.com/articles/personal-finance/091814/analysis-should-you-get-gold-ira.asp
  • https://www.cbsnews.com/news/pros-cons-of-gold-iras/
  • https://www.businessinsider.com/personal-finance/what-is-a-gold-ira
  • https://www.annuity.org/retirement/ira/gold-iras/
  • https://www.investopedia.com/terms/g/gold-ira.asp
  • https://www.ndtv.com/business/partner-content/what-are-the-most-important-gold-ira-pros-and-cons-4321549
  • https://www.linkedin.com/pulse/gold-ira-pros-cons-investing-ira-hans-mincer-xoglf/
  • https://www.linkedin.com/pulse/considering-gold-ira-learn-pros-cons-stewart-vickers-sod8e/

About the author

Nathan Tarrant

Nathan has worked in financial services, marketing, and strategic business growth for over 30 years. He was the founder and COO of a Queens award-winning financial services company based in the UK, and a capital investment company in Virginia USA..

He operated as a financial & alternative investment advisor to delegates of the UN, World Health Organization, and senior managers of Fortune 500 companies in Geneva, Switzerland, after the 2008 financial crash.

As an avid investor, especially in alternative investments, he runs this blog Altinvestor.net, sharing his growing experience and views on alternative investments. You can see Nathan's full profile at his personal website nathantarrant.com
You can read his full bio on our about us page

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