Gold IRA vs Physical Gold – Which Is the Best Option?

Can I Mix Gold And Stocks In My IRA?

Investing in gold is becoming a popular method of investing for retirement. One of the biggest advantages of investing in gold is that it provides a steady return on investment. Also, it has the least element of risk involved.

Although investors at one time preferred physical gold, they are now shifting their focus to a more market-oriented gold investing method.

One of the better ways to invest in gold, that people are now looking up to is Gold IRA. Gold IRA allows the user to invest in the same way in gold. Although they do not have to physically handle or store it.

When we talk about Gold IRA vs. Physical Gold or Gold IRA vs. Physical Gold which is good? both of them come with their advantage. This article will discuss investing in a Gold IRA and how it differs from investing in Physical Golf. 

What is a Gold IRA?

A Gold IRA is an individual retirement account that allows users to invest in gold and other precious metals, without having to physically own them. Now with this type of account, a person can directly invest in gold, which will be overseen by a custodian.

A Gold IRA account offers more diversity in the portfolio and helps balance the entire investment against inflation. It is also considered one of the best investment types during a condition of economic uncertainty. 

How to Invest in It?

Many companies are offering you a Gold IRA account. Choosing the right company is the first step in opening a Gold IRA account. These companies or custodians will help you open an account.

They will also allow you to store the purchased gold in an approved depository. These companies or custodians will offer their services in handling other tasks. It can be the account-related paperwork, tax filing, and maintaining your retirement account. 

The process of investing in a Gold IRA is made much easier through the custodians. Depending on the company or custodian you choose, you might see a difference in the fee structure and the services. Therefore, make sure that you compare the same before selecting one.

You can go for a custodian with a better fee structure, good customer service in the past, and someone who values client commitment.

Gold IRA or Physical Gold
Gold IRA vs Physical Gold

Types of Gold Investing With Physical Gold?

Since you can invest in physical gold directly, you should also know about the types of gold investments that you can make. One of the most popular gold investment types is Gold Bullion. It is sold by the weight of ounces and is one of the popular ways to invest in gold initially. You can buy the gold from an approved and reputed dealer.

Another option is Gold Futures, which is a way for investors to speculate on the increasing price of gold. It allows investors to enter the market without having to spend a lot. However, it also has a risk of losing money if the price of gold does not rise or fall as expected.

Another option is to invest in an exchange-traded fund (ETF). It is a security that tracks an index, commodity, or multiple assets. They are extremely easy to purchase, just like company stocks in the market. It allows the user to own physical gold without having to think about storing it, insurance costs for the same, and handling it. 

Tax Implication for Gold IRA vs. Physical Gold

Buying and investing in Gold also brings a few tax implications and benefits. If you are thinking about investing in a Gold IRA, then here are tax details that you should know about.

  • Withdrawals from the IRA account are taxed at ordinary income tax rates, but the contributions to the IRA are deductible on tax returns.
  • No taxes are due on an increase in value, if you decide to sell the gold holding before the investor’s age of 59.5, and have held them for one year or more. However, before selling before that, one will have to pay taxes on capital gains, based on the increasing value since the date of purchase.

When we talk about physical gold investment, the tax deductions and benefits are different. Here are the tax implications on physical gold

  • Physical gold investments are considered to be a commodity. It is why the investor is taxed on capital gains or losses. The collectible gold bullion and coins have to be reported as per their fair market value, as income on the income tax. 
  • Holding an asset for more than 12 months and selling it for profit will be taxed as a long-term capital gain. All gains will be taxed as ordinary if the asset is sold in less than 12 months.

Policies And Reporting Requirements From The IRS For Investing in Both Forms of Gold

If you are investing in Gold IRA then you will have to file Form 1099-B while filing the taxes. Also, Form 8606 is a separate tax form that goes along with the 1040 form. It is used to report the taxable income and losses from the retirement account.

You would also need to report on Schedule B of your 1040 if the value of the account increases by more than $1,000 at any point in a year. Gains on gold investment will be taxed at ordinary income tax rates.

Physical gold investments are considered collectibles. Regardless of the type of physical gold you invest in, it will have capital gain taxes on it if sold after having it for more than a year. It needs to be reported on Form 1099-B along with Schedule D of Form 1040 on your tax return.


In the comparison between Gold IRA vs Physical Gold, both of them are worthy investment types when it comes to investing in gold. While both have their benefits, both of them provide you with different ways of investing in gold. Based on your requirements, it would be your choice which one to select and invest in.

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