Some advice we’ve seen in many places online is to set up a precious metal IRA (Individual Retirement Account). These retirement plans which include precious metal investments are one of the most effective tools against ever-rising inflation and even financial crises like the COVID-19 pandemic.
Among the many types of precious metals one can choose for an IRA (gold, platinum, and palladium), our personal recommendation usually leans towards silver. This is because it provides almost all the benefits of gold while having a significantly lower barrier to entry.
That said, not all forms of silver can be used in an IRA, as the silver you use has to fall within the guidelines set by the IRS. Keep reading to learn more.
Understanding IRAs and Precious Metals
Before we dive deeper into IRS-approved silver IRAs, let’s first define what an IRA is, how it differs from other retirement funds, and how precious metals fit into the equation.
What is an IRA?
The acronym IRA is an abbreviation of Individual Retirement Account. In simple terms, an IRA is a retirement fund designed to help you stay financially independent when you’re in your golden years. All you have to do is set an amount of assets aside for the IRA each year, and you’ll be able to enjoy your retirement without having to worry about money.
But, what makes an IRA different from just keeping money in a savings account? To our understanding, the most significant difference between IRA and other types of retirement funds comes from the tax benefits of IRAs.
For example, you can deduct the amount you put towards a traditional IRA from your taxes each year. Similarly, any growth experienced by the assets in your IRA isn’t taxed.
The role of precious metals
There are more than a dozen different types of assets that can be used to create an IRA. Some of the most notable options from these include stocks, bonds, cryptocurrencies, treasury bills, and mutual funds.
However, in our experience, none of these provide the stability of precious metals like gold, silver, and platinum. As we mentioned above, these metals have fantastic resistance against inflation and economic troubles. So, including them in your IRA can make it more secure against unforeseen recessions.
Criteria for Silver to be IRA-Approved
Now that we have a better understanding of what precious metal IRA is, let’s return to our original question. Here are the two key factors that make a piece of silver IRA-approved:
The most important aspect of silver’s IRA approval is its purity. A piece of silver needs a purity of at least 99.9% to be eligible for your IRA account. This requirement is put in place to ensure the intrinsic value of silver and prevent any contaminated materials from muddying the silver market as a whole.
The IRS places emphasis on coins produced by recognized government mints, underscoring the significance of reputable sources. Coins such as the American Silver Eagle or the Canadian Silver Maple Leaf, meeting both purity and minting standards, often earn the esteemed IRA-approved designation.
Some other coins we’ve seen people use in silver IRAs include:
This goes hand-in-hand with the mint requirements we listed above, but the silver you use for your IRA has to be in bullion form. This includes coins, bars, and ingots. So, a piece of silver jewelry you own cannot be assigned to your IRA account, even if it exceeds the minimum purity requirements.
Benefits of Including Silver in Your IRA
We discussed the key benefits of creating a silver IRA earlier, but that barely scratches the surface of why you should consider this option. Let’s take a closer look.
Stability against inflation
Since the year 2000, the price of silver has jumped from below 5 USD to above 24 USD. At the same time, the value of 1 USD has dropped down to just 55 cents.
So, if you had a silver IRA back then, it would be worth 500% more today. While a cash-only savings account will cost you nearly half of your retirement funds in inflation-related losses.
During financial crisis
After the 2008 housing crisis sent the global economy down the drain, assets like stocks were struggling to get back up. In the meantime, the value of silver shot up quickly and even reached an all-time high of 48.60 USD in April 2011.
Silver against other assets
From our experience, silver is pretty much on par with gold in terms of market sentiment, while also having some industrial uses that give it intrinsic value. But, its industrial demand isn’t as high as metals like platinum and palladium, whose value can drop drastically if they ever get phased out by the automobile industry.
On the other hand, assets like stocks or crypto can be more appealing if you’re looking for significantly faster growth potential. But, none of them can compete with silver when it comes to its status as a safe haven asset.
Popular IRA-Approved Silver Options
If you are interested in purchasing silver bullion for an IRA, here are some of our personal favorite options:
American Silver Eagle coins
In many ways, the one-troy-ounce American Silver Eagle coin has become the default option for most investors and collectors. The instantly recognizable eagle symbolizes stability, while the lady liberty on the other side is walking forward to show the progress of the American economy.
Canadian Silver Maple Leaf coin
The Canadian Silver Maple Leaf coin has a very similar appeal to the American Silver Eagle but with a completely different aesthetic. Functionally, both are identical with their one-ounce weight and 99.9% purity — making them certified IRA-approved.
Silver bar from Royal Canadian Mint
We’re specifically talking about the 1kg bar with its iconic maple leaf design and bold lettering. These bars are the ideal option for high-volume IRAs as they’re much easier to manage than 30+ silver coins.
How to Purchase and Store IRA-Approved Silver
So, after learning about its benefits you’re interested in creating your own silver IRA. Here’s our fool-proof guide to actually purchasing IRA-approved silver:
Choosing a dealer
This is the most important step as the final results of your efforts will depend on this one decision. We recommend doing thorough research on the most trustworthy precious metal dealers in your area before trusting one with your hard-earned money.
Especially make sure to read customer reviews to get first-hand testimonials about a dealer's business practices and customer support quality.
Buying the silver
The next step is to buy the silver. We suggest allocating a clear budget before beginning this phase to make the rest of the process more streamlined.
You can also look through the available catalog of your dealer and choose the form and weight based on your preferences. Remember that, as far as pure silver value is concerned, a 10-ounce bar is the same as 10 coins of one ounce each. See my recommendation of the best places to buy silver in 2024.
Now that you have your silver, choose a location for storage that is away from any malicious hands. You can find creative and secure spots in your home, but that is not worth the risk in our opinion. Instead, look into precious metal storage companies that also help with IRA management for a safer and more convenient way to store your silver.
Risks and Considerations
While we have mostly focused on the advantages and benefits of a silver IRA investment so far, it is not all sunshine and rainbows. There are a few key risks that you accept and considerations that you have to make before making the final decision. These are:
While it is almost as stable as gold, silver can still experience volatility, especially in the short term due to changes in its industrial demand. So, make sure you’re buying or selling at the right times to avoid losing money by buying at its peak or selling during a dip.
We cannot preface this enough, make sure the silver you bought for your IRA is stored in a safe location. The last thing you want is to lose the safety net for your retirement to robbery or theft.
Even if you’re trusting a storage company with your precious metals, we’d suggest getting insurance that covers your IRA funds in case of an unforeseen disaster.
Lack of growth
Silver — just like other precious metals — does not grow very fast or provide insane profits overnight. For that, we’d recommend diversifying your IRA portfolio with other, more energetic, assets like stocks or cryptocurrencies.
Taking everything we’ve learned into account, we get a very clear understanding of silver’s role as an IRA-approved precious metal. It has a low barrier to entry compared to gold, while also providing similar safe haven benefits.
However, before you invest your hard-earned cash into a silver IRA or any other similar investment, we highly suggest talking to a professional financial advisor. They can take your current economic situation into account and develop the most fitting investment plan for you. Good luck!