In Lear Capital’s more than 25 years in business, the Los Angeles-based company — which facilitates bullion and rare coin purchases and helps investors add physical precious metal assets to an existing IRA account — has served more than 90,000 customers. A number of those customers, according to founder Kevin DeMeritt, initially had questions about how the physical precious metal asset investment process works.
“It sounds complicated, but it’s very easy,” DeMeritt says. “Gold and silver have historically performed very well in times of inflation. With inflation and [a] recession looming, precious metals [can help serve as] a hedge against some of that economic uncertainty. If people get educated about precious metals, they’ll find that it may be a great time to add at least some portion of their portfolio into that asset category.”
If you’ve been considering making a physical precious metal asset-based investment but aren’t sure what exactly is involved, we’ve rounded up answers to a few of the most frequent questions Lear Capital has been asked over the years.
How Do You Invest With Physical Gold, Silver, and Platinum Assets?
Investors can purchase stocks; obtain an exchange-traded fund that’s backed by physical gold, silver or platinum; or hold physical precious metal assets — gold, silver, or platinum coins or bars — that they purchase for use in a precious metal individual retirement account, such as the Lear Advantage IRA.
Some stipulations apply — the Internal Revenue Service, for instance, requires precious metal coins and bars to have a specific purity level (a fineness of at least 0.995 for gold items, and 0.999 for silver), and you can’t keep them at home. The investment assets need to be stored at an IRS-approved private facility.
Lear Capital, which has assisted with more than $1 billion in IRA-related transactions since 1997, for example, sends precious metal assets to the Delaware Depository, which provides a comprehensive policy that insures the items for their full value if any physical damage occurs due to an issue like a fire or flooding.
Investors can roll over several types of retirement accounts — including Roth, SEP or SIMPLE IRAs; 401(k); 403(b); 457(b); pension plans or Thrift Savings Plan accounts — to buy physical assets like gold for a self-directed IRA.
Once a precious metals IRA account has been created, you can arrange for retirement funds to be rolled over to it via bank wire, using one of two tax- and penalty-free methods — a direct trustee-to-trustee transfer, where money is moved from your current IRA provider directly to your new precious metals IRA; or a 60-day rollover option, in which your current IRA account provider mails a check to your home. You then send it directly to your new precious metals IRA provider. As long as the check is deposited into the new IRA account within 60 days, no taxes or penalties will be incurred.
Why Do Some People Choose To Invest via Gold or Silver Coins and Bars, Instead of Buying Gold or Silver Stocks?
Some investors feel more comfortable having a tangible piece of gold or silver, Kevin DeMeritt says; owning it gives them complete control over the investment, whereas stocks and gold-backed funds can present third-party risks.
With an exchange-traded fund, for example, the related precious metal might be held in another country.
“If something goes wrong with [the] bank, you [could] have a problem [getting] the gold back over here,” Kevin DeMeritt explains. “In most of [the investor agreement] documents, it says, ‘If there is an issue, we can trade you into a like-kind asset.’ I don’t know anything that’s like gold, so I don’t know what other asset [they could provide that truly equates to it].”
Similarly, he says, other investments’ performance can be contingent on mining companies’ internal operations.
“[A company] could bribe a government official in another country, then that comes out and the stock potentially crashes,” DeMeritt says. “You’ve got the risk of the CEO hedging gold one way and it goes the other way, and [you don’t get] the appreciation you thought you were going to. The company could take on a little bit too much debt, interest rates go up, and their earnings crash because interest payments are much higher— and now you pay the price because you own the gold stock, as opposed to the actual physical gold.”
When Do People Start To Invest in Physical Precious Metal Assets?
A number of investors who are close to retirement have chosen to invest in gold and silver bars and coins, Kevin DeMeritt says, because after focusing for years on stocks they hoped would provide sizable returns to increase their total savings, they’re now looking to add stability to their portfolio.
“Through these past 10 or 15 years, they’ve been after capital appreciation,” the Lear Capital founder says. “We’re starting to see people [move] some portion of [their investments] over to [physical precious metal assets to] have diversification and security.”
Investors in other demographics, too, have expressed an interest in gold and silver asset-based investments, DeMeritt says.
“You don’t have to reach retirement age to invest in precious metals,” he states. “We’re starting to see younger people come into the market. They put a lot of faith in crypto, and it’s had a lot of volatility, so they want to diversify from digital to real gold. It might not be their entire portfolio; [they might say], ‘I’m going to take 30% or 50% of my crypto and move that over’ — which is great.”
What Role Does Lear Capital Play in the Investment Process?
When assisting investors with bullion, limited issue coins, and rare coin purchases and adding physical precious metal assets to an IRA account, Lear Capital, which has earned a AAA rating from the Business Consumer Alliance, matches each investor it assists with a dedicated account representative who helps guide them through the precious metals investment process.
Investors can also call an 800 number during daytime hours to speak with a qualified customer service professional about any questions they have.
The company’s acquisition process has been designed with an emphasis on transparency to ensure investors clearly understand what costs, time frames and other elements will be involved; as part of the company’s Price Advantage Guarantee policy, investors receive a written account agreement, and the purchase details are confirmed both in print and via phone.
Lear Capital also offers a risk-free purchase guarantee, giving buyers 24 hours to review their transaction and the option of canceling it at no cost, if they’d like to.
“I think our customers appreciate the transparency and that we help them through the process as quickly and painlessly as possible,” Kevin DeMeritt says. “We try to move as quickly as possible to get people the metals that they want.”