[00:00:01] Speaker A: You're listening to PTC point of view brought to you by preferred trust company, the preferred custodian for all alternative investments. We're here to provide retirement savers like you with the tools you need to succeed. Need a confidence boost when it comes to investing outside of the stock market? Do you want the power to build a tax sheltered nest egg that will last through your golden years? You've come to the right place. Turn up your speakers and turn off cruise control because we're taking you on the alternate route to investing with your IRA.
[00:00:38] Speaker B: Today's topic is investing in precious metals with your self directed IRA. And with me today is Chris Trembley.
[00:00:47] Speaker C: Hello.
[00:00:49] Speaker B: She's going to help me discuss investing in precious metals with your self directed IRA. Chris is the director of operations here at Preferred Trust Company. She was in our last episode going over all things self directed iras. So today the first thing we're going to discuss is why do investors choose precious metals as an investment in their self directed IRa?
[00:01:14] Speaker C: So the biggest reason and what we try and educate our clients about is diversification within your IRA. No matter what it is you're investing, you don't want to put all of your eggs in one basket. And so we encourage clients, stocks, bonds, mutual funds, anything publicly traded is great, but you need to balance that out with some of the alternative investments. And precious metals is a great way to provide that diversification. It's also a tangible asset. So you have some collateral there. It's not just a piece of paper. And we say precious metals is really a long term play, a long term investment. You don't want to buy it and six months later sell it. You can do that if you're in that emergency situation. But it's made for the long term. It's made to protect your wealth, and it's a way to store value, basically. So definitely a way to diversify amongst your retirement accounts.
[00:02:09] Speaker B: Okay. And I noticed you said collateralized.
How does that differ from a stock or mutual fund?
[00:02:16] Speaker C: Well, we know that the stocks and the mutual funds, obviously, as the market changes, so do those particular assets. You know, you could be high one day and lose everything the next, and then there's nothing backing it. It is what it is. Once it's gone, it's gone. What's nice about gold and precious metals, silver, gold, platinum, palladium, those are the metals specifically that you can hold within your IRA. What's great about them is they are actually a tangible asset. You can hold the gold in your hands. It's stored in the depository it's actually there. It's something physical and it can be bought and sold whenever suits you.
[00:02:52] Speaker B: And what types of precious metals can you invest in? Is it any kind of metal?
[00:02:57] Speaker C: So the IR's is very specific about the types of precious metals. Anything that's considered a collectible or collector's item is not okay within an IRA. So there's certain fineness and certain standards that the iras can accept. So silver, gold, platinum and palladium, those are your types of metals. And then within that, there's certain boundaries that the IR's outlines for you. And really most custodians will have that. And then the dealers that are providing for IRA investments specifically will also have that. So you don't ever make the mistake of choosing the wrong type of metal to go into that IRA.
[00:03:39] Speaker B: Speaking of dealers, does preferred trust companies sell the metals to invest with an IRA?
[00:03:45] Speaker C: We don't. We are not licensed to sell any investments, including precious metals. So like any investment, you have to have someone in between that transaction. Our role is to custody the investments that you select. So there are precious metals companies out there, or what we consider precious metals dealers that buy and sell the precious metals to you as the IRA account owner to be held in that qualified plan. And there are a lot of them out there. So a lot of due diligence on the IRA account owner's part to make sure that they're going with a company that they feel comfortable with.
[00:04:22] Speaker B: Yeah. How do you set them aside? What are some factors to consider when selecting a dealer?
[00:04:28] Speaker C: So I think the biggest thing that we see across the board is the pricing. Make sure you're doing your comparisons. Reviews are great, but it only goes so far. And some of them are not even real reviews. They're created reviews. So you want to make sure that you really do your due diligence on the company that you're going to use to purchase your metals. So you want to look at what the spot price of the precious metals are at. You want to make sure you're looking at that spot. And of course, there are pricing above that, but you want to make sure the percentage is well within a reasonable amount. And we're talking a lot of dealers out there today are pricing anywhere from 40 to 70 or more percent above stock price. And really that's shouldn't be doing that.
[00:05:18] Speaker B: How can you?
[00:05:18] Speaker C: Way too high for what they buy it for versus what they're selling it for. So you do want to do comparisons because there are dealers out there that are selling them for 1020 30% over spot, which is considered reasonable in the space. You also have to look at the fact that within the industry itself, there is zero regulation for companies that are selling precious metals. For us, as a financial institution, we're regulated by the financial institution division of the state that we're licensed in, which is Nevada. We're also regulated by the IR's and the DoL. But when you look at companies that are selling precious metals, there are no governing bodies around.
[00:05:56] Speaker B: They're not regulated.
[00:05:57] Speaker C: They're not regulated at all. So it's kind of like the wild, Wild west, which to their point, kind of lets them do and price and sell for whatever amount they see fit for their profits. And so you have to be careful out there. You really have to. It's. The CFTC has a website that you can go to and you can look up precious metals companies. You can see if there are any complaints written against them. You can see if there's any outstanding about them. The other thing to really consider is their delivery time. The precious metals dealers should really be delivering the metals to you or to the depository. If it's in a qualified retirement account, it has to be within the depository. You need to make sure that they're delivering within a 28 day timeframe. If it's taking over that, then that's not acceptable either. So those are really the key elements of looking for a dealer and ask them what their buyback will be. A lot of dealers don't put that on their website, what their buyback rate would be. So it's good to ask them that or find a dealer that has that on the. Directly on their website. That's. That's important.
[00:07:00] Speaker B: Yeah. Transparency.
[00:07:01] Speaker C: Transparency is huge.
[00:07:03] Speaker B: I know you mentioned Wild west. This is kind of relating to Wild west. But can you bury your metals purchased with an IRA in your backyard? Seems like something they would do in the Wild west.
[00:07:16] Speaker C: Right? And this. But this is a question that's posed to us more often than not. You'd be super surprised with how many people ask us this. So the IR's says that if you are holding medals within your qualified retirement plan, that they have to be held in a depository. You cannot be holding them, you know, burying them in your backyard, shoving them underneath your pillow or your mattress. You just cannot do that. If you want to hold them personally and store them personally, then you have to take possession of them, which is a taxable event, from your IRA. So if you're holding gold in your IRA and you want that gold to be sent to you, then it's a distribution. So it's a taxable event. You are going to pay taxes on it. That's the only way that that's allowable. Even within an IRA, LLC, you should be holding them at a depository. It's required.
[00:08:07] Speaker B: What would one want to consider when selecting a depository?
[00:08:12] Speaker C: So I think the biggest thing is regulation, how the depositories are also regulated. Some of them are actually licensed trust companies as well, which means they are held to a little bit higher standard. I think you have to look at the security around the depository. Fees is also a big ticket item. Obviously, those fees have to be paid from your IRA. So it's important that you make sure you have enough money in that IRA to cover not only your purchase, but any associated fees. And that's annually. Most depositories are charging fees annually. Location people are always curious about, you know, where are these depositories located? I want one closest to my home. I want one, you know, centrally located. That's kind of more personal choice when it comes to selecting the depository. Segregated versus non segregated storage. Do you want your metals commingled with other people's metals, or do you want your exact metals that you purchased from that precious metals dealer to be separated and kept in their own account and never comingled? So those are important things. Some depositories only do segregated storage. They don't offer that non segment option. So it's good to do research and to determine which is best for you.
[00:09:27] Speaker B: So kind of just whatever you prefer and what they offer and make sure they align.
[00:09:31] Speaker C: Yeah. Preferred trust company, we really only work with the bigger depositories. DDSC, which is the depository. Delaware depository ids, which has locations both in Texas and Delaware. Those are some of the bigger ones that we work with, and they're easy to work with. They provide great for us as a custodian, being able to track the metals and being able to communicate with the depository, being able to ensure that your metals are there, that's important to us.
[00:09:58] Speaker B: Very important, yes.
[00:10:00] Speaker C: And so those are the. Those are the two companies that we look to the most to really provide great service when it comes to storage and great security levels of security.
[00:10:10] Speaker B: So let's talk about the components of maintaining a compliant account with preferred trust company. When you hold precious metals in a self directed IRA, I know there's three of them. Do you want to go over those really quickly?
[00:10:25] Speaker C: Yeah, let's talk about those. So minimum account balance. This is important. Preferred trust company. And most custodians do have a minimum account balance that must be held cash in the account, that must be held in that cash position and not invested for preferred trust, that's dollar 500.
That ensures that any fees can be paid. If you don't have cash above that in the account, especially the depository fee, that is an annual fee by the depository. It's not something that preferred trust company charges. The depository charges that, and it's a pass through to the IRA. That's the IRA has to pay for that fee.
[00:11:01] Speaker B: Could be different. It could be different depending which depository.
[00:11:04] Speaker C: That's correct. So fees are. Fees vary depending on a, what type of metals you own, how much of the metals you own, whether or not it's segregated or non segregated storage. So their prices vary as well. So, like we talked about, always wanting to do your due diligence, find the right depository, that's for you. But you need to make allowances for that in your account, because here's the thing about the depository fee. It's considered an expense associated with the actual investment. Just like if you had a rental property and you're going to pay insurance or property taxes on that property, those are considered expenses. Same thing with the depository fee. If you're going to have metals, you have to have a depository. And so in turn, there's fees associated with that. So. And that cannot be paid outside of the IRA. And what I mean by that is not with personal funds. So you can't be giving us your credit card to pay for that. You can't be calling up the depository and paying them directly. You either need to use funds that have been contributed to your IRA or funds from another qualified retirement account. So that's super important. You want to make sure that there's enough in that account to last several years, because like we talked about earlier, the whole thing with precious metals is that it's a long term investment. It's not like you're buying and selling every other day. You do have that option to sell your metals to make cash for the account to pay. So you could, you could sell a portion of your metals to be able to pay some of your fees or expenses. But the whole idea is to keep those medals for long term. So you want to try and avoid that as much as possible. So leaving a cushion in the account is important.
[00:12:46] Speaker B: Cushion is always good.
[00:12:47] Speaker C: It's good. And then the IRA account administration fee, so that's minimal. Here at preferred for a precious metals account, it's dollar 100 a year. That fee actually can be paid with a credit card. So you, you can put that on file with us and we can charge it every year. You can send us a check, you can wire the funds. You can make an automatic payment where we withdraw it from your bank account. So there's some options there as well. But I think that the minimum balance requirement of 500 and the depository fee, those can be a little tricky because that has to be qualified money. So via contribution or another retirement account. So super important.
[00:13:24] Speaker B: Super important, yes. To be compliant.
[00:13:27] Speaker C: To be compliant, yes. We don't want to. We prefer trust company. Don't want to be forced to sell your metals if you don't have funds in there to pay all of these fees and expenses. And if you're not responsive to us or you're forgetting to make sure that balance is where it should be in order to pay for those, we're going to have to be forced to sell your metals.
[00:13:48] Speaker B: So would you notify someone before you sell them?
[00:13:50] Speaker C: We would. We absolutely try every way possible to reach the client. We call, we send emails, we send invoices through the actual mail to get you to make those payments. But if you're not responsive and you don't make those payments, you go Mia. If you go Mia, we don't hear from you. You don't return our voice messages, you don't pick up the phone, you don't respond to our emails. You don't open our emails. Yeah. Then we're going to be forced to sell your precious metals, and that's the last thing that we want to do. Not good. No.
[00:14:22] Speaker B: So we were talking about fees, and you mentioned the annual fee. Do we have any other types of fees here at the Ford Trust Company?
[00:14:30] Speaker C: Transactional fees. If you want to make a purchase of precious metals or you want to sell your precious metals, there are transaction fees associated with that, but that happens at the time that that takes place, as well as an in kind distribution fee for your precious metals. So if you reached a point where you'd like to hold those metals within your own, you know, home and you want to have them sent to you, moved out from the storage location to you personally, then there are going to be fees associated with that as well, probably shipment fees. And there are shipping and handling fees. Yes, I almost forgot about that. That's super important, especially today. It's expensive to ship metals, especially if you have a lot of them and they weigh a lot.
[00:15:07] Speaker B: Yeah, they're heavy.
[00:15:08] Speaker C: They are heavy. And the depository, really, they can give us an estimate on shipping, but it fluctuates because of the carriers, UPS, FedEx, depending on how they're shipped, depending on the level of insurance on them, depending on how many boxes it takes them to ship it. So it can be quite hefty. And then the only way you're able to pay those fees is by making a contribution to your account or from qualified funds from another IRA, or from selling a portion of your precious metals. So you do have some options there. But again, leaving a little bit of a balance in that account for those occasions, especially if you know down the line you're going to want to take an in kind distribution of your metals.
Important factor is having the money in there to do it.
[00:15:52] Speaker B: Then you definitely want to insure them before you move them.
[00:15:55] Speaker C: Yes.
Actually, most depositories won't let them leave the depository without being insured. That's just built right in there. They're going to require that because as we know, the shipping, you can do the best you can to make sure they arrive at their destination. Most shipping requires that when they get to you at your location or at your home, that you're there and present to sign for them. They won't just leave them on your doorstep. Important, but everything is always insured.
[00:16:23] Speaker B: Very important. Yes, things get lost a lot in the mail.
[00:16:27] Speaker C: Even FedEx and Ups make mistakes.
[00:16:30] Speaker B: Took like five weeks for my insurance card to get from Minnesota to here. Yes, it definitely got lost.
[00:16:36] Speaker C: Yes. And we actually have had, not to freak people out, but, and the depository stood by it. But we had metals, you know, it went out. I won't say the carrier, but it went out from a carrier and something happened along the way. It never made it to the client's house. And so of course the depository will put in a claim with that carrier and they'll work to get it straightened out. And we had those clients metals replaced immediately. But things do happen.
[00:17:01] Speaker B: Accidents happen.
[00:17:02] Speaker C: Accidents happen for sure.
[00:17:04] Speaker A: You're listening to PTC point of view brought to you by preferred trust company.
[00:17:13] Speaker B: So I know in the beginning of the episode we discussed the benefits of investing in precious metals with your IRA and how it works. But what are some cons of precious metal investments?
[00:17:26] Speaker C: So I think probably the biggest one that we see is putting all of your eggs in one basket, taking all of your retirement wealth and buying precious metals and not diversifying. So, especially if you're of an age where you need to be taking required minimum distributions or you want that passive income. Precious metals is one of the few investments that does not provide passive income. So you're not getting a monthly interest payment or a dividend payment into your account. They're meant to buy and hold. So if you're someone who's reached the age you're retired, you need some monthly income, which a lot of our clients do. You're not going to get it from precious metals. So you want to make sure that you don't invest 100% of it. You want to leave some in there or invest in other things that will provide you the passive income. And you also want to be very aware of the fact that if you're of the age, that you're getting close to having to start to make required minimum distributions, that you leave enough in the account to do that, or you have another requirement, another retirement account somewhere else that you can draw from. You can take the medals as part of that distribution. That's not a problem. A lot of people don't like to do that, though. So if you're not looking to go down that road, you can also sell a portion of your metals. But if you've, let's say you just purchased metals, and a year later, now you're up for your RMD, you've put 100% of your retirement dollars into those precious metals, how are you going to get that requirement of minimum distribution? You're going to be forced to sell. And unfortunately, with only holding the metals for a year, you're probably going to lose money during that sell.
[00:19:16] Speaker B: So, because like you said, it's long term.
[00:19:19] Speaker C: It's long term.
[00:19:19] Speaker B: It doesn't produce income, it maintains it. Right?
[00:19:23] Speaker C: That's right. That's right. And year over. Like, you know, people really hold these metals for long periods of time. But if you listen to some of the precious metals companies and dealers talk about it, they say the minimum you should be holding the metals is three years, three to five years before you even consider selling. So with that in mind, you know, you don't want to be doing it a year down the line, six months down the line if you don't have to.
[00:19:48] Speaker B: And we discussed shipping and security and storage and all that already. That would be another negative, right?
[00:19:56] Speaker C: Yeah, there are expenses. Sure there are expenses, especially when, of course, there, again, no passive income is coming into the account. So you could potentially have, if you're looking to get those medals out before that time period, you are potentially looking at having expenses and fees associated. And you have to remember, too, that if you choose to do an in kind distribution of your metals and there's going to be shipping and handling fees associated with this and you don't have any cash in your account. You may have to make a contribution, but maybe you're not able to make a contribution. So everybody's situation's a little bit different. We always encourage people, make sure you research, do your due diligence. If you have a CPA or a tax professional that you can go to and talk about these things, it's important to lay it all on the line and let them know what you're thinking about, how you're thinking about. If you have an investment advisor, that's great, too, to help you kind of determine that, just make sure it's the.
[00:20:58] Speaker B: Right choice for you.
[00:20:59] Speaker C: That's right. Doing your due diligence is very important.
[00:21:02] Speaker B: So you mentioned in kind distributions. If you were a client here at preferred trust company and you wanted to take an in kind distribution, how would that look? What's that process like?
[00:21:14] Speaker C: So, we actually have a form that you would fill out where you can identify exactly which metals you want to take an in kind distribution of. Now, you can take all of them, obviously, but a lot of times people take portions of it. So they may have gold and silver in their account, and maybe they only want to take a portion of their silver. So we provide you a form, you complete it, and you tell us exactly which precious metals you want to have distributed to you. And then we actually direct the depository. Because, remember, the depository is holding your metals under preferred trust company. That's who has custody of the metals. So they take direction from us and not the client directly. We let them know exactly what the client has elected to move to them. We make sure you've told us your exact address, where you want them delivered. A lot of people have personal precious metals accounts, or depository accounts at the depository for their metals that are purchased outside of a qualified retirement account. So they are personally, and they, instead of putting them in their backyard or in a safe deposit box or something like that, they've actually opened up their own personal account at the depository. And we can move them from the IRA account to the personal account at the depository. Still an in kind distribution, but it stays within the depository. So you fill out the form providing us all the instructions on how many, how much, which ones, where you want them sent. We direct the depository, and then the depository keeps us aware of what's going on. They'll give us some quotes to ship. They'll use different carriers, different options. We provide that to you so that you'll know exactly how much money it's going to take to get that in kind distribution processed, and then it kind of moves along the path until it reaches your doorstep and you sign for it.
[00:23:04] Speaker B: How long do you think that process takes generally?
[00:23:07] Speaker C: Sometimes it can take a few weeks. Yeah, it can take a few weeks because remember, the depository has to make sure everything is inventoried. Every depository has their own inventory process that they go through to make sure you're getting the exact metals that you purchased, making sure that everything weighs correctly, making sure they get the right insurance on it. They're bidding out to the carriers, so it can take a couple weeks.
[00:23:31] Speaker B: Okay, so my next question is kind of a fun one. Do you yourself have any precious metals?
[00:23:37] Speaker C: We do. We all do, and I do as well. So real estate, precious metals, stocks, bonds, anything publicly traded? Yeah, definitely.
I love to have some gold. That to me is important. And I don't have any plans to do anything with it for the long term. It's just to be. It's holding some of that wealth that I've already raised through other investments. It's amazing if you get the chance. We've had the opportunity from a standpoint of being a custodian, to visit the depositories and actually see how things are held, how security works around it, to actually see the metals and hold the metals in our hands. And it's really a pretty exciting thing to hold a ten ounce gold bar.
[00:24:19] Speaker B: Does it look like a bank vault?
[00:24:22] Speaker C: It does. Some of them are bigger than others, depending on the depository and depending on how the storage works. But it's, you know, it's like Fort Knox. It's hardcore. It is very hardcore. Now, clients can go to the depository to see their metals. They can go in and take a tour. A lot of depositories allow for that. There is a cost doing that, and the direction has to come from preferred trust companies. So if you want to see the medals that are currently being held in your IRA at the depository, we can make arrangements for you to do that. Oh, cool. Yeah, and so you can actually take a trip to Delaware and go to the Delaware depository. But they are very secure. So there's different levels that we have to go through before you're. You're able to go into the vault and see them. And some of them have different ways in which they do that. But it's. It's definitely an option for you if you want to do that.
[00:25:08] Speaker B: And I know we have a couple company partners that are actually depositories, so they could get in contact with you about going to see their vaults.
[00:25:16] Speaker C: They can one of our SWP strategic wealth preservation. They are out of the Cayman Islands, so they sell precious metals and they store precious metals. So wow. What a great way to check out what precious metals you have in your retirement account with a trip to the Cayman Islands.
[00:25:34] Speaker B: Make a vacation out of it.
[00:25:36] Speaker C: Exactly.
[00:25:37] Speaker B: That sounds like something I might have to do.
[00:25:39] Speaker C: Cool.
[00:25:40] Speaker B: Speaking of SWP, next week they are going to be coming in and discussing how you can invest in precious metals with them through your self directed Ira here at Preferred Trust Company. So we are looking forward to that. And thank you again for listening.
[00:25:56] Speaker C: Chris.
[00:25:57] Speaker B: Thank you.
[00:25:57] Speaker C: Thank you.
[00:25:58] Speaker B: It was fun.
[00:25:59] Speaker C: Definitely tune in next week. SWP. They're pretty awesome.
[00:26:02] Speaker B: Yeah, they're a fun group there.
[00:26:05] Speaker A: Thanks for joining us for another episode of PTC Point of View where retirement savers meet alternative investments. Know someone who's struggling with a retirement strategy? Tell them about our show. Can't wait for the next episode. To learn more, visit our
[email protected], or give us a call at 888992.
