Summary

• Investing in silver with your IRA, 401k or company pension plan.
• Physical Silver in your IRA.
• ETFs and ETNs in your IRA.

Silver will soon be an investment that many will be contemplating once it finishes the beatdown it has experienced for the past several years. While no one can predict exactly what the final low in silver will be, it is time to consider doing your homework as to which type of silver you wish to buy for your IRA. When I say IRA, I am also including ROTH IRA. SEP. and all of the other types of retirement plans allowed by the IRS, including a 401k rollover into an IRA.

When it comes to investing in silver there are many investment vehicles to choose from ranging from buying physical bars and coins to the various Exchange Traded Funds (ETFs). This article will explain the fees associated with each investment and analyze the strengths and weaknesses of each type of investment.

Physical Silver in your IRA

Many investors want control of their wealth and choose to own physical silver in their IRA versus a promise of the paper ETFs discussed below. It gives this type of precious metals investor the peace of mind knowing they can take delivery of the silver at any point in time of their choosing. Normal IRA restrictions and penalties would still apply and current taxes would have to be paid on any withdrawals but there is comfort for some knowing they can access their wealth in times of potential financial turmoil.

In 1997 Congress passed the Taxpayer Relief Act and any silver bullion that meets the minimum purity requirement of .999 fine silver is now allowed to be included in one’s precious metal IRA. Numismatic or collectible coins are not allowed in an IRA. Publication 590 from the IRS explains more about the exclusion of collectibles in an IRA.

Self Directed IRA

If you want to invest in physical silver then you need to do it through a company that specializes in alternative assets and offers self-directed IRAs. Three of the top companies that offer self-directed IRAs that allow investments in physical silver are The Entrust Group. Goldstar Trust Company and Equity Institutional (formerly Sterling Trust).

The way the process works if you transfer funds from your current IRA custodian (investment house) and rollover the funds to the new self-directed IRA with a form from the new institution along with the application. Once the funds arrive you contact the gold dealer that you will buy the silver coins or bars from. Gold dealers will then recommend what silver to buy. The commissions for purchasing the metals range from 1% to 15% or higher depending on the gold dealer you speak to and depending on what product they recommend. Please know that typically these commissions are negotiable.

Because silver is such a heavy metal, I recommend it for IRAs more than I do for home delivery. Gold works out well for home delivery because it is lightweight and portable.

Silver Coins and Bars Allowed in IRA

There are many coins and bars that one can invest in with their self-directed IRA but again, the metal has to be .999 pure and produced by a refiner/assayer/manufacturer accredited by NYMEX/COMEX, NYSE/Liffe, LME, LBMA, ISO 9000, or national government mint and meeting minimum fineness requirements. Source 1000 ounce silver bars can be had for just a few dimes over the spot price of silver. Other popular bars are the 100 ounce and 10 ounce bars.

The most popular coins to put in one’s IRA are the American Eagle and Canadian Maple Leaf one ounce coins which will run you about $2.25 to $2.50 over spot. Another popular coin choice though would be the one ounce silver rounds, which can lower your premium to just around 80 cents over spot. Remember, the premiums charged by suppliers to gold dealers vary based on product ability. There has been a surge of demand in silver on the last fall in price and even the U.S. Mint temporarily ran out of Silver Eagles November 5th and the premiums moved higher because of this before they finally caught up with demand by November 17th.

What you will find many gold dealers doing is trying to push silver investors into Proof Silver coins or coin sets. These are coins that have a much higher cost than bullion silver coins and have a shiny mirror like look to them. I have warned silver investors before about buying these proof coins in a Seeking Alpha article The Problem With Buying Gold And Silver Proof Coins In Your IRA. You will typically be paying high premiums of 15% to 30% for the proof coins and when it comes time to selling them you will find it difficult to do so. On the application make sure the box next to proof coins is not checked.

Storage of Silver and Fees

Each of the aforementioned companies will have various fees for setting up the account ranging from $50 to $150.

Most all of the self-directed IRA companies now recommend storage at Delaware Depository. You can ask for segregated storage or non-segregated storage. Segregated storage means that your silver purchase is separated from all other silver customers of the depository. The annual fee for this is 1.5%. Non-segregated storage means that your metals are commingled with other customers. The annual fee is lower because of this at only .05%.

There are other U.S. domestic options for storage which you can find here .

Because of the setup fees, I don’t recommend investing in silver self-directed IRA’s with small amounts under $5,000.

Silver ETFs and ETNs

The other popular way to own silver in your IRA is through ETFs and ETNs. They typically have low fees and one can trade in and out of them quite easily. In the table below are the most popular ETFs and ETNs which offer more liquidity (volume) and also includes the 2x and 3x leveraged silver plays, AGQ and USLV. These leveraged plays can give an investor up to 2 or 3 times the return in silver. But as you can see by the losses of 33.69% and 50.21% for them, they also give you more risk and the potential of larger losses.