Gold IRAs Cannot Include Krugerrands


With the turmoil that the world's financial markets have been experiencing, many people are turning to gold coins such as the Krugerrand, and transferring their traditional 401k to a gold IRA. I did some research on gold IRAs myself, and came across and illuminating article from Bruce Sands on The End of Cheap $1000 Gold. He makes many good points- however the one that stuck with the most was this quote regarding the volatility of gold:

I would consider a Dow that swings from 13,000 to 6,500 in 14 months the definition of volatility, but then again I am no stock expert.

If you couple that with some other notable news items- Bloomberg's February announcement that the Rand Refinery has kicked up Krugerrand output to the highest level in twenty three years, and in January (2009), the US mint shipped more American Eagles than it did in the first SIX months of 2007 (Gold Sales Skyrocket) you'll see that many investors believe gold is a smart play in the market today. If you decide a gold IRA is right for you, you cannot choose to purchase Krugerrands. The Taxpayer Relief Act of 1997 allows for precious metals (platinum, gold, and silver) to be included in IRAs starting Jan 1, 1998. The rules stipulate that all coin and or bars be 24k (.995 fine). Since the Krugerrand is an alloy of copper and gold (1 part copper to 11 parts gold), it's only 22K, and thus not eligible for inclusion in a gold IRA (there is an exception for American Eagles). Don't let that discourage you however, there's nothing that says you can't buy Krugerrands in addition to that gold 401K. There are significant tax advantages to a 401K, and a diversified portfolio in ANY financial climate is always a good idea. Let's look at those numbers in a bit more detail. The price for gold was a little under $300 on Jan 1, 1998. As of Apr 1, 2009, it's a little over $920, which is a respectable gain. If you have looked at your 401k statement and been as concerned about what you see as I was, it may be time to open a gold IRA.

{ 3 comments… read them below or add one }

George

Hi,
So you can purchase the American Gold Eagles for an IRA, since they are 24K? Interesting, so if I wanted to convert a portion of my 401k into American Eagles how would I go about this?

24K

Hello George-

Yes, as I understand it Gold Eagles do meet the government requirements for investing in a gold IRA. You would need to speak to your financial advisor on whether you can do a partial conversion to gold in your 401K.

George

24k,

Thanks I need to look into this in a few years.

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