Can I Purchase Physical Precious Metals with My 401k Funds?

Investors who regularly contribute to a 401k retirement fund often wonder if they could be buying physical precious metals with their savings. Unfortunately, 401k plans that allow precious metals investments can only purchase “paper gold” in the form of ETFs or mutual funds.

To invest retirement funds directly in physical gold and silver and take possession of them, a self-directed 401k, also called a QRP is necessary. This allows you to buy eligible gold and silver coins and bullion and have them shipped directly to you because you are the Trustee and Administrator. Metals QRP’s are great retirement plans, because they allow you to protect your wealth with the ultimate safe-haven assets while also enjoying the tax benefits of an IRA or 401k.

My Gold Advisor generally recommends using a QRP when clients have existing IRA or 401k funds they can rollover.

We do NOT recommend using a self directed IRA because the IRS and Department of Labor Require that your metals are held at a 3rd party vault. You are NOT legally allowed to hold the metals if you use a self directed IRA.

If you already have a 401k plan, find out if it is eligible for an “in-service rollover.” This may allow you to move a portion of the funds from your current employer’s 401k into a QRP. When you leave the company through which you earned your 401k, you also have the option of rolling your savings into a QRP.

How much of my portfolio should I keep in Gold and Silver?

Damion recommends holding 15-20% of your investment portfolio in physical precious metals.

How much of this should be in gold and how much in silver?

Generally speaking, Damion advises holding about 2/3 of your precious metals holdings in silver and about ⅓ in gold. This provides a stable foundation in the resilient yellow metal paired with the strong upside potential of silver.

Many of our clients are interested in better performance in their metals investments, and therefore buy a larger share of silver. They are willing to endure silver’s short-term fluctuations in exchange for its long-term growth prospects. Silver continues to have a growing industrial base and unknown to most the readily available amount of silver is less than gold.

Generally, defensive investors prefer to stick with the more conservative 2:1 allocation of gold to silver. It’s ultimately up to the individual investor how to allocate his or her precious metals holdings. For some, this also includes a consideration for platinum and palladium.