How does a gold or silver IRA work?

A gold or silver IRA works as a self-directed individual retirement account that allows you to hold physical precious metals as the primary investment. The account follows the same tax rules as any other IRA but holds tangible assets instead of stocks, bonds, and mutual funds.
The process begins with selecting a precious metals IRA provider. These are specialized companies that help you open a self-directed IRA, fund it, and purchase IRS-approved gold or silver products. The provider partners with a licensed custodian who administers the account and an approved depository that stores your metals.
You can set up the account as either a traditional IRA, which offers tax-deferred growth, or a Roth IRA, which provides tax-free growth and tax-free qualified withdrawals. The choice depends on your current tax situation and your expectations for retirement.
Funding options include annual contributions up to the IRS limit, which is $7,000 for individuals under 50 and $8,000 for those 50 and older in 2025, or rollovers and transfers from existing retirement accounts. Rollovers from 401k plans, traditional IRAs, or 403b accounts are the most common funding method because they allow larger sums to move into the account without being restricted by annual contribution caps.
Once funded, you work with your custodian to purchase approved metals. Gold must be at least 99.5 percent pure with the exception of American Gold Eagles, and silver must be at least 99.9 percent pure. Eligible products include government-minted coins like American Eagles and Canadian Maple Leafs and approved bars from accredited refiners.
The metals are shipped directly from the dealer to the approved depository, where they are stored in secure vaults with insurance coverage. You never take personal possession of the metals while they are in the IRA. You can choose between segregated storage, where your specific metals are kept separately, or commingled storage, where they are stored alongside identical products from other investors.
Inside the IRA, all transactions happen without triggering taxes. You can buy, sell, and rebalance between gold and silver freely. Taxes only come into play when you take distributions in retirement, and the treatment depends on the account type.