The difference(s) between GoldMoney and PHYS

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dschroeder01's picture
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Joined: Nov 16 2010
Posts: 22
The difference(s) between GoldMoney and PHYS

Can someone explain the differences between holding allocated physical gold thru a site like GoldMoney (possibly using a custodian) and owning shares of PHYS that owns allocated gold at 99.5%?  I know there is a premium (currently 3.01%) for using PHYS, but there are costs of buying the physical and possibly using a custodian if you're trying to get physical in a retirement plan when you buy physical? 

h2oBoy's picture
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Joined: Jun 18 2009
Posts: 52
The difference(s) between GoldMoney and PHYS

 For me, owning gold coins in my Roth is worth the additional 3% in and out fees. I have all my accounts with Fidelity and am able to buy gold coins within my Roth. I can take possession any time I choose, though they will come out of my Roth. 

If CM and others are correct about coming inflation (hyperinflation) the 3% and yearly storage fees will be a small price to pay to save the taxes on the gains.

katyan's picture
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Joined: Feb 1 2009
Posts: 46
PHYS a good alternative for holding gold in an IRA?

I'm also looking at Sprott's Physical Gold Trust (PHYS) as an alternative for holding gold through my IRA. I didn't quite understand the previous comment about saving taxes on gains. Wouldn't the gains in a traditional IRA be taxed regardless of which mechanism is used? And aren't all gains in a Roth IRA tax-exempt anyway? The post seemed to imply that the tax benefit accrues from holding physical gold rather than the type of IRA account. Does retrieving the physical gold from your account not result in a potentially taxable gain based on the change in the cash value of the asset?

I have a self-directed traditional IRA (don't want to take the additional tax hit now for conversion to a Roth since we converted my husband's IRA in 2010), so I will need to set up either a brokerage account for buying stocks or a custodial account for holding physical gold within that account, or transfer the portion of the IRA I want to put into gold to a new qualified plan through the broker or custodian, depending on which route I go.

While I realize that many people have a strong preference for holding physical gold over any type of gold-backed third party instrument, I would appreciate seeing a more in-depth discussion of the fees, tax consequences and other considerations in this particular situation for those of us who aren't as knowledgable. I was not considering any type of PM-backed stocks until I read about PHYS, which seems to be somewhat different. The fact that it is in Canada and that it appears to hold bullion in an undiluted one-to-one ratio, as well as the lower fees, are appealing on the surface.

I should note that I have a small amount of physical gold and silver purchased directly outside of my IRA and plan to add more each month as my cash flow allows. However, the IRA account is where the more substantial amount of money is, and I want to diversify out of stocks and cash before it's too late...still kicking myself for not doing it in 2009 when gold was $800 (at least I bought some silver then). Water under the bridge, though, time to move on and take action!

Thanks in advance for any feedback.

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