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Many investors have profited from buying and selling precious metals, from physical gold bullion and silver coins to platinum jewelry and rare-earth metals like palladium. It seems straightforward: purchase rare metals, sell them for a higher price, and watch the cash roll in. However, there’s far more to precious metals than buying and selling. Keep reading as we discuss everything a novice needs to know about how to sell gold, silver, platinum, palladium, and other precious metals, including physical investments, IRAs, tax implications, and essential tips.
What Are Precious Metals?
Although the specific characteristics vary, most precious metals are worth money because they have many uses in various industries, are scarce and difficult to mine, and have intrinsic value. They are also an excellent way to diversify a wealth portfolio, hedge against inflation, and offer protection during times of economic uncertainty.
How To Sell Precious Metals
Of course, you want to get as much money as possible when selling your precious metal investments. Whether you sell gold and silver bars, gold coins, or pieces of scrap jewelry and metal, you should spend some time researching the best methods of sale and get an official appraisal to help you lock in the highest prices and make a tidy profit.
Gold and silver coins usually make excellent investments because they can have a higher value than just their metal content. A government-backed (sovereign) coin will generally fetch the highest price, as it has a guarantee regarding purity and content. Before you put any coins up for sale, research their value. For example, bring them to a local coin shop or a professional appraiser — if possible, get multiple opinions.
Physical gold and silver bullion bars are the most common, but you can also find platinum and palladium. While they’re not the most liquid form of physical precious metals, they’re a low-risk investment. They often sell for very high prices, especially from well-established mints or refineries. However, you can’t simply send them through the mail; you’ll need to invest in a secure shipping method.
The sale of fine jewelry is usually straightforward. Bullion jewelry (up to 99.99% pure) is worth far more than costume jewelry. Like coins, the price of jewelry can be subjective and is often higher than its actual metal content. Standard methods of sale include jewelry stores, private individuals or collectors, online buyers, or third-party companies.
Most buyers purchase scrap based on weight, content, and purity. Compared to investment-grade physical precious metals, scrap metals have a much lower resale price because the company that purchases the scrap must melt it down for refabrication. The best places to sell scrap would be jewelry stores, companies that buy old or broken gold, or recycling facilities.
Can You Put Precious Metals in Your IRA?
Are you interested in making extra income from metals like gold, silver, platinum, etc., but you don’t want to deal with the hassle of shipment, storage, and insurance? The best alternative is a precious metal IRA. With this type of IRA, you get the same benefits as a traditional IRA (tax-deferred contributions), but your retirement funds aren’t paper assets like money. Instead, you fund your IRA with a physical precious metal like gold or silver.
First, you select an IRA custodian and third-party depository. Pick a reputable company and fund your account with IRA-approved precious metals. Once you pay for transaction and storage fees, your items will go right into the depository for secure storage.
IRA-approved Precious Metal Products
The Internal Revenue Service (IRS) has guidelines regarding precious metal IRAs. Only specific bars, coins, and rounds made of physical gold, silver, platinum, and palladium are eligible. Also, they must be from an accredited refinery or national government mint and meet a minimum requirement for fineness.
Examples of IRA-approved products include the following:
Gold: Minimum fineness of .995
- Gold Canadian Maple Leaf coins
- American Eagle bullion
- .995 gold rounds and bars
Silver: Minimum fineness of .999
Platinum and palladium: Minimum fineness of .9995
- American Eagle Bullion coins
- Canadian Maple Leaf coins
You can learn more about which products the Internal Revenue Service approves for IRAs here on the Oxford Gold Group website.
How To Sell Precious Metals in Your IRA Account
You can absolutely sell the precious metals in your IRA, a process known as “liquidation.” However, the Internal Revenue Service has rules and regulations regarding investor distributions and IRA withdrawals. One of the best benefits of a gold IRA is that your precious metals are tax-deferred until you liquidate, known as a distribution. You can opt for an in-kind distribution, where your bullion, coins, etc., will ship directly to you, or a standard liquid distribution, generating a wire payment or check.
You can withdraw IRA funds without incurring tax penalties after age 59 and a half. If you remove your funds before then, you’re responsible for paying a 10% tax penalty. After age 72, you’ll have to take an annual required minimum distribution.
In addition, you can sell gold, silver, or other metals from your IRA without paying any taxes, as long as you don’t take any cash withdrawals. The only exception is a Roth IRA.
Tips When Selling Precious Metals
Determine the value of your metals: Before you sell any precious metals you’ve purchased, find a professional to appraise their value. While bullion prices align with market fluctuations, items like jewelry or rare coins can fetch a much higher price than the value of their metal content.
Find a reputable buyer: Only sell your items to a respected buyer. Whether it’s a private investor, commercial company, or jewelry store, verify information like their reputation, background, purchase history, etc. For online companies, call them on the phone and speak to a real person. Ask about shipping instructions, transaction costs, client references, shipment insurance, etc.
Be cautious of scams: Many people fall prey to investment scams when they try to sell their precious metals and make a little extra income on the side. To avoid scams, research the buyer, shop around, get multiple opinions, and if it sounds too good to be true, it probably is.
Selling method: Consider which method of sale will offer the highest price for your items. The most common venues include coin shops and shows, online dealers and auctions, pawnshops, jewelry stores, and private collectors.
Know the cost implications: Selling physical precious metals often comes with extra costs or transaction fees, like shipping, insurance, delivery, and more. Know what you’re responsible for before you sell.
Consider logistics: If someone across the country wants to purchase your items, you’ll need to consider logistics like the cost of delivery (sometimes based on weight) and the best shipping methods. For example, use bubble wrap or other materials, include a packing slip, and invest in a lock box.
Is There a Minimum Amount When Selling Precious Metals?
No, there is no minimum required selling amount you must follow if you want to sell your precious metals. Whether you have a single gold collector’s coin or several pieces of bullion, there aren’t any minimum sale requirements. However, one important consideration is the taxes you’ll have to pay to the IRS on reportable income. We’ll discuss more information about the tax implications of selling precious metals below.
Where Can You Sell Your Precious Metals
If you want to sell precious metals, it’s important to choose the right marketplace that will be convenient and allow you to make a profit. The most common places where people sell their precious metals include:
- Online (to private companies)
- Through a third-party company
- To a private buyer
- At collector’s auctions or sales
- Local coin shops
Two places to avoid are local pawn shops and online marketplaces like eBay. Pawnshops will not give you the best possible price for your metal, and using eBay puts you at risk of dealing with fraud.
Tax Implications for Selling Precious Metals
If you’re ready to sell your precious metals, it’s very important to understand the tax implications of such a sale. For example, the tax rules for selling physical gold or metals differ greatly from those for selling a gold ETF (exchange-traded fund).
The IRS considers the holdings of physical precious metals you’ve purchased as capital assets, specifically collectibles. As such, you’ll have to pay a capital gains tax of up to 28% after selling your metal, and only if you’ve held it for over a year. The IRS taxes short-term gains at the ordinary income tax rate.
You don’t have to pay taxes immediately after you sell silver, gold, or other precious metals. The IRS requires you to report the sale on Schedule D of Form 1040 on your annual tax return. In addition, certain types of precious metals require an additional filing of Form 1099-B, including:
- Quarter or half dollars
- $1,000 face value of US 90% silver dimes
- 1,000 troy ounces of gold or silver bars
- 25+ one-ounce Gold Krugerrand, Gold Maple Leaf, or Gold Mexican Onza
The full amount of your tax bill for items you sold that require a 1099-B filing must be paid at the same time as your regular tax bill. Following these tax regulations to the letter is vital to ensure not only that you stay within the lines of the law but also that you maximize your returns should you ever decide to liquidate your assets.
Buying and selling precious metals has the same risks and rewards as any other form of investment. At Oxford Gold Group, we’re an industry leader in precious metals, including physical metals and IRAs. If you want to learn more about this popular market, we’re here to answer your questions. Call Oxford Gold Group now at 800-633-GOLD to speak with one of our passionate team members and start building a stable financial future.