Gold and Precious Metals Basics for IRA Investors

A Gold IRA is a retirement account that owns physical metal. The tax rules are covered across our Gold IRA Guide. This hub covers the other half: how the gold market itself works. Spot prices, troy ounces, purity, dealer premiums and price swings all decide what an IRA pays for metal and what it gets back when it sells.

Each section gives a short summary and links to a deeper guide. Unfamiliar terms are also defined in our Gold IRA Glossary.

What do you need to know about gold markets before a Gold IRA?

Six ideas cover most of what a buyer needs:

1. Gold is priced per troy ounce of pure metal, not per coin and not per kitchen ounce.
2. The spot price is a wholesale market price. No retail buyer pays it.
3. Dealers add a premium when they sell and pay less than spot when they buy back. The gap is the spread.
4. Purity matters. IRA rules only allow bullion of a minimum fineness, plus certain listed coins.
5. Gold produces no income. Any return has to come from a higher price when the metal is sold.
6. Gold prices are volatile. Regulators say so plainly: the CFTC notes that past performance is not a good predictor of future returns.

The table below defines the market terms used on this page.

What is the gold spot price and where does it come from?

The CFTC describes the spot price as "the cash price for immediate delivery of physical metal." It adds that the spot price "is quoted in dollars per troy ounce" and "should be easy to get from financial news or quote providers" (CFTC).

There is no single office that announces "the" gold price. Several large markets trade gold at the same time. Three are worth knowing.

The London over-the-counter market

Much wholesale gold trades "over the counter" (OTC). That means banks and dealers trade directly with each other rather than on an exchange. The London Bullion Market Association (LBMA) explains that precious metals "are, by default, quoted in terms of US dollars per troy ounce." In London, "spot" has a precise meaning. Delivery of the money and the metal happens "two business days after the transaction date on the so-called 'spot date'" (LBMA).

The London price refers to very large bars. The LBMA says the published price is for "a fine troy ounce of the metal in a bar weighing between 350 and 430 troy ounces" (LBMA). That is far bigger than anything a typical IRA buys.

The LBMA Gold Price benchmark

A benchmark is a reference price that contracts can point to. The LBMA Gold Price is set "twice daily (at 10:30 and 15:00 UK time)" through an electronic auction. "ICE Benchmark Administration (IBA) operates the LBMA Gold Price," and the result is a price per troy ounce in U.S. dollars (LBMA). The LBMA says these benchmarks are "the basis for pricing a variety of transactions, including industrial contracts and averaging business" (LBMA).

Gold futures on COMEX

A futures contract is "an agreement to buy or sell a particular commodity at a future date," and "the price and the amount of the commodity are fixed at the time of the agreement" (CFTC). The CFTC adds that "most contracts are liquidated before the delivery date."

In the U.S., the main gold futures contract trades on COMEX, part of CME Group. Its rulebook sets the contract at "one hundred (100) troy ounces" of gold, priced in "dollars and cents per troy ounce." The rulebook's contract specifications call for gold of "a minimum of 995 fineness" that "must be a brand approved by the Exchange" (CME Group). That fineness rule matters for IRAs, as explained below.

What this means for the number you see

The "spot price" on a dealer's website or a news screen is a live reference drawn from this wholesale trading. In our experience, quote services can differ slightly at the same moment, so when you compare dealer quotes, it helps to note the time and the spot figure each dealer used. Our guide to Gold Spot Price Explained goes into more detail.

What is a troy ounce, and how is it different from a regular ounce?

Precious metals are weighed in troy ounces. Groceries, mail and body weight in the U.S. use the avoirdupois ounce. The two are not the same.

The National Institute of Standards and Technology (NIST), the U.S. agency for weights and measures, gives these figures (NIST Handbook 44, Appendix C):

NIST states that one troy ounce equals "1.097 avoirdupois ounces." So a troy ounce is about 10% heavier than a kitchen ounce. NIST also notes that a troy pound has 12 troy ounces, while an everyday pound has 16 ordinary ounces. For the same reason, a kilogram is roughly 32.15 troy ounces, according to NIST's tables.

Why it matters: if a seller quotes "ounces" without saying troy, or quotes a price per gram, convert before you compare. A price per avoirdupois ounce would look lower than the same price per troy ounce. Our guide Troy Ounce vs Ounce has worked examples.

What do fineness and purity mean?

Fineness is the share of pure metal in a bar or coin, usually written in parts per thousand. The LBMA describes its silver standard this way: "a minimum of 999 parts in every 1,000 will be silver." For gold, the LBMA's large wholesale bars must be a "minimum of 995 purity," and prices refer to the "fine troy ounce," which "represents pure gold irrespective of the purity of a particular bar" (LBMA).

In plain terms, a gold price applies to the pure gold inside an item, not to its total weight.

Why fineness matters for an IRA

The tax code treats most coins and metals bought by an IRA as "collectibles." The IRS says buying a collectible "is treated as an immediate distribution from such account in an amount equal to the cost to the plan of such collectible" (IRS).

There are exceptions. One covers "certain gold, silver, or platinum coins described in 31 USC Section 5112." Another covers "any gold, silver, platinum, or palladium bullion of a certain fineness if a bank or approved non-bank trustee keeps physical possession of it" (IRS).

The law does not write a fineness number into the IRA rules directly. Instead, Section 408(m)(3)(B) points to "the minimum fineness that a contract market ... requires for metals which may be delivered in satisfaction of a regulated futures contract." For gold, the COMEX contract above requires a minimum of 995 fineness (CME Group). That link between the futures market and the IRA rule is why the futures market matters to IRA buyers. For the full rule, see the IRS collectibles rule and fineness and purity.

How do dealer premiums and the bid/ask spread work?

Retail buyers, including IRAs, never pay the wholesale spot price. The CFTC explains: "A dealer will always sell metal above the spot price and buy it back below the spot price. The difference between the dealer's buy and sell price is known as the dealer's spread" (CFTC).

The CFTC gives a simple illustration. "If the current spot price is $2,000, for example, a half-ounce coin would be worth $1,000, plus the dealer's markup or 'premium'" (CFTC). That $2,000 is the CFTC's example, not a current price.

Even the U.S. Mint prices this way. It says its bullion coins "are sold based on the prevailing market price of gold, silver, platinum, or palladium plus a small premium to cover minting, distribution, and marketing costs." The Mint doesn't sell bullion coins to the public. It sells to "authorized purchasers," who then trade with wholesalers, dealers and investors (U.S. Mint). Each step can add its own markup.

How wide can spreads get?

"Each dealer sets its own spread, so it pays to shop around," the CFTC says. It also reports that "some fraudulent dealers have charged spreads of more than 300 percent while others dealers may charge less than 20 percent" (CFTC). Collector coins tend to cost more. The CFTC says numismatic coins "typically carry higher markups than bullion and are much less liquid" (CFTC).

A simple way to see your own cost is to ask the dealer for three numbers at the same moment: its selling price for the item, its buyback price for the same item, and the spot price it is using. The CFTC suggests asking: "What's the dealer's buy-back price?" (CFTC).

For a full breakdown with worked examples, see dealer premiums and markups. For how collector coins differ from bullion, see bullion vs. numismatic coins.

What factors are commonly cited as influencing gold prices?

Gold's price moves for many reasons at once, and the mix changes over time. The World Gold Council (WGC) publishes a framework it calls the Gold Return Attribution Model. The WGC is an industry body. It says its members "are some of the world's most forward-thinking gold mining companies" (WGC). Keep that in mind when reading its research.

The model groups gold's drivers into these categories (WGC):

In its 2026 outlook, the WGC describes these as "four key thematic driver categories of gold's performance: economic expansion, risk & uncertainty, opportunity cost, and momentum" (WGC). Its model page also says the tool can "identify periods where existing drivers do not fully explain gold's returns" (WGC). In other words, even the people who build these models say they don't explain every move.

A framework like this helps explain past price changes. It is not a forecast, and we make no prediction about where gold prices will go. For more, see What Drives Gold Prices, Gold in Recessions and Market Crashes and Historical Gold Prices.

How do central banks and supply and demand fit in?

Gold demand comes from several groups: jewelry buyers, investors in bars and coins, exchange-traded funds, industry and central banks. Supply comes mainly from mining and recycling.

The WGC's quarterly Gold Demand Trends report gives this picture for the second quarter (April to June) of 2026:

On supply, the WGC says "a 2% y/y increase in mine production offset a 6% y/y decline in recycling" in Q2 2026 (WGC).

Central bank buying

Central banks hold gold as part of their reserves. The WGC reports that "net purchases totalled a healthy 289t in Q2" 2026, "a fivefold increase on Q1's revised estimate of 57t." Over the first half of 2026, central bank net demand of 345 tonnes "was the lowest for a first half since 2022" (WGC).

The data has gaps. The WGC notes that "unreported buying ... was again elevated in Q2," meaning some official purchases had not yet been disclosed (WGC). Figures like these are estimates and can be revised.

These numbers describe a past period. They don't tell anyone what prices will do next. For more, see Central Bank Gold Buying and Why It Matters and Gold Supply and Demand.

What is the difference between physical gold and paper gold?

"Paper gold" is an informal term for ways to get gold price exposure without holding specific bars or coins. The main forms differ in what you actually own.

The LBMA explains the account difference. With an allocated account, metal is held so that "the investor does not have a credit exposure to the institution where the account is maintained." With an unallocated account, "a credit balance on an account means that the owner of the metal has credit exposure to the institution where the account is held" (LBMA).

Exchange-traded products are listed on stock exchanges. Investor.gov says exchange-traded commodity trusts are "typically structured to hold assets which consist primarily of commodities, currencies, or derivative instruments that have commodities or currencies as their underlying assets" (Investor.gov).

Futures carry their own danger. The CFTC warns that in futures speculation, "many individuals lose all of their money, and can be required to pay more than they invested initially" (CFTC).

A Gold IRA, as covered on this site, holds physical metal. Watch for offers to buy metal "on margin" or with financing. The CFTC says: "It is illegal for dealers to offer leveraged or financed purchases unless your metal is delivered within 28 days" (CFTC). See Physical Gold vs Paper Gold and Gold IRA vs gold ETF.

What is the gold-to-silver ratio?

The gold-to-silver ratio is simple arithmetic: the price of one troy ounce of gold divided by the price of one troy ounce of silver. It tells you how many ounces of silver one ounce of gold would buy at that moment. Both metals are quoted in U.S. dollars per troy ounce (LBMA), so the units cancel out.

Hypothetical example: if gold were $3,000 per ounce and silver $40 per ounce, the ratio would be 3,000 ÷ 40 = 75. These numbers are made up for the arithmetic. They are not current prices.

The ratio moves as either price moves. Some sellers present a "high" or "low" ratio as a signal to switch metals. A ratio describes the relationship between two prices on one day. It does not predict which metal will do better. See Gold-to-Silver Ratio Explained and our Silver IRA guide.

Is gold a safe investment? Volatility and the lack of income

Gold is often sold as "safe." Regulators push back on that word.

• The CFTC: "The truth is gold and other precious metals are highly volatile and past performance is not a good predictor of future returns" (CFTC).
• The CFTC again: "The truth is precious metals prices are just as volatile as those of other assets" (CFTC).
• FINRA: "metal prices can fluctuate, like any other investment, and they're sometimes quite volatile" (FINRA).

Gold also pays nothing while you hold it. "As an investment, precious metals do not pay dividends, create earnings growth, or compound, like other assets" (CFTC). Meanwhile, holding metal has ongoing costs. The CFTC lists "storage, insurance, administrative fees, and possibly additional taxes and penalties if you take money from a qualified retirement account" (CFTC).

The CFTC also makes a point about who benefits from fear: "when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers" (CFTC). It warns readers to "be suspicious of claims of big returns for very little risks, or that offer guarantees or agreements that limit your losses." Our Gold IRA Scams guide covers these tactics, and Gold IRA risks covers volatility, costs and liquidity in depth.

How do these basics matter for a Gold IRA buyer?

Put together, the market basics change how a Gold IRA works in practice:

• Your starting value is below what you paid. The day an IRA buys metal at the dealer's ask, the metal is only worth the dealer's bid if sold back. The price has to rise past the spread before the IRA breaks even, before counting any fees.
• Ongoing fees reduce returns every year. Because metal earns no income, custodian and storage fees come out of the account's value. See Gold IRA fees.
• Fineness and product type decide eligibility. Bullion has to meet the minimum fineness and be held by a qualifying trustee. Many coins don't qualify. See the collectibles rule.
• Quotes need the right units. Compare prices per troy ounce of fine metal, at the same time, with the same spot reference.
• Price claims deserve skepticism. Anyone forecasting gold prices, or calling gold risk-free, is making claims regulators warn against.

Common mistakes

• Comparing a dealer's coin price with the spot price and assuming the gap is small, without asking for the buyback price.
• Mixing troy and avoirdupois ounces, or grams and ounces, when comparing quotes.
• Treating a central bank headline or a gold-to-silver ratio as a reason to buy now.
• Buying collector coins inside an IRA without checking whether they are eligible, and without knowing the markup.
• Assuming that "paper gold" and physical metal in an IRA carry the same costs and risks.

How much gold, if any, belongs in a retirement plan depends on your age, income needs, other savings and taxes. That's a question for a qualified financial professional who knows your full situation. The CFTC advises: "Do talk to a qualified financial planner, investment advisor, or accountant before making significant changes to your tax-advantaged retirement plan" (CFTC).

Related questions

Why is the price I'm quoted higher than the spot price on the news?

Because spot is a wholesale price for large trades, and dealers add a premium. The CFTC says a dealer "will always sell metal above the spot price" (CFTC). See dealer premiums and markups.

Is a 1-ounce gold coin exactly one troy ounce of gold?

It depends on the coin. Gold prices refer to the fine (pure) gold content. Check the coin's stated fine gold content, not just its total weight. See fineness and purity.

Does the World Gold Council predict gold prices?

The WGC publishes outlooks and research, and its members are gold mining companies. Its attribution model explains past performance. We don't repeat price forecasts from any source.

Where can I check what a regulator says about gold sellers?

Start with the CFTC's Precious Metal Frauds page and our Gold IRA Scams guide.