Why don't my precious metals values match what I paid for them?

Investing in precious metals through a Self-Directed IRA (SDIRA) at American Estate & Trust (AET) is an excellent way to diversify retirement savings. However, many account holders notice that the value of their precious metals displayed in the AET online portal does not always match the price they originally paid. This can cause confusion, but it is a normal aspect of precious metals investing.

Understanding why these differences occur requires knowing the difference between spot prices and physical prices and how AET values precious metals in an SDIRA.

Spot Price vs. Physical Price: The Key Difference

When purchasing precious metals, there are two main pricing factors at play:

1. Spot Price (Melt Price)
   The spot price represents the current market value of a metal in its raw form. This is the price that metals are traded for on global markets and is constantly changing based on supply, demand, economic conditions, and geopolitical events. The spot price does not account for the costs associated with turning raw metal into physical coins or bars.

2. Physical Price (Purchase Price)
   The physical price is the amount an investor pays when purchasing tangible metal products like coins or bars. This price includes a premium, which covers the costs of refining, minting, distribution, dealer profits, and storage.

Since the physical price includes these additional costs, it is always higher than the spot price at the time of purchase.

How AET Values Precious Metals in an IRA

At AET, the value displayed in the online portal depends on the type of precious metal held in the IRA:

• Metals With an Established Market Value
  Some metals, such as American Eagle coins, have a widely recognized market value beyond just the metal’s spot price. In these cases, AET displays the value based on the market price of that specific coin or bar.

• Metals Without an Established Market Value
  If a client purchases a metal that does not have a specific market value for the exact coin or bar they own, AET displays the asset’s value at the spot or melt price of the metal itself. This means that even if a client paid a premium over spot for their investment, the displayed value will be based only on the raw metal price, which may be lower than the purchase price.

Why Is the Value Different From What I Paid?

The most common reason for discrepancies between the purchase price and the value shown in the AET portal is the premium paid at the time of purchase. Since the AET portal reflects either the current market value of a specific item or the spot price of the metal, it does not include the premium that was originally paid to a dealer.

Additionally, spot prices fluctuate daily, so the value displayed in the AET portal may change frequently as the market price of metals rises and falls.

Can I Recover the Premium When I Sell?

It is possible to recover some or all of the premium when selling precious metals, but it depends on several factors, including:

• Market Demand – If demand for a specific coin or bar is high, it may sell for a higher premium.
• Metal Prices – If the spot price of the metal increases over time, the total value of the asset may rise.
• Dealer Pricing – Some dealers offer buyback prices that include a portion of the premium, while others may only pay the spot price.

Key Takeaways

• The AET online portal displays either the spot price or the market value of a metal, depending on the type of asset.
• Spot price is the raw metal value, while the physical price includes premiums for minting, refining, and distribution.
• The value shown in the AET portal may be lower than the purchase price because it does not include dealer premiums.
• Market fluctuations can cause the displayed value to change over time.
• When selling, clients may recover some of the premium depending on market conditions.

Understanding these differences will help investors make informed decisions and avoid confusion about the values displayed in their AET accounts.