Gold 401K

Is it possible to invest in 401k using precious metal commodity?

With the news of uncertainty about the state of financial market in terms of stability, and when it does hit the market hard, the banks facing the catastrophe will not allow withdrawal of cash from the individual and business accounts, will the holding of precious metal in the deposit of the trustworthy holder (mutual fund company or other) allow APY (annual percentage yield) in compound interest on precious metal and jewelry (lucrative gems & rare minerals) holding depending on the current market demand for precious metals (fine gold, silver, platinum, etc)? Or does compound interest apply only to paper currency in saving and investment?

It’s improbable that your 401k plan is going to offer something like that. Few people invest in precious metal funds, so your employer isn’t going to spend money to offer it. I’m not sure that they’re even allowed to offer direct purchases of precious metals.

You may be able to do it through an IRA and you can definitely do it through a taxable account. Check with some IRA providers and see if anyone offers a brokerage option that includes precious metals.

The bulk of your question is difficult to understand. (Try a little punctuation, please!) However, I think that you’re asking how returns work on precious metals as compared to savings accounts.

Precious metals do not pay interest and nothing is compounded. You buy them at the current market price and sell them at the market price in effect at the time of the sale. If the price has gone up when you sell, you’ve made a profit. If the price has gone down, you’ve lost money. Precious metal mutual funds usually invest in mining companies, not the actual metals. Returns work similarly except that you will likely have capital gains distributions and possibly dividends.

If you want compound interest, open a savings account or buy some CDs.

By the way, precious metals are speculative. If you need to ask how price appreciation works, you may want to think twice about buying these. They’re best suited for sophisticated investors with risk capital.

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