What is a gold IRA investment? Why not just keep your money in a diversified bundle of stocks, bonds, ETFs?
First, let’s explain what gold is as an investment: Gold as an IRA investment, unlike equity investments such as stocks and bonds, is a commodity – the owner of gold holds a distinct physical product, something of actual value. Equity investments, on the other hand, mean the investor owns a portion of the company that issued the stock. Stockholders make money when the companies they own stock in increase profits or improve their business standing. This profit increase results in an increased demand to own the company triggering a rise in the price of the stock. Precious metal investors make money when the demand for precious metal increases, causing the “spot price” of metals to increase.
Historically, the stock market overall has significantly outperformed precious metal investments, which have been traditionally viewed as a hedge against inflation and risk as opposed to a profit-seeking investment. But over the past 12 years this fact has changed in a big, big way: gold and silver have significantly outperformed the Dow Jones Industrial Average.
In times of economic uncertainty, gold has traditionally been the investment standard for safety (after U.S. Treasury issues). Its price often tracks with market or economic swings. Gold has proven to be a haven in times of inflation because it retains its value much better than currency-backed assets, which can climb in price but drop in value.
Why should you put your money in a self-directed gold IRA or gold Roth IRA investment? This fact was well illustrated in 2008 when the price of gold varied from around $720 an ounce to almost $980 an ounce. As the stock market reeled and economy dropped further into recession, gold prices soared. Gold does extremely well during times when investors are nervous and are looking for a safe place to put their cash that has been pulled out of a riskier stock market.
Don’t lose the purchasing power tomorrow for the investments you make today. Every day, the Fed prints more dollars which means that the dollars in your savings are worth less. Gold IRA investing is your protection against inflation.
Gold is a safeguard from stock market volatility. After the bubbles of 1999 and 2007, experts fear that stocks are now at the edge of a dreaded “triple top” – and could plummet 60%.
Gold is also an excellent way to diversify your savings. More just than juggling a group of paper assets like stocks, bonds, and mutual funds; Gold allows you to diversify with hard, tangible assets.
Gold offers phenomenal growth potential. As increasing demand for gold and silver outpaces supply, some experts expect them to increase significantly in value in the coming years.
If you’ve never before invested in IRAs, gold coins, bullion or other precious metals, you may be concerned that the process is mysterious and complicated. The truth is it’s no more difficult that rolling over a 401(k) or transferring a traditional IRA but there are things you should know before you invest.
For rolling over into gold the rules are the same as any other investment: The account owner can make annual contributions of a $5,500 maximum and take distribution at age 70 and a half. At the time of distribution the owner can take possession of the metals or sell them and cash out if desired. With a self-directed Gold-backed IRA, you are in control of your wealth. (Speak to your accountant or refer to Section 408(m)(3) of the Internal Revenue Code for complete details.)
No wise investor should ever venture blindly into any investment opportunity.
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With today’s economic uncertainty, adding gold or silver to your portfolio could be your best diversification strategy – serving as a potential hedge against inflation and a declining dollar.
Protect yourself – and your retirement – today!