If you think you can rely on your 401(k) or other savings accounts, real estate, Social Security, or the government, think again. Owning diversified stocks and bonds may not be sufficient to protect your investment assets from downside risk. Research shows that adding physical gold to an investment portfolio consisting of stocks and bonds can increase protection and security against dangerous market risks.
We’ve outlined six reasons why owning physical gold in your IRA, 401(K) or other retirement investment vehicles is still the best way of storing value over the long run.
1. Gold is valuable by itself.
Gold is universal money – a tangible store of value and protection. Physical gold is durable, divisible, consistent, convenient, and has value in and of itself. These are characteristic that makes it unique.
Gold has served as a way of preserving and protecting wealth throughout history. No currency has ever stood the test of time – all of them have eventually returned to their intrinsic value, which is zero. Gold has been used as money for more than 3,000 years because it doubles as a currency and a store of value. Gold is also one of very few assets that is not the obligation of someone else.
2. Gold is the ultimate diversification tool.
A portfolio including gold is less volatile over time than the same portfolio excluding gold. Even though the price of gold may be, at times, quite volatile, because its price movements tend to be uncorrelated with the ups and downs in other asset prices, it reduces the volatility and price risk in one’s overall investment portfolio. In a world that is getting increasingly globalized, assets tend to correlate more and more, meaning they move in tandem. Gold has historically displayed negative correlation with other asset classes. It is a unique portfolio diversifier.
3. Gold acts as a hedge against geopolitical risk.
The future of the global economy is dominated by uncertainty. During times of economic and political uncertainty, the demand for Gold rises due to its high intrinsic value and relative stability. It’s during these times that investors are especially glad that they hold gold. Investors are hungrier than ever for diversification, tirelessly searching for security. In times of uncertainty, Gold serves as a secure safe haven for investors.
4. Gold protects against inflation.
Gold is widely considered to be an effective hedge against inflation which means that when the dollar depreciates, demand for gold increases. Investing in gold in retirement accounts can create a hedge against significant price increases in asset prices as well as the cost of living, because its price tends to rise when inflation increases dramatically. Gold offers protection against excessive monetary creation, future inflation at home and U.S. dollar devaluation in world currency markets.
5. Favorable supply/demand characteristics.
Gold is one of the most highly-sought after precious metals in the world. It is used in jewelry, electronics, and coinage. Unlike paper money that can be printed on demand the supply of gold doesn’t change much.
It’s of course difficult to know for sure, but according to some estimates the total amount of gold ever to have been mined is about 165,000 metric tons. The annual supply of newly mined gold is about 2,500 metric tons.
6. No Counterparty Risk.
The paper market for gold is fraught with both counterparty risk and speculation, which makes it unsuitable as a long-term store of value. Gold is the only financial asset that at the same time isn’t someone else’s corresponding liability. When you buy a paper gold security or a futures contract you will always have a counterparty risk. The same applies to both bonds and stocks.
We can help you protect your retirement assets and avoid making these common retirement planning mistakes. The IRS allows you to keep physical gold and other precious metals in your retirement account with a self-directed Gold IRA. Because the strategy has been so valuable to others, they allow you to roll over an old, current 401(k), IRA, or other qualified retirement plan to a precious metals backed IRA. It is one of the only strategies left that is tax-free. Call an Advantage Gold specialist today at 1-800-341-8584 and we can answer any questions you may have about protecting your retirement assets with physical gold.Tags: 401k gold, add gold to my ira, advantage gold, advantage gold blog, best gold, best gold companies, best gold dealers, best gold ira, best way to buy gold, best way to invest in gold, bullion for retirement, buying gold bullion, gold investment company