Gold has always been a valuable commodity and it continues to be highly sought after today. Having a gold IRA is a great investment and allows you to invest in precious metals from your own retirement account and diversify your portfolio.
What is a Gold IRA?
In essence, owning a gold IRA is like owning your own golden goose as it turns your retirement savings from paper fiat currency to real gold and other precious metals. In 2000, an ounce of gold was worth $272.65 and now in today's time, an ounce of gold is worth over $1,200. If you had invested in gold in 2000, you would have made almost a thousand dollars for every ounce of gold you owned.
Typically, traditional and Roth IRAs procure investments in paper like stocks, bonds and cash, in contrast, Gold IRAs allows you to invest in physical ownership of gold, silver, platinum and palladium, all resources that meet the requirements established by the Internal Revenue Service (IRS). Additionally, with gold IRAs, your gold or other precious metals are stored with an IRS-approved depository.
Why is Gold a Good Investment?
Despite reports saying otherwise, gold is a solid long-term investment for several reasons.
History of Being Valued
If you were to go back through history and study fiat money, which is paper currency decreed as legal tender by the government, you will see that it has a relatively short life expectancy of less than forty years. Currencies have collapsed and continue to collapse throughout the world. Fiat money has no value apart from a government decree and is highly unstable, it is vulnerable to devaluation and debasement as well. Once a currency collapses, any paper you own in that currency is worthless. Gold, on the other hand, has remained valuable throughout the ages.
Instability of the US Dollar
The US economy has been especially precarious since former President Nixon abandoned the gold standard, and it continues to be so today. One of the reasons the USD looks stronger is because the US Dollar Index matches it up with six other countries economies, and those economies are hurting as much or more than the United States. To off-set the crippled economy during the financial crisis of 2008, the Federal Reserve initiated three rounds of quantitative easing, which prevented the complete collapse of the USD. However, on its own and without constant intervention, the USD is relatively weak. Gold does not have that problem and its value continues to rise as the world's economies struggle.
Insurance Against Inflation
Gold performs exceedingly well, especially in times of inflation, deflation, hyperinflation and stagnation. Diversifying your retirement portfolio protects your purchasing power by hedging against inflation. One of the side effects of the Federal Reserve's quantitative easing and other countermeasure initiatives is continued inflation. As a general rule, as the USD decreases in value, gold's value increases.
Scarce Commodities are Valuable Commodities
Unlike the US dollar, which the Federal Reserve continues to print and sell back to the government, gold can't be made from thin air. Production from gold mines has steadily declined since about 2000, and most gold sales come from the vaults of central banks in the form of gold bullion. Any time there is a limited supply of a commodity, it is considered scarce. A basic rule of economy is, the more scarce a commodity, the higher its value.
Supply and Demand
The nature of supply and demand is also a basic economic rule. As gold has a limited supply, its value is also dependent on the demand for it. Gold has seen an increased surge of popularity since the 2008 financial crisis. Demand for gold is rising not only in countries like India and China, but among investors as well. Just as with scarcity, the more demand there is for a product, the higher its value.
Diversification is Essential
In order to reduce the risk and volatility of any market, your portfolio should be properly diversified. An integral part of diversification is investing in stocks that are not closely correlated, or that responds opposite of each other during financial up and down swings. For example, during the 1970s, it was a terrible time for stocks, but a great time for gold, in the 80s and 90s, the opposite held true and in today's time, stocks are dropping as more investors are migrating toward gold.
What About Gold Ira Storage?
With a gold IRA, you invest in physical gold or other precious metals, so it is vitally important to choose a trusted gold IRA firm with an IRS-approved depository. There are two ways of buying gold, you can either buy and store it yourself or you buy it and have someone else store it for you. When you purchase gold through your retirement accounts, you never hold the physical gold in your hand, so this is an area where many people fall prey to countless scams. You must ensure the company is highly rated, holds a flawless reputation and is one you explicitly trust.
Which Gold Ira Firm Should I Choose?
Regal Assets is a gold IRA firm that was founded in 2009, and since then has become America's #1 rated gold company seven years in a row. With an A+ rating from the Better Business Bureau (BBB) and zero consumer complaints and an AAA rating from the Business Consumer Alliance (BCA), you know you are not only investing in a good product, but also in a reliable firm that values its customer. A good rule of thumb to follow when investing is if you can't hold it, you don't really own it. Regal Assets is the first company to offer a live video feed of when your precious metal arrives at the depository. Whether you want to open a new account or rollover an existing account, choose an established gold firm with a solid reputation like Regal Assets.
Investing in a gold IRA, diversifying your portfolio and hedging against inflation and market volatility is a smart way of making your retirement account work for you and to ensure your wealth is there when you need it.