Gold safeguards a paper portfolio against failing currency, high inflation, and national debt. If an investment doesn’t provide high profits, the paper portfolio results in insufficient retirement income. Gold is real money versus currency. It diversifies an investment portfolio and improves the value of the portfolio as it increases in value.
The continuation of increased gold value makes a gold IRA a safe investment. There are, however, two things that affect a gold IRA. One is that things get better in the United States. The other is that things get worse. Right now, the country is suffering from recession, inflation, high unemployment, increased home foreclosures, a decrease in mortgage applications and big corporate failures.These factors all contribute to good news for gold prices and bad news for the consumers’ dollar. The current economic environment erodes consumer confidence. Consumer confidence hits bottom when Americans pay inflated prices for daily necessities, while still bringing home the same paycheck.
To help make-up the difference between the cost of living and net income many people turn to their savings and IRA accounts for survival. Savings accounts and IRAs start getting depleted, thereby decreasing retirement income. Replenishment of retirement funds is then needed. But, paper-only portfolios do not grow at the same soaring rate as gold. Neither does real estate, 401K or Social Security.
It’s true that the stock market has made a lot of people very rich. Conversely, the risk of the stock market has caused a lot of people to lose everything they have. This results in those investors looking to their savings and IRA account funds, as well. Bonds, notes and CDs do not add much to set-off the paper losses because of their fixed rates.
If an IRA portfolio is not shored up with gold, the paper continues to be at the mercy of the economy and the Dow. Gold represents real money. Paper investments, such as stocks and bonds, represent currency. Hyperinflation happens when currency is not backed by gold. In 1971, President Nixon abandoned the gold standard for the American dollar, ignoring the US Constitution. Articles 1 and 8 of the Constitution state that debt payments must be made in gold and silver.
When the dollar is not backed by gold it loses value and causes countries to fail. Consider Greece who suffered from huge, unbelievable inflation per month before their collapse. Other countries have smartened up. For instance, China and India are now very large purchasers of gold. WikiLeaks revealed that China’s goal is to weaken the US dollar by buying great quantities of gold.
Contributing to the devaluation of the dollar are interest rates and the disbursement of currency. These functions are the job of the Federal Reserve. They control interest rates, thereby controlling the economy. They loan money to the government, charging interest, i.e. the national debt
The current benefit of investing in a gold IRA is that gold is tied to the national debt. As the national debt rises the demand for and value of gold increase with it. More specifically, gold values rise as an increasing percentage of America’s revenue is used to pay interest on its loans. As more money is needed to run the government, the Fed just prints more, i.e. devalues the dollar further.
The economy will get better once the United States and Europe get their finances in order. Higher interest rates, lower spending, lower national debt and deflation are a few things that will have to be dealt with. Until then, gold will continue to rise and is expected to do so for the next several years.
Current US debt hovers around $17 trillion. This number is projected to climb up to the high $20 trillion mark by 2016. The publication Financial Articles Summaries has reported that over 140 US analysts are forecasting gold to reach anywhere between $5,000 and $12,000, per troy ounce, by 2016. This does not begin to address potential big profits from mining-company stock which can exceed that of gold coins.
Giving credence to these numbers makes buying physical gold a prudent decision. In the last ten years gold prices have gained over 460%. Even when a good performing paper portfolio makes profits, they don’t outperform gold. The gold in your IRA has no risk of margin calls, financial crises or inflation.
All IRAs, 401Ks, pension plans and deferred compensation plans can be rolled over into a gold IRA account. Transferring one IRA into another is possible at any time and is tax-free. No income tax is paid on the earnings until withdrawals are made. A professional should be consulted in order to understand tax positions including capital gains tax on gold.
Gold can be in the form of bullion or coins. Gold coins of 99.5% pure gold are government approved for gold IRAs. Coins with less than 99% pure gold are not. Only 24 karat gold bars are approved for gold IRAs and the metal must carry government-approved hallmarks. The 22 karat US Gold Eagle coin is the only exception to the rule of holding physical gold in an IRA.
Gold is a safe and profitable choice over other options. Gold is considered real money; stocks and paper are considered currency and do not increase at the same rate as gold. Gold is not tied to any currency, government or country, and has no debt or liability. As the ultimate inflation safety-net, gold is a powerful investment.