Everyone feels the pain of inflation. It hits us hard in the wallet. And while the definition of a recession has been questioned, a growing number of analysts seem to agree that the worst of the economy is yet to come.
Of course, American households are worried about their financial future. The specter of 2008 isn’t too far behind. And even when faced with different circumstances, the fear of dwindling wealth and a collapsing economy remains. And as in many situations where economic uncertainty has prevailed, the flight to gold to protect wealth is on the rise again.
One way people have started getting involved with gold is with a gold IRA. Perhaps you didn’t know that you can invest in physical gold with tax protection. If not, we’ll talk about it. We also show you how to invest in a gold IRA in five easy steps.
1. Make sure a gold IRA is right for you
A gold IRA is like any other IRA except that it holds physical gold coins and bars instead of paper assets. But why should you hold gold as part of your retirement plan?
It offers you an additional source of diversification. You may already have a well-diversified portfolio of stocks and debt securities. But when the market goes down in a way that signals a recession, all “paper” assets, no matter how diversified, tend to move in the same direction: down. Adding gold to your portfolio can improve your diversification. And in a bear market or recession, holding assets that are “marching to the beat of another drum” is probably something you want to see.
It protects against inflation. If gold is an inflation hedge, why hasn’t it gone up with inflation? That’s a valid question. If you look at the history of gold’s rise in relation to inflation, you’ll see that it often doesn’t progress with inflation per se, but when people start to have doubts about the Federal Reserve’s ability to keep inflation under control to keep control. The bottom line is that the US dollar has lost 97 percent of its value since 1913, while gold has gained over 8,000 percent over the same period. If that’s not “proof in the pudding,” then what is?
It offers a tax-advantaged way to pursue growth and security.
A traditional gold IRA allows you to take advantage of the purchasing power protection and price appreciation of gold without having to pay taxes until you start taking distributions. When you choose a Roth Gold IRA, you pay taxes upfront, so your distributions are tax-free after retirement.
It offers wealth protection in addition to portfolio diversification.
Remember, gold isn’t just an asset during times of economic uncertainty. It’s a monetary value that works well in both good times and bad. Since 2000, the S&P 500 is up 157 percent. Gold, on the other hand, is up 491 percent. For investors looking for a diversified portfolio, there is some evidence that holding both asset classes would have been cheaper than just one.
2. Find a reliable Gold IRA professional
It’s sad to say, but gold remains a “barbaric relic” unless you are a central banker or financial institution responsible for managing your country’s currency and economy. In other words, you’ll find that most financial institutions don’t see gold as the domain of the “small investor.” Why this is so is beyond me, but it is evident in the mainstream financial media.
That being said, you won’t find many custodians even knowing that there is such a thing as a gold IRA. Obviously you want to work with an IRS-licensed custodian that specializes in this area. Start reviewing Gold IRA ratings. Among the top institutions that offer this is GSI Exchange. Call us if you need help. We have helped thousands of happy clients open Gold IRAs. We would be happy to do the same for you.
Once your IRA is open, you must store your gold assets in a precious metals depository. We only work with depots that have a lot of experience in storing precious metals. So if you need help, give us a call.
3. Fund your Gold IRA
Your Gold IRA contribution limits are the same as any other IRA. Make sure you know these before funding your account. However, these limits do not apply to transfers or transfers from another tax-advantaged retirement account. In case you’re unfamiliar with either, a rollover consists of funds transferred from an existing 401(k) account or similar employee-sponsored account to an IRA. A transfer refers to funds being moved from one IRA to another IRA.
4. Buy physical gold
Note that not all gold and silver coins are IRA eligible under US tax law. Among those that come into question are American Eagle gold coins and American Eagle silver coins. This is where it helps to consult a professional bullion dealer who has a reputation for trustworthiness and customer satisfaction. The quality of the coins or bars you buy is critical to your portfolio. It is all the more important to work with a trustworthy and competent dealer.
5. Keep up to date with economic developments
As with any other investment portfolio, there may be times when you need to rebalance your precious metals allocations: buy more silver than gold, or add more cash metals than stocks, and vice versa. Staying actively abreast of economic developments is one way to optimize the value of all your retirement savings, from monetary metals to stocks and real estate.
That’s why we at GSI Exchange are constantly publishing educational materials and curating business news articles. As a retailer with a long history of customer satisfaction and product quality, we work hard to actively maintain a beneficial relationship with our customers, helping them to anticipate the future economic environment and providing them with advance warning when opportunities and risks arise.
GSI Exchange is one of the few gold standard coin dealers in the United States and currently offers customers the ability to set up a gold standard IRA. For more information on this GSI-exclusive gold standard coin from the UK Royal Mint, visit gsiexchange.com/gold-standard-ira/ or call 833-GSI-GOLD.
GSI Exchange is a retail gold and silver dealer located in Palm Beach Gardens, Florida and does not provide tax, legal or investment advice. When making an investment decision, please consult your tax attorney or financial professional.
By Anthony Allen Anderson, Executive Member
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