Top 10 Reasons Why Physical Gold In Your IRA Is a Smart Move
Updated: Nov 23, 2019
If you are investing with an individual retirement account (IRA) to provide the funds to see you through your twilight years then you probably have a diverse range of stocks and other investments included in your arrangement. A well-balanced investment portfolio should include some physical commodities to offset the potential volatility of stocks though, and gold bullion is historically one of the most stable commodities.
Here are ten reasons why you should include gold in your IRA investment portfolio.
1. Gold has long term historical stability.
Gold has been successfully used as an investment and currency for thousands of years. It has stood the test of time and continues to be valued today as a bedrock investment. Paper currencies frequently become worthless and other precious metals and materials can corrode and degrade over time, but gold is a robust metal that is easily stored over long periods. If you want to anchor your IRA or investment portfolio with a stable physical commodity then you should include gold ownership as one of your investments.
2. Gold acts as a hedge against inflation.
Inflation is a regular and recurring factor. It provides a necessary system of relief for financial markets and gives them room to grow and fluctuate. While most stored fiat currencies lose their value as inflation occurs the value of gold steadily rises to accommodate inflation in the changing market. This makes gold a necessary part of your investment strategy if you want to ensure that the steady increase in prices due to inflation doesn't result in a steady decrease in the value of your IRA investments.
3. Gold can survive currency deflation and the financial events that lead to it.
The currency market can fluctuate wildly as it is influenced by world events. Gold helps hedge against wild deflationary changes in the cost of goods and services and ensures that your investment portfolio continues to have value. Historical evidence suggests that the purchasing power of gold increases as the value of goods decreases. This means that an investment in gold ownership as part of your IRA will stabilize your finances and allow you to ride out a period of deflationary instability.
4. When the value of the dollar abruptly drops the price of gold rises.
Because gold is such a stable investment it is the thing that people buy when they lose faith in the value of their country's local currency. Political situations, financial scandals, and world events can all cause the value of the American dollar and other currencies to drop rapidly. When this happens people buy gold in large quantities and the laws of supply and demand ensure that the price of gold rises accordingly.
5. Gold acts as a hedge against political instability.
Political situations can change rapidly and politicians frequently make choices that affect the markets in various ways. Many countries have experienced a change in their entire political leadership as part of a cue. This can make people uneasy about investing in local stocks and resources during periods of instability because they do not know if those investments will hold their value. In these situations they flock to gold as a tried and true investment which makes gold a stable choice for hedging against political disruptions.
6. Gold has a slow and steady supply which stabilizes its value.
Cash money and digital currencies are something that a government can change on a whim. Many countries have tried to solve their financial problems by printing out ridiculous amounts of currency, which just resulted in that currency rapidly becoming worthless. Gold is a mined resource. That limits the introduction of new gold into the financial market in the form of gold bullion. This gives it a stable value that is unlikely to be disrupted by new supplies of the metal.
7. Gold has real-world uses.
Most currencies are just glorified I.O.U.s that have no real value by themselves. A dollar bill may be used to buy food, but you can't eat a dollar bill. Gold is used in electronics, jewelry, as a coating for cable connections, and as a resource in many industries. Gold has many useful properties that give the metal value outside its use in gold bullion. These real-world uses ensure that gold will always have value.
8. The demand for gold is increasing as third-world countries become more prosperous.
Over the past few decades, many of the poorer countries around the world have embraced modern technologies and industries and turned themselves into economic powerhouses. The per-capita income and spending power in many of these countries has sky-rocketed. The people in these countries often hold onto their old traditions and many of these traditions utilize gold in weddings and other ceremonies. This creates a growing demand for gold and increases its value as a result.
9. Gold gives you diversification against stocks in your portfolio.
The general wisdom is that a well-balanced financial portfolio should include a diversification of investments that are not reliant on each other. There should also be a balance of investments that oppose each other, with some investments increasing as others decrease. Gold and stocks tend to rise and fall in opposition to each other which makes a gold IRA a necessary investment to counterbalance changes in value to the stocks in your IRA portfolio.
10. Having gold in your IRA portfolio gives you peace of mind.
Gold ownership as part of your retirement investment portfolio gives you the peace of mind that your portfolio will always have value no matter what happens. You can rest easy knowing that all the factors above ensure that your gold IRA investments will allow you to retire with your hard-earned savings secure, safe, and stable.
Gold has been used for financial stability for almost as long as the metal has been mined. Over thousands of years, many currencies have come and gone with many of them using gold in their coins and bullion. Gold is still valued today and has even more practical uses than it once did now that modern technology can utilize its special properties. This ensures that gold will always have value and that it should be an essential part of your IRA investments as a result.
As you can see from above, physical gold is a great tool to help diversify your portfolio and we can think of no easier way to invest in gold other than using a Self-Directed IRA and adding Precious Metals to the mix.
If you’d like to learn more about the benefits of using a Precious Metals or Gold IRA,
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The Gold IRAs 101 Team