Gold IRA

Investing in a gold IRA? Here’s a few things you need to know

If you’re in the market to put some of your hard earned money into gold or a gold IRA, you’ve no doubt noticed that finding useful information can be kind of tricky. Welcome to goldiral.com. Our mission is to provide you with well researched information regarding gold IRAs as well as investing in gold or precious metals in general.

Some companies hire pushy salesmen or attempt to “bait & switch” their customers once they’ve come into contact with them. Your retirement money and gold IRA account is much too important to be messed around with. Therefore only the most trustworthy companies with proven track records and irreproachable customer service are worth your time.

There are a lot of companies online that are all fighting for your attention (or more specifically, your money). At the end of the day, the onus is on you, the investor, to contact multiple companies and decide which one is best suited for your particular situation.

If you are looking for more information about gold IRAs in general, keep reading. We have gathered some valuable information below and have done our best to lay it out in a comprehensible manner.

What exactly is a gold IRA?

What is the difference between a traditional individual retirement account (IRA) and a gold IRA account? At their core, they are pretty much the same. As an investor, you can put money into one or the other and enjoy the tax benefits that come with them.

However, the main difference between both is that the gold IRA is limited in the assets that can be included in it. As the name suggests, it can only be comprised of gold. Not just any gold is allowed though, for example jewellery and some rare coins cannot be included. As a general rule, most gold bullion is admissible. Once again, talking to a company such as Regal Assets that specializes in gold IRA accounts will shed some light on what can and cannot be included.

Rules and restrictions

There are restrictions of course, but they mostly apply to how the funds in the IRA/gold IRA are used or how/when they are withdrawn. For more information on the rules and regulations, visit the official IRS website on IRA on investment retirement accounts. It is of course in your best interest to follow these rules as ignoring or going against them can have quite unpleasant and costly consequences.

Citizens of the United States are obviously more concerned with gold IRA accounts in particular. However, it is also possible for US citizens to transfer funds from their 401k accounts into gold or even other precious metals. This process is called a rollover and more often than not, individuals opt to transfer those funds into a gold IRA.

Why should you buy precious metals right now?

As with any type of investment, it is best to get in while it’s still “cheap”. Well gold is no different. Of course, starting a gold IRA ten or twenty years ago is the best situation, but what good is hindsight in the “here and now”?

So, the next best time to buy up as much gold as possible is immediately. Consider this. The World Gold Council has recently published a report stating that 2013 marked the fourth consecutive year to see a marked increase in the demand for gold.

And as any market states, whenever the demand goes up, so does the price. There is only so much gold on this planet of Earth which makes it a fixed resource. Humans can’t make more gold like they can money. So, when the supply drops due to the high demand, availability goes down and prices go up.

So, given that people are investing in gold at an unprecedented rate and that the gold IRA business is booming, what do you think will keep happening to the price of gold? It has nowhere to go but up.

Who is buying up all that gold?

Gold IRA - Countries

A breakdown of the countries buying up gold the most. China and India are buy far the biggest buyers.

Individuals have combined for well over 3500 tons of gold. That represents over 170 billion US dollars. But it’s not just gold coins, bars and bullion that is more in demand than ever. Even jewellery is soaring to new heights in terms of price and demand.

But it’s not just individual investors buying the stuff or opening gold IRA accounts. The central banks of the world as well as many countries have been buying gold at a rate never seen before. Countries like China, India and even Turkey have increased their demand during 2013.

Advantages of investing in a gold IRA

One of the best things about putting your money into a gold IRA is the fact that you have full control on what happens with your investment. This type of investment account is called self-directed, meaning that you have the final say regarding what goes on.

On the other hand, a traditional IRA account often doesn’t provide this kind of freedom. Most of the time they are managed by some third party that you have never met and therefore don’t have much interest in getting you the most out of your investments.

But the biggest advantage of a gold IRA is…

Let’s not dilly dally, there’s not time. The main goal of investing, no matter in what, is to eventually see a positive ROI. So in that regard, how does a gold IRA fare? Given that most (if not all) well known investors keep on hammering the importance of investing versatility, how can investing primarily in gold be advantageous at all?

Gold is on the rise, has been for a long time.

To evaluate whether investing in a gold IRA can bring you a profit you just need to take a look at its price over the past few years. Gold itself has seen a rise in value of 524% between 2001 and 2012.

To put that into perspective, say you invested 25,000$ in gold at the turn of the millennium. At the end of 2012, that same amount of gold was worth approximately 156,210$. By any standard, that is an astonishing increase that no paper asset can come close to.

Gold performance against stocks

Gold versus S&P500 since 1971. Except for a brief 4 to 5 year period, gold has always been higher.

The only other way you could see an increase that rivals that of gold is if you invest in a start-up company that explodes over the years after purchase. These days, it seems that tech companies are the most likely to take off in such a manner, think facebook and twitter. Or think how much money you could have made had you invested in Apple or Microsoft stock in the seventies? Of course, selecting those sorts of investments is kind of a crapshoot and requires an in depth knowledge of very specific topics and markets that not everybody possesses.

But let’s get back to the topic of gold IRAs. You see, gold hasn’t stopped rising in price either. In fact, the price of gold has been on the rise since the end of 2012 still and financial experts predict that this increase has no end in sight.

A Gold IRA is also one of the best hedges against time and economic downturn

If you remember your history classes at all, you’ll no doubt remember a few civilizations that have risen and fell over time. The Egyptians, the Greeks and the Romans are all examples of empires that have gone through this inevitable cycle. It seems that nothing humans build lasts forever.

But if you look closely at pretty much every major empire or society that has been built by humans, one thing they had in common was gold. Egyptian kings hoarded the stuff to the point of demanding to be buried with it. Romans used gold to stamp their coins and used it as currency. Heck, even pirates fought and pillaged to get as much of it as possible.

Throughout history, there is nothing that has been used as a currency as consistently as gold and there is nothing that has been as consistently held in high value. And all that is due to the rarity of the metal, to the fact that there is only so much gold on the face of this planet.

So asking yourself if investing in a gold IRA is a good idea or if it might lead to a personal financial disaster, you can stop. As far as investments go, there is nothing quite as safe as gold.

History is fun and all, but what about the modern society we live in today?

Printing press - Gold IRA

The printing press is a machine that has defined the past 100+ years

One of the biggest things to mark modern civilization is the use of paper currency as a means of trade. Just a tad over a hundred years ago, services or goods would be traded with one another. Heck, this still goes on today in many places over the world. A goat might have been traded for tools or milk could have been bartered with the local blacksmith. Of course, gold was also accepted for payment for pretty much anything.

But the twentieth century saw some drastic changes that has compounded the usefulness of gold IRAs today. Gold, being heavy and inconvenient to use and transport, was replaced with paper currency that represented a set amount of gold. And given that the gold supply is fixed, the amount of money it was possible to print was limited by that same gold.

That all changed in the early seventies though when the United States government decided to suspend the conversion of money into gold. At that point, the Us dollar ceased to represent a fixed amount of gold which means that it was no longer limited by the amount of gold available. This is called a fiat currency and the only thing giving value to the money is the trust that people, institutions and countries have in that currency. This also means that the government was free to print out as much paper money as they wished, lowering the value of each dollar in the process.

This point in time is a major reason why a gold IRA is one of the best economic hedges available today. The metal held in a gold IRA account is not subjected to the state of the US dollar, or the state of any of the worlds currencies for that matter. In other words, it doesn’t matter what happens in the outside world. The gold contained in a gold IRA will always retain its value (or increase).

It’s not just money

It’s easy to think of gold as a metal that doesn’t do much outside of being expensive and looking pretty. However, one thing that few people know is that gold is used in a lot or everyday objects. Many industries use gold either as a material or as part of a fabrication process. Examples include the medical industry, food and beverage and electronics. This is something that makes owning a gold IRA give you an edge over investing in paper assets, since there is no “real” demand for paper money.

Most modern electronic devices such as phones, televisions, computers, tablets and other devices need gold to function properly. And, with the rising demand for such products, gold is sure to keep being in demand in the future which will in turn keep its price high. Who knew that people buying the latest smartphones is good for your gold IRA?

A gold IRA protects against inflation

Inflation is something we all face. Goods and services cost more and more money but really, the service or good hasn’t really changed. A hair cut is a hair cut regardless of when it was done. A gallon of milk contains the same volume of milk today as it did in the early nineteen hundreds. This is due to the insidious occurrence called inflation.

Let’s take a look at a concrete example and how a gold IRA can help protect you from that. The venerable loaf of bread. A single loaf of bread feeds just the same today as it did one hundred years ago. However, today the same loaf cost about 1.50$ today when it cost about six cents a century ago. That’s approximately a 25 fold increase. Inflation at work.

Gold price vs stocks - Gold IRA

As many stocks have dropped over the years. gold has seen a constant upwards progression.

To fully understand what’s going on with our favorite breakfast food, let’s compare it to that oh so precious metal that goes into gold IRAs. In 1913 and ounce of gold cost a little under 19 dollars. The year that Obama was elected (2008), that same ounce of gold cost a tad over 870$. That is close to a 45 fold increase.

So, where inflation increased the price of bread drastically, gold has increased almost twice as much during that same time frame. If inflation continues the same way it has been, not only will your gold IRA protect you, it stands to make you a pretty profit.

Conclusion and recommendations for a gold IRA

As it stands, inflation is rising at an unprecedented rate, government spending is spiraling out of control and countries left and right are standing on the verge of bankruptcy. All this because the US dollar isn’t backed by anything, just “trust”.

Putting money in a gold IRA right now is a move that simply cannot lose. The US national debt is increasing exponentially each and every day, lowering your purchasing power along with it. But if you own gold, no amount of inflation can affect the portion of wealth. Just like no amount of debt the US accumulates can affect the value of your gold IRA.

In fact, it’s quite the opposite. A devaluing dollar means that what you have invested in gold gains in value, when compared against the currency in question. It’s a no brainer. With a gold IRA, you simply cannot lose and you only stand to gain.