If you bought gold before its historic run, your friends and family likely thought you were a financial genius. Opening a gold IRA as a hedge against hard times is a traditional strategy that protects the smartest investors. If you never considered yourself a gold bug before, it is a good time to examine the possibilities. People make money when they buy low and sell high. Gold’s price will likely recover soon from a long correction period. At one point during the Great Recession people expected gold to top $2,000 an ounce. When you invest in a self-directed IRA, you don’t have to pay taxes on any gains in your account because the IRS treats it as a retirement account. In the case of a Roth IRA you aren’t even subject to taxes after you retire. A gold IRA is a great solution for many people, but there are still some factors to understand.
Understanding the spot price of gold
Several different factors determine the price of gold at any given time in history. In recent years, the threat of the Federal Reserve curtailing their bond-buying program or quantitative easing program has influenced the gold markets. Other issues include supply and demand, current events including wars, market speculation, euphoria, currency values and buying power. For example, the Chinese government has substantial buying power that can greatly alter gold’s course.
Diversifying your portfolio
Gold is just one of several alternative investments suitable for a self-directed IRA. As part of proper asset allocation, it is good to put money in a variety of investment instruments. Many people believe the recent bull market has run its course. A new modern-day gold rush could ensue as investors brace for a secular bear market that lasts 5 years or longer.
Benefiting from history
Young millennial investors did not benefit from the gold boom in the 1980s. Throughout the years, gold has shot up and made investors wealthier than speculative stocks and blue chip stocks. If you like feeling a part of history, you can set up a gold IRA by rolling money over from a 401(k) or traditional IRA. Some investors love the fact they can buy gold coins or bullion as well as other precious metals. You can consider gold a sort of wealth insurance. When you own gold, you gain peace of mind when you feel your wealth threatened by economic recessions, debt crisis or war.
A growing number of out-of-the-box thinkers embrace self-directed IRAS. As long as the IRS allows it, you have the freedom to invest in alternative investments. The IRS does allow you to own a gold IRA as a retirement account. You can also diversify your retirement portfolio by owning silver, palladium or silver. When looking for the right program, consider working with a provider that allows for checkbook control of a self-directed IRA, otherwise you may just be investing in paper backed by precious metals. Remember your gold IRA is the owner of the gold. You, as the IRA holder, are not the owner. All profits benefit the IRA until you as the account holder reach retirement age and start taking distributions.
At New Standard IRA, we help our clients set up self-directed IRA accounts as well as gold IRAs that maximize their investment opportunities. With a possible recession around the corner and other economic uncertainties in the world, it pays to look into gold. For more information on a gold IRA, please contact us.