Perhaps you’ve heard the latest buzz about gold and how it has become a popular choice for investors interested in stabilizing their portfolios during times of economic stress. You might also be a little worried about the value of your 401k and whether it will withstand the ups and downs of the stock market. If you are considering gold as a means to protect your assets, then the following information can help get you started:
Why Buy Gold?
Gold has long been the metal of royalty and civilizations since the dawn of human history have prized its luster, malleability and durability. Since gold is both conductive and highly resistant to corrosion, it has a number of applications in the electronics industry, and dentists today still use gold to create sturdy fillings. In addition, gold has been used as currency for centuries, which is why most nations in the world today keep gold reserves.
What does this mean for the gold investor? For starters, a commodity that retains its value for thousands of years is a stable one, meaning that gold isn’t likely to become worthless unless all the governments of the world collapse. While gold is like other investments in that its value can go up or down, during times of inflation when fiat (paper) currency loses its worth, gold really begins to shine. Investors, therefore, add gold and other valuable commodities to their portfolios as a hedge against inflation.
Gold Investment Options
Buying gold can be as simple as purchasing it with cash from a gold dealer, though it pays to do thorough research first before making any investment. Investment-grade gold, for instance, is usually traded as bullion coins or bars, and come from trusted sources such as the U.S. Mint to ensure their purity. Buyers may then choose to put their gold in a home safe or store them at a bank depository for a fee.
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Investors who want to buy gold without the hassle of paying for high premiums and storage fees may also choose to enter a gold pool program. These unallocated gold accounts enable investors to purchase smaller amounts at an affordable rate. Since the dealer holds the gold, storage is often free or at a low cost. While this is a budget-friendly option, due diligence is especially important since the dealer may not have the gold reserves to honor your claim when it’s time to cash in
Buying Gold for Retirement
Many of those who have seen their 401ks steadily decrease in value from poor stock performance have considered rolling over their existing retirement plans into a self-directed IRA, which can contain non-traditional investments such as real estate and precious metals. Gold backed IRAs are frequently preferred because they tend to remain stable during tough economic times.
Buying gold intended for a precious metals IRA, however, carries additional rules in order for your investment to qualify. The IRS, for instance, only allows 24 karat gold bullion bars and coins for these accounts, though an exception is made for the 22-karat American Eagle gold coin. Also, the gold must be administered by an IRA custodian and stored at an IRS-approved location. This means that you cannot buy gold for retirement and store it in a home safe.
There are additional rules regarding Gold IRAs that require your attention before setting up an account, but if you need further assistance the precious metals investment consultants at Scottsdale Bullion and coin are available to help you make the choice that best suits your retirement needs.