Investing in gold is a great option for any solid retirement plan. In fact, it’s essential. Despite what some naysayers out there might try to tell you, this precious metal always goes up in value.
You don’t want to invest only in self or institutional-directed stocks and bonds (mutual funds, RRSP’s, etc.)
Nor can you rely on a government or company-based pension. Ultimately, the survival of either is out of your control.
Any of those investments carry risk. The stock market could crash any time. Your pension fund could implode for any number of different reasons. Including inflation and deflation.
Dollars are never stable, because inflation is needed for all of us to have jobs. Deflation is needed to save us when we’ve spent too much money. Recessions occur when the balance between the two isn’t achieved. Which is rarely ever, if history tells us anything.
This is the fiat-money-system at work. You can’t rely on it to ensure your retirement is comfortable.
Let’s say you have 20 good years to live out your retirement…
Would any of you choose to spend 5 – 10 of those years just scraping by, re-mortgaging your home just to eat and pay for healthcare because of an unwelcome recession?
Investing In Gold For Your Retirement Should Be a Priority
Dollars Are Fake:
You can’t rely on those dollars in the bank to get you through your retirement. Sure, they may be collecting interest (slowly) but they’re collecting fiat interest.
Money that’s only real so long as the majority agrees it is.
What if you’re set to retire in 20 years, or forced to take an early retirement (due to illness, etc.) and right after you do that money becomes about as useful as toilet paper?
There’s a serious chance that the US dollar will fall out of favour globally – soon. Some say the Yuan will reign in the near future. Others feel the Ruble will sit atop the global economy. Both countries seek a commodity-based global currency.
Gold is money. Gold was money long before there was paper in front of it.
From former Parisian President Charles DeGaulle:
“It (gold) has no nationality and is eternally and universally accepted as the unalterable fiduciary value par excellence.”
There are three distinct factors to reassure anyone gold will always be the king of true tactile (not fiat) currency:
Much like petroleum, there’s only so much gold on earth. Some experts speculate that there’s enough total gold on the planet for each person to own approximately a third of an ounce.
Gold was used to back currencies during the 1800’s and leading to the implementation of the “fiat system” in the early 70’s. Even back to Egyptian times, it’s been considered a symbol of purity and perfection, possessed only by the wealthy and rich.
The current inflationary/deflationary fiat system is sure to fall from favour, sooner rather than later. Many of the world’s governments are tired of being at the mercy of the USD. China and Russia are getting very close – China owns most of the US debt and have stockpiled massive amounts of physical gold. Russia is the world’s largest petroleum exporter. Both of them want to topple the USD and its status as the world reserve currency.
Allocated Gold Certificates
Seek professional advice before opting to put your money into unallocated gold investments. This is a risky manoeuvre and you don’t actually own anything but perhaps the paper you’re given after dropping your money.
If gold prices nosedive or the dealer/bank folds for any number of different reasons, you can be left with nothing. If you do choose to try for the “easy money” with unallocated, choose your bank or dealer wisely.
You can learn more about how allocated and unallocated differ right here: Allocated vs. Unallocated Bullion
Allocated gold certificates allow you to buy gold that’s verified authentic, purchased by professional buyers who knows more than you do about spotting fakes. The actual gold is stored in a highly-guarded bank or depository vault and insured against theft and fraud.
These certificates are very liquid, and require only that you investigate the dealer you plan to buy from and the depository where it’ll be stored, before making a purchase. You can hold the certificate for as long as you want – you own the gold.
Another way is to diversify your 401k, 457, TSP, annuity or other retirement funds by switching (rolling) some of those funds to gold.
Investing in gold for retirement: Gold-backed IRAs
This must be an allocated gold investment in order to be eligible for tax sheltering purposes.
Gold backed “Individual Retirement Accounts” are just like any other IRA. The risk factors are the same. If gold falls, your IRA loses money. If gold rises, it gains.
The major differences is that we know gold will always be in favour, so you’ll never completely lose your shirt. This is particularly true if a recession occurs before or during retirement.
There are two great benefits to a gold-backed IRA:
Gold typically raises quickly in value during times of financial turmoil (learn more).
Gold goes up when stocks go down (more here).
How it’s done
This investment is entirely self-directed, as opposed to RRSP’s and other bank or institution-directed retirement funds. Traditional institutional plans do not include physical gold purchases in the portfolios they offer, due to the insurance and storage fees involved.
With a self-directed, gold-backed IRA you decide the type of, and how much gold bullion is directed toward your IRA. You can only include certified bullion bars or coins in this scenario.
You also need to have accumulated some funds in your current directed IRA before it’s cost-effective to do a roll-over into precious metals like gold.
The process is actually quite easy. The main concern being to find a certified precious metals’ custodian to help you set up an account.
You would first have to open a trust account with a trustee who specializes in self-directed retirement plans. If your current trustee is accredited to do this, you can skip this step.
After opening your account and consulting with a custodian, they’ll help you do a “roll-over” from your current investment portfolio to gold.
Next, you’ll look for a gold vendor to make your purchase and the trustee will help facilitate the purchase, offering administrative support and later handling the reporting for tax purposes.
Before Investing In Gold For Your Retirement:
Make sure both the trustee and the vendor have an impeccable rating with the Better Business Bureau. Don’t deal with either if they haven’t been in business for at least ten years.
Sure, every company has to start somewhere, but you’re levelling yourself to “guinea pig” status if you decide to chance doing business with the inexperienced!
If your new to Gold investing, you might want to check out our beginners guide.Dan Craig