Gold IRA Protection
If you’re concerned about protecting your liquid assets from inflation while growing your wealth you should strongly consider diversifying your portfolio with gold. Since the establishment of the Federal Reserve (America’s central bank) in 1913, the value of the US dollar has lost 96% of its value. According to dollartimes.com a greenback in 1914 had the buying power of an astounding $22.96 in 2013. What’s even more startling is that annual inflation rate over this time span was a “moderate” 3.22% or roughly the amount of inflation in America today.
Following the demise of Bretton Woods in 1971 and the beginning of the US dollar as a fiat currency America has turned to its printing presses to pump more dollars into the global marketplace as we seek to finance our growing trade deficits. Conversely gold began its historic ascension from $44.20 an ounce to approximately $1,400 in early June 2013. In August 2011- 40 years after the “Nixon Shock” – it sold for close to $1,900 per troy ounce. A more recent timeline shows that gold has risen by close to 400% over the years from 2004 to 2012. Despite its recent roller coaster ride gold has kept much of its market gains achieved during the past 10 years. In fact gold is still up over 50% from 2008 levels, as the following chart demonstrates:
Sixty years ago the dollar was by far the world’s preeminent foreign reserve currency, accounting for 90% of the total global money supply. Today, according to research from Rafferty Capital Markets, that percentage is now 15%. When the dollar loses its status as a reserve currency America will face the daunting challenge of actually having to repay its deficits as opposed to merely printing more money. China and India, the world’s emerging economic powers, have bought roughly half of the world’s available gold during the past five years. Their currencies – the yuan (or renminbi) and the rupee respectively – are increasingly backed by gold reserves. According to the ‘Wall Street Journal,’ China is now negotiating with New Zealand to make their currencies directly convertible, thus eliminating the dollar as the means for making or receiving payment. As more nations follow this monetary policy the dollar will continue to decline as a reserve currency.
Of course gold has historically been viewed as the ultimate safe haven from economic uncertainty, geopolitical turmoil and inflation. With the ascension of gold in a multiple reserve currency system and the decline of the dollar, the stage is set for a continued increase in gold prices. Gold has been and will be a hedge against fiat currencies such as the dollar and the euro. Billionaires worldwide have been moving their wealth into gold in reaction to the weakening of the dollar. Carl Icahn, George Soros, Mikhail Prokhorov and Carlos Slim are just a few of the notable financiers who have sung the praises of gold.
A sound method of planning for one’s financial future is establishing a precious metals or gold IRA for retirement. (check our reviews on the top gold IRA companies here). Many learned of the volatility of stocks and bonds during the market meltdown of 2007 – 2009 when the Dow Jones Industrial Average lost more than 50% of its value in a year and a half. But historically inflation is even worse than recession for stocks and bonds. Even with the stock market’s rebound from its 2009 nadir gold has outperformed the DJIA; better still, the value of gold won’t be eroded by inflation.
When looking for a custodian to oversee your gold IRA you should find one that permits you as an investor to a create a portfolio that includes stocks and other precious metals such as silver and platinum. The idea is to diversify your holdings to limit exposure to any one asset and reduce risk. This asset allocation will balance the long term performance of your portfolio and spread your investment over different sectors.
With gold you have a choice of a wide range of investments from bullion, coins, gold mining and exploration companies and ETFs. Gold is a long term strategy for accumulating wealth for retirement as it’s proven to withstand inflation and has shown growth for almost fifty years. Don’t be misled by market ups and downs; over the long haul gold, particularly bullion and coins, is an asset that has gained in value. Consult with a gold IRA expert to learn how to manage your retirement and build wealth that resists inflation and economic uncertainty.