When a Former Federal Reserve Chairman, especially one as prominent as Alan Greenspan, says owning gold is a smart idea, you tend to sit up and take notice.
Right now, the American dollar is very unstable. For this reason, wise investors are searching for a way to invest their money without the risks associated with the stock market. Commodities offer this opportunity and the safest commodity available is gold. Gold rose in value for thirteen straight years before it peeked in 2013. It has also been suggested that at least 20% of a person’s portfolio consist of precious metals, and putting them into an IRA avoids heavy taxation.
Where Americans Go Wrong With Gold
One of the most common reasons why people don’t invest in gold is because of the hype both FOR and AGAINST it in the mainstream financial press, which if you’ve paid any attention to on a weekly basis, know they are only in business as a hype machine.
The fundamentals of sound investing strategy will not be found on CNN or Fox News because it’s not exciting, it’s not sexy, and you can’t make a sensational story of it or get people angrily worked up in a fervor about it- the most crucial ingredient and result of the modern day news story.
Because of all they hype and distractions, the loud voices telling you to buy or not to buy, and because the majority of people with capital have a natural tendency to only want to buy stock or assets AFTER they’ve risen and then sell off a month or 2 after it doesn’t move again (silly but true), gold never really gets its day in the sun as a viable investment tool for the smart money tactician and long-term strategist.
How to Win with Gold (or any investment)
Buy the dips. Sell the highs. Set your stops. Ignore the market noise.
That philosophy has helped me make an overall positive return from markets in my life. And if you’re going to get into metals, (which you should to diversify out of all the US dollar heavy stocks and bonds), then you’ll need a strategy. Don’t just run off buying random coins or giving money to groups that have the word “bullion” in their company name (if their company name is still the same as it was last year). Basically, don’t be me in 2005.
I did my research to find only the best of the best, most trustworthy gold dealers and IRA companies.
To some people, a gold IRA might be a new concept. I know it was to me at first.
How does a Gold IRA Work?
There are four commodities which can be rolled into an IRA; platinum, silver, gold and palladium. While each of these metals has its strong points, gold is by far the most practical. Silver is typically a sound investment and it steadily increases in value.
However, it’s only worth around $20 an ounce so wealthy investors would have to purchase large quantities to reach the suggested 20% of their net worth. The custodial fees for storing hundreds of pounds of silver would defeat the purpose of investing. Palladium is more valuable than silver, but it isn’t very stable. In a single day, the spot price can decrease $25 an ounce.
This instability means an investor could loose thousands of dollars in a single day. Platinum is another precious metal which available for inclusion into an IRA, but it’s more unstable than palladium. Even though Platinum is the most valuable of the four precious metals, but it’s spot price can dip below that of gold. Of all the precious metals available, platinum is the most risky investment. Gold is by far the best precious metal to rollover into an IRA but, it’s important to first know the specifics of doing so.
Easy, Convenient, and Smart Tax Relief
In 1997, the taxpayer relief act was signed into law by congress. This law permits American citizens to include the four precious metals into an Individual Retirement Account (IRA). Money, commodities and assets in an IRA are not subject to taxation, which is why so many people make them the focal points of their retirement plans. However, only specific types of gold can be rolled into an IRA and jewellery isn’t included.
Of course, pure 24 karat gold bullion bars may be included into the IRA. However the bars must contain the hallmark of authentication from either the Commodity Exchange Incorporation (COMEX) or the New York mercantile Exchange (NYMEX). A Gold IRA expert can handle that for you without worry so you don’t have to worry about being a custodian for your own gold, and you can avoid the risk of owning paper shares of gold.
Other Precious Metals for IRA Rollovers
The IRS also permits 24 and 22 Karat gold coins for inclusion into the a gold IRA. The American Eagle, Canadian Maple Leaf and the Australian Philharmonic are all allowed into a gold IRA so long as they’re stored at an approved depository. There will be a storage fee charged which is typically calculated based on the amount of metal being stored and the overall value. This protects investors from heavy taxation, but there are other reasons to invest in gold.
A Hedge on Inflation, and Unforeseen Collapses
In 2008 an epic collapse of the stock market saw tens of thousands of people lose everything, and over the 6 years to follow, many tens of thousands more, just gradually as many leave the workforce and give up a search for a real job (not 2 or 3 part time jobs). The former unfortunate individuals lost their fortunes, because their money was all invested in paper stocks and bonds, while the latter was unable to keep up with rising costs of living and inflation due to Federal Stimulus.
While these stock and professionally managed investments are traditionally very safe, they’re based on the performance of the economy. However, gold is a physical asset which is far less likely to suddenly increase in value. in fact, many investors immediately turn to gold when inflation damages an unstable economy. But the smart ones get in on gold when the price has hit a bottom. If you look at gold’s major price movements over the last 40 years, you’ll see that rarely did its ascent come consistently or gradually. Its upward price movements and tendencies to never return to prior lows indicate shifts to the economic fundamentals of the economy and monetary system itself, matched with political instability and changing alliances around the world.
In 2008, even the other precious metals lost their value but gold steadily increased in value. Even formerly impoverished countries like India and China are purchasing gold at an astounding rate. These countries are gaining protection against another global, economic crisis and investors who have a gold IRA can do the same.
When the Fed Reserve Says Buy Gold: You Buy Gold
In an interview at the new Orleans Investment conference, Allen Greenspan was asked where he thought the price of gold would be in one year. Greenspan is the former federal reserve chairman and his opinion on matter like these is extremely valuable. Greenspan said he didn’t know the immediate future of gold, but he did say tit will increase over the next five years. Greenspan also had some very concerning things to say about inflation in the future. Mr. Greenspan said inflation is like kindling wood waiting on a match. People who fail to understand this metaphor are probably unfamiliar with the immediate changes affecting the global economy and the American dollar.
US Dollar Losing World Reserve Currency Status: Where it’s Happening Right Now
The world reserve currency is the American Dollar. This means the dollar can be spent in countries the world over, because banks hold it as the principle for their loans. This means the US can simply print more money when we go in debt to foreign countries. These countries are forced to take this worthless money, because of its status as the world reserve currency.
However, it would be tragic for America’s economy if the dollar lost its status as the world reserve currency. People who think it can’t happen don’t have to look further than the Taj Mahal. This legendary tourist attraction no longer accepts the dollar and more places are following suit. If businesses refuse to accept the US dollar, it will lose its status by default. This could lead to inflation the likes of which America has never seen.
The Lesson Americans Need to Learn from Post WWII Britain
The last currency to lose its status as the world reserve currency was the British pound. This caused the value of the pound to plummet, resulting in the winter of discontent. This is a dark hour in the history of England where groceries increased several thousand times fold. If this happens in America, the match of which Allen Greenspan spoke would be struck.
However people who have invested their money in gold would be protected from the hyperinflation, because they could simply liquidate the gold into another currency. Even if the dollar never loses its status as the world reserve currency, gold is still a wise investment. Gold has an advantage over stocks and bonds, because it has so many uses and it’s in such high demand.
When someone like Allen Greenspan speaks on the dangers of inflation, wise investors listen. Fortunately, Mr. Greenspan also offers investors a way to protect themselves from the coming danger. Gold is like an umbrella in a storm of inflation, and a gold IRA prevents the precious metal from over taxation.
Just don’t wait on the sidelines expecting to get on board with the right price movement or circumstances. By then it could be too late. If you’d have opened a gold IRA in 2001, you would have over 3 times your initial investment tax free right now waiting for you. Imagine what will happen in the next 14 years for the US and the world’s need of a more stable currency that is not operating at high levels of debt and a trade deficit.
Read about why I picked Regal Assets here as the best and most honest Gold IRA company with which to do business.