- Gold is a popular hedge against inflation and the erosion of major currencies
- Investing in this asset class should give you a store of value for generations to come
- You can easily invest in gold with your IRA or 401(k) – read below how to do it
Why it might be a good idea to invest in gold
Investors often buy gold to diversify risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility, as are other markets. Gold has been the most effective safe haven and holds hedging properties across several asset classes compared to other precious metals used for investment. You can buy gold directly or through an ETF, fund, or other product.
Boom in Gold IRAs – gold always wins in the long-term
The possibility of using gold and other precious metals as securities in your IRA was created by Congress in 1997, back then the average price of an ounce of gold was $331. The average price of gold in 2022 is $1873, it’s a five time increase of value in less than 30 years.
Considering that gold is considered one of the most stable assets you can invest in, it’s no surprise that Gold IRA is one of the most popular choices for individuals wanting to hedge against inflation and protect their wealth from economic turmoil while taking advantage of tax benefits coming with a self-directed IRA. Find a list of most trusted gold IRA brokers below, they’ve been thoroughly tested by our staff and we can wholeheartedly recommend all of them.
Top #3 Gold IRA Companies
#1
✔Over 15 years of experience
✔BBB A+ rating
✔No unnecessary paperwork
#2
✔Family owned business
✔Zero complaints
✔Secure IRS storage facilities
#3
✔Founded in 2003
✔Very high customer satisfaction
✔No fees over $50,000 investment
Is investing in gold safe?
Investing in gold can be risky if you don’t do your homework. Anyone considering investing in gold should look into the company they are buying from and check the purity of the gold they receive. The Better Business Bureau is a great place to find reviews about local (or online) businesses that deal with gold as an investment.
Despite its risk, investing in gold can provide you with diversification against the stock market’s volatility. Additionally, gold is an international currency, so it’s not directly tied to any particular economy. However, it is important to understand its volatility and know how to invest safely before moving forward.
How exactly to invest in gold
Investing in gold may be a smart decision for many investors. Whether you are investing in physical gold, such as gold bars or bullion, or purchasing an exchange-traded fund or mutual fund that provides exposure to gold stocks, there are many ways to get your hands on the precious metal. Before investing in gold, you should consult with a broker or financial advisor to learn more about the safest way to buy and sell. For example, using a gold IRA is an excellent way to diversify your retirement portfolio. It lets you hold actual physical bars or coins of precious metal. And as with any investment, it pays to do your due diligence before choosing a company to handle your retirement account.
Goldco – named the #1 IRA provider by INC. Magazine
OVERVIEW
Goldco mission is to help people protect their retirement savings and build long-term wealth through the security of precious metals. Founded in 2006 in Woodland Hills, California – Goldco has thousands of 5-star reviews across the web from happy customers. Most of the reviewers mention excellent support during the investment process, simplicity of acquiring precious metals and educated staff ready to answer any questions along the way.
REASON TO INVEST WITH THEM
+ Over 15 years of experience
+ Outstanding user reviews
+ They will guide you through the whole process
WHAT COULD BE BETTER
– $25,000 minimum for IRA rollover
– Does not own storage facilities (reimburses you for the first year)
OR
click here to receive a free starter kit from Goldco including a printed guide
Augusta Precious Metals – lifetime support of your investment
OVERVIEW
Augusta Precious Metals is known for its lifetime customer support promise, having none complaints against the company since its inception in 2012 and very competitive prices. Unlike some other precious metal dealers Augusta can store your gold or silver in IRS approved storage facilities situated around the country including depositories in Los Angeles, Salt Lake City, Jackson and New York. Their 7-day protection program locks the price of the metal for one week as well as offers 100% money-back guarantee if you have second thoughts about your investment.
REASON TO INVEST WITH THEM
+ Up to 10 years of fees waived
+ Excellent educational webinars
+ Zero BBB or BCA complaints
WHAT COULD BE BETTER
– Minimum deposit of $50,000
– No online shop
Birch Gold Group – almost two decades of experience
OVERVIEW
Birch Gold Group has been in the precious metals business for almost two decades now and their customer reviews are nothing but positive. Paired with their low fees and very approachable minimum investment of $10,000 Birch Group is a good choice if you want to get into the world of precious metal investment.
REASON TO INVEST WITH THEM
+ Almost 20 years of experience
+ Fees waived on investments over $50,000
+ Minimum investment is only $10,000
WHAT COULD BE BETTER
– You need to talk to Birch rep. to get exact fees
– No own depository
There are several other ways to invest in gold in exchange-traded funds (ETFs) as well. You can get direct exposure to the precious metal and companies involved in the production of gold. Gold ETFs invest in the physical metal or hold Gold futures contracts to gain exposure. However, exchanges have different specifications on their gold ETFs, so it’s important to research the ETF providers before investing. Several different types of ETFs also target gold companies. Investing in gold through ETFs promises to be a less risky solution compared to buying one or two companies, as it will lower your company-specific risk.
Alternative ways to finance an investment in gold
There are a number of ways to finance an investment in gold. The most common is to purchase outright, paying 100% of the total cost. Alternative financing options include borrowing some or all of the cost of the purchase. Financing can be through loans or pledging cash or other assets as collateral against the loan.
Another way to finance your purchase might be by using margin on your brokerage account, which is similar to pledging other assets as collateral. Using margin to finance the purchase of gold can increase your gains if the price goes up, but it can also magnify your losses. To continue to invest in gold using margin, you must maintain a sufficient equity balance. If your equity falls below the maintenance margin, a margin call may be issued, and you may need to deposit cash or securities to cover the full maintenance margin requirement.
Using margin to finance a gold investment can be a wise strategy if you do it carefully. You’ll want to choose the best broker for shareholder-friendly policies with low fees and tight spreads that don’t eat up your gains on movements in gold’s price.
What are the advantages of precious metals investments?
One of the greatest advantages of investing in precious metals is peace of mind. Physical assets like gold, silver, and platinum have withstood the test of time as a hedge against instability and uncertainty. Investors can sleep at night knowing their investments won’t disappear overnight by owning physical assets of value. Precious metals are tangible and real.
Precious metals also have a number of advantages over stocks and bonds, especially in the short term. Precious metals are a better investment in times of crisis and instability, when there is more inflation or deflation, or when stock markets are volatile.
Gold and silver have also long been coveted as a reliable way to diversify your investment portfolio. As a preservation wealth asset like real estate, precious metals hold their value long term and serve as a safeguard against rising costs in stocks, property, and even the cost of living. However, unlike real estate, gold is a widely recognized store of value that is easily exchanged and portable.
What are the disadvantages of precious metals investments?
Although investing in precious metals can offer great financial benefits, there are also some disadvantages. One of the biggest challenges facing investors is knowing when to buy and sell. Precious metals prices go up and down significantly on a daily basis, so you need to be patient. Another disadvantage is that it’s easy to misjudge the value of each piece of precious metal you’re planning to invest in.
In addition, if you purchase precious metals via trading companies, you must pay for storage and insurance for your materials. Trading companies also charge commission fees on top of the value of the precious metal.
Finally, precious metals investments do not generate income like fixed-income investments, such as bonds, or dividends, such as equities. The lack of a regular income stream over time can make it difficult to measure if your investment is working for you.
How to properly allocate your investment strategy when adding precious metals
You may have a long-term financial goal in mind, or you might be saving for something short term. The truth is, whatever your current situation, it’s important to balance your precious metals portfolio allocation with other assets like stocks and bonds to ensure that you preserve the purchasing power of your money.
The most important thing to know about precious metals is NOT why you should consider them for your portfolio, but rather how much of your total investment portfolio’s assets you should allocate to precious metals. There is no “one size fits all” answer to this question – it really depends on your other holdings such as stocks and bonds.
One rule of thumb for investment portfolios is to limit gold and silver exposure to about 5% of the total value. However, it’s possible to increase precious metals investments when other asset classes do poorly. Many investors would say the maximum should be 10–20%, but it will depend on your personal preferences and expectations. Most metallic investments are speculative, so it’s best to consult a financial adviser before investing unless you’re an expert on the subject.
FAQ
What is my return on investment?
Precious metals have historically shown a higher annual growth return and are considered one of the most stable investments. In the short term, results may vary. Most independent financial advisors recommend an investment in precious metals as an important part of any well-diversified portfolio.
What is a gold IRA?
Gold IRA is a self-directed Individual Retirement Account that allows you to invest in precious metals in the form of coins, bars or bullion. Rules regarding contribution limits, distribution and taxation remain the same as with regular IRA accounts.
What is the best gold IRA company?
Right now Goldco is our number one thanks to excellent customer reviews, money-back guarantee and simple sign up process. Depending on your particular needs however you might want to have a look at other companies in our ranking to make an informed decision.
What is the risk of investing in precious metals?
While we’re excited about the potential for investment in precious metals, you must understand the risk involved. There is a risk of losing money by investing in precious metals. The precious metals market is historically volatile, and prices can go up as well as down. Precious metals also don’t pay income, so they’re not for everyone. Liquidity can also become a problem during a market freefall, and you may not be able to maintain your account value.
How to buy gold with 401(k)?
Most 401(k) do not allow you to invest in precious metals directly. You can however easily rollover your 401(k) to a gold IRA company. Providers like Augusta Precious Metals or Goldco make the rollover process easy and help you every step along the way.