Saturday, December 9th 2023
Precious metal IRAs have been around for a while now. They are a great way to store value and protect your money. With this in mind, more and more people are choosing to invest in precious metal IRAs. Current events around the world have made people worried about there money and thus we are taking a look at why people are choosing precious metal IRA accounts.
Hedging Against Currency Inflation
A big concern for many investors is the inflation of the dollar. Paper money can be printed and thus the value depends on how much money is printed by federal governments around the world. Precious metals on the other hand, cannot easily be created. That means that there value is harder to affect.
As the value of an individual dollar goes down, the value of gold stays the same or even increases. This helps to secure your money. Hedging against inflation is a major reason that people choose to invest in gold.
Something to keep in mind is that inflation tends to affect retirees harder. They do not have a salary that raises with the raise of inflation. AKA, they don’t get a cost of living raise. It is also harder for retirees to find other sources of income.
Financial crises come and when they hit, they can affect everyone. Gold is a common method of protecting wealth from a financial crisis. This can be done before the crisis hits. It is also done by some investors during the crisis or as the crisis is ramping down.
The last great financial crisis that the United States experienced was in 2008. For many, it appears that this crisis has faded into the past. The truth is that it is still affecting us today. Cyprus’s bailout is an example of how the market is still feeling the impacts of the 2008 crisis. A lot of countries have been trying to help with the flow of cash but we have yet to see the dramatic repair to the economy that was expected.
As the impact still lingers on, we could see more of an impact. Especially with COVID and how it is still affecting the world. For this reason, many people are looking to invest in gold and other precious metals to help protect their funds. This can help to protect against any future impact but also any future financial crises.
Having your investments all in one place means that if something happens you lose all of your money. Most people do not invest all of their money into a precious metal IRA. Instead, they only invest a portion of their savings into gold or silver. An average amount is between 4% and 20%. This gives you a hedge for if your other investments fail for any reason.
Holding Gold and Silver in An IRA
You can store physical gold and silver in an IRA but not in the way that most people think of when they hear about this option. You do not personally hold onto the gold. You work with a gold IRA custodian to arrange the pickup and transfer of the precious metals that you invest in. The custodian stores the money in a secure vault to help ensure its safety and that it remains in your account until you are eligible to withdraw it (source: Carpathian Gold).
Another note about gold and silver for a precious metal IRA is that only certain gold and silver are allowed. Rounds and bars are the only two forms of precious metals that are allowed into a precious metal IRA. Even then, the government restricts what types of coins specifically are allowed. Part of that is due to the purity. Gold must be .995 pure or better. Silver must be .999 purity or better.