Should I Invest in Gold?

The best time to buy gold is before it rallies into a bull market. As of today, The price of Gold goes up when there is a significant lack of confidence in the central bank, US government and the dollar. E.g. quantitative easing, the national debt and fiat currencies that don’t last forever. Gold, today, is reaching for $2000 an ounce. Billionaire Paul Tudor Jones has said that Gold will be the best investment for the next few years.

Proponents of owning physical metals cite that the gleaming yellow metal is a scarce commodity and has no counter party risk. Gold’s value is inherent.

While many investors claim to have indirect exposure to precious metals, there is comparison to owing physical gold and silver.

Benefits in owning physical Gold:

• Portfolio diversification
• Hedge against a down economy
• No credit risk
• Outperformed fiat currencies
• Liquid asset
• Opportunity for gains

Statistics:

• Worldwide demand has increased an average 18% since year 2000.
• It has had comparatively good returns compared to other investment assets.
• World banks and billionaires are accumulating physical metals while major countries are “reacquiring” what they own.
• The yellow metal is a proven portfolio diversifier.
• It holds value as fiat currencies like the US dollar fall in value.
• The Fed continues the dollar devaluation while the US government can’t stop its endless borrowing and spending policies.

Billionaires John Paulson, Thomas Kaplan, Paul Tudor Jones, Eric Mindich and Carlos Slim all own a lot of the precious metal. Do they know something we don’t?

Combine Fed Policy, the federal deficit and federal government spending, many experts believe that eventually, something has to give. A financial day of reckoning if you will. Whether it be a dollar collapse, hyper inflation or something else, they like the peace of mind knowing that not all of their assets are dollar based. Gold Investment Companies can help.

Why Precious Metals for Your Golden Years:

It is a frequent message being broadcast to investors nowadays with some allure. Recent shocking fluctuations on Wall Street may have you believing it is an appealing alternative for you too. However, is buying gold shrewd  today? As it happens, you will find IRS-approved techniques for investing in gold.

Gold Individual Retirement Accounts (Gold IRAs) combine the comparative stability of gold and silver with all the advantages of a modern IRA. But that gold or precious metals IRA is ideal for your present situation?

One way to secure your life savings is with a Gold IRA. Investors with various financial goals will find it an appealing investment. By diversifying your retirement savings with a gold IRA, you may be able to attain wealth preservation, portfolio growth and even tax benefits. All of this with a smaller risk than many other investments.

This type of account might be the perfect solution for any investor looking to diversify their life savings, however there are multiple gold investment companies offering  Gold IRAs. With so many options readily available, it is important you consider the advantages and disadvantages of each.

Just because Gold Investment Companies advertise and hire actors as spokesman doesn’t mean they are legit. To this point, there are quite strict regulations which IRA firms should follow. This includes the storage and transfer of the precious metals which we will discuss further.

Most financial advisors advocate that you allocate 5-15% of your retirement portfolio to  precious metals, with a few more bearish experts  suggesting around 20 percent. Considering these guidelines should help you make the right investment decision.

When properly invested in gold, silver and platinum, an IRA could certainly protect your nest egg and demonstrate support your purchasing power.

What is a Gold IRA?

A Gold IRA is a self directed retirement account aka precious metals IRA, that allows individuals to hold precious metals in their retirement accounts to protect them from “paper” fiat dollar denominated investments that they own. Similar to standard IRAs, tax deferment is possible on earnings. Gold IRAs can be purchased through authorized Investment Companies.

And just like any other Individual Retirement Account, a precious metals IRA allows Internal Revenue Service permitted annual deposits into a brand new investment company account or transfers and rollovers for existing IRAs.

Custodians are required by the IRS to oversee the process. Once the Gold investment companies receive your investment funds they can convert the dollars to real money, aka gold.

Code requires that your precious metals are stored by an approved facility either overseas or domestically. Overseas storage is the choice of investors looking distance from the government.

If you are like most most retirees, your main focus when starting a retirement account is to make sure your portfolio produces income. How is that accomplished? That, of course, happens by adopting the correct portfolio strategy.

While stocks, bonds and even the US Dollar might look attractive while you compose a multi source income plan, these conventional investments are not always enough to attain proper diversification. Consider how diversified your investment portfolio could be if you invested in gold?

A self directed IRA from a one of the many gold investment companies is not complex but is an effectual alternative for retirement investing. Combining the yellow metal with silver, platinum and even palladium further increases hedging your life’s savings against financial disaster.

Can I Hold Physical Gold in my IRA

In a word, YES, you can hold precious metals in your retirement account through Gold IRAs.

With the passing of the Taxpayer Relief Act in 1997, the IRS allows investors to own approved Gold, Silver, Platinum and Palladium bullion in a self directed retirement account from precious metals investment companies.

The setup of an IRA must be handled in accordance of IRS rules and regulations by authorized IRA firm. You may either open a self directed physical precious metals IRA outright, do a transfer or rollover funds from an existing 401k, SEP, TSP, 403b, etc into your new account.

Transfer: If you have an existing IRA, you can “transfer” funds directly from your current custodian to the new ira custodian. The government requires that the disbursement check must be made out to the new custodian or trustee. You do not take possession of the funds and can do a transfer as often as you like.

Rollover: If you receive a distribution from a retirement account and move the funds to an IRA custodian, this would be considered a rollover. To avoid IRS taxes and penalties, the transfer must be made within 60 day window. You are allowed to rollover the same funds once in twelve months to keep your retirement account tax deferred.

Bonus: With an IRA from a gold investment company you only get to claim ownership of precious metals but you’ll have the right to access them. Realizing that you don’t have direct access to your stock portfolio, the plusses of the gold IRA move becomes clearer. Making the bold choice of investing in a Gold IRA will likely preserve and expand your wealth.

What Precious Metals are IRA Approved?

Some of the approved coins for a precious metals IRA :

Gold:

• American Eagle
• Canadian  Maple Leaf
• Austrian  Philharmonic
• Australian Kangaroo/Nugget
• Chinese  Panda
• American  Buffalo uncirculated coins

Silver:

• American Silver Eagle
• American Silver Eagle
• Mexican Libertad
• Canadian Silver Maple Leaf
• Austrian Silver Philharmonic
• Australian Silver Kookaburra
• Chinese Silver Panda

Platinum:

• American Platinum Eagle
• American Platinum Eagle
• Australian Platinum Koala
• Australian Platinum Emperor Penguin
• Canadian Platinum Maple Leaf

Palladium:

• Canadian Palladium Maple Leaf

Note: Other bars and rounds are permitted  and all bullion must meet with IRS issued requirements of fineness. The best precious metals dealer can help you choose the right precious metals for your needs.

What You May Not Invest in:

For Self-directed IRAs, just like conventional IRAs, you cannot invest in artwork, rugs or antiques, alcoholic beverages, gems and most metals, stamps, and most coins as these are considered collectibles by the Secretary of the Treasury. Any investment like the above would be subject to any relevant taxes while being treated as a distribution.

How to Vet Gold IRA and Gold Investment Companies

If you are trusting your hard earned investment or retirement funds with a bullion dealer, you want to make sure that firm is a trusted and reliable source. Gold  investment companies should provide a physical office address (no PO box), email contact and phone number with office hours.

Questions to Consider Before Opening a Gold IRA:

Fees for Buying and Selling Precious Metals:

As with any financial product purchase, you should know about any commissions, transaction fees or purchase premiums involved. These fees will vary from firm to firm and if are not stated on their website, you may have to ask their representative.

For the most part, lower premiums will be charged on larger bars compared to coins. Similarly, fees for selling your precious metals holdings would be lower compared to coins, etc.

Other Fees:

There can be other costs when buying precious metals from gold investment companies, including ongoing management, storage, delivery, insurance, administration fees and even currency exchange. These fees vary from product and dealer and are often figured as a percentage of your precious metals account holdings.

Consult with your tax adviser, but any gains from your Gold IRAs could be taxed with capital gains or income tax like your other investments.

Storage fees differ from Gold Investment companies as well and are based on the products you invest in. Vault or segregated storage will be more expensive and a preferred method by serious investors. Costs for pool allocated precious metals will be lower.

Some Internet Investment Gold companies are regulated but many are not and, in particular, are not regulated as investment services. This is often the case in new markets and means that investors need to take extra care in deciding which providers to use.

In many jurisdictions, customers of regulated investment services are protected by investor compensation schemes in case the investment firm fails to return the investor’s assets.10 Claims typically would arise if there is fraud or other administrative malpractice or when an investment firm is unable to fulfill its obligations as a result of operational errors.

However, even unregulated Internet Gold Investment companies may conform to voluntary standards, industry codes or sound practices. Gold providers that adhere to regulatory or voluntary
standards can provide additional safety in terms of both corporate governance and internal controls. Banks and payment service providers, for example, tend to implement ‘the four-eyes principal’ for activities that are considered sensitive. This means two people have to approve an action before it is taken, which can decrease the risk of operational errors or fraud.

Are the expenses other than that?

Ongoing fees are common with Internet Investment Gold products, comparable to management fees for investment funds. These fees, which are often charged every month, usually cover the costs of storage, insurance, and administration. They are usually computed as a percentage of the value of your gold holdings.

Storage costs vary depending on the product you choose. Pool-allocated gold products, in which bars or coins are assigned to a group of investors, typically have the lowest storage costs. Because they require more space and effort, segregated storage or safety deposit boxes in professional vaults are more expensive. Nonetheless, many investors favor this type of storage.

Other fees may apply to Internet Investment Gold products. Physical delivery is usually charged by providers, and currency exchange may also be charged.

Gains from Internet Investment Gold products are generally taxed in the same way that other investments are, so they may be subject to capital gains tax or income tax, for example.

Significantly, investment gold is exempt from VAT in many jurisdictions, with some exceptions. Before engaging in any transactions, you should check local taxation laws and consult with your tax advisor.

Gold is a one-of-a-kind investment asset, and Internet Investment Gold allows you to take advantage of many of its special features. However, Internet Investment Gold provides opportunities as well as risks, like any investment. As such, if any guaranteed or excessive returns or risks-free capital preservation are pledged, you should seek impartial information on the potential performance and be skeptical. You should also make sure that this investment type, amount and gold investment companies are appropriate for your specific goals and risk tolerance.

How to Buy Gold and Silver

Silver coins, junk silver coins etc. is an excellent, low budget way to own these precious metals. By taking delivery on your gold and silver, you have several advantages.

• There is never any question how much actual silver or gold you own.

• You have complete control of the metals and can sell any amount at any time you want.

• It is one of the least inexpensive ways to own these precious metals.

If you take possession of your gold and silver, you should keep the metals in a safety deposit box at a bank or invest in a good home safe, or both.

Storing of Precious Metals at Home – Dangerous!

If you would rather store your precious metals (with a company that offers that service), look into bonded and insured silver and gold vaulting options.

But be very careful! Make sure you have a rock-solid company to store your gold and silver. There are unscrupulous storage companies where people have lost a great deal of their holdings.

Before considering this option, please read the following article about the bankruptcy of MF Global and how they confiscated their customers’ precious metals.

Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global

Numismatics – How to buy gold and silver

A numismatic coin is a collector coin that has a value in significant excess of the base metal. When you purchase these metals, you must pay:

• The cost of the silver.

• The dealer’s premium.

• The cost of the numismatics premium. 

These costs can be very high. Think 30-50% or more. Some dealers can be unscrupulous and charge much more of a premium than the coins are worth.

When you decide to sell your numismatic coins, you are at the mercy of the current desirability of the coins. You might make a profit, but you might not.

Think of it this way. If the economy takes a dramatic downturn, people will need money to pay for basic food and rent. Many people will sell their numismatics (at whatever price they can get) to pay their bills.

Selling for a loss places a sizeable downward pressure on prices. The numismatic premium may drop dramatically and be near the price of the bullion gold or silver.

Consequently, you will get more bang for your buck purchasing gold and silver bullion rather than purchasing numismatics.

Unless you are an expert at numismatics, there are significant pitfalls to purchasing silver and gold this way. Not Recommended.

Gold and Silver ETFs

When you invest in Exchange Traded Funds (ETFs), you do not own the silver. Fund managers contract with a custodian to hold your silver in a vault. Custodians are usually large international banks serving many different customers.

The precious metals are usually not moved around during buying and selling. The title to the gold and silver bars is transferred from sellers to buyers by book entries on massive computers.

There is a belief among some metal experts that silver and gold ETFs may hold less than the amount of precious metals they are supposed to own. If we have severe economic problems, there may be a cause for significant concern. Although there are concerns for the long term, relatively short term ETFs are one way to consider making money in silver and gold.

Silver and gold stocks

Owning silver and gold stocks in mining companies is a common way people invest in silver and gold. You have moved up the supply chain significantly and are now in the stock market.

If you study stocks carefully and feel comfortable investing, this is another option. However, if you invest in wealth preservation for challenging economic times, this is probably not a good strategy.

More ways on How to Buy Gold and Silver

The more exotic ways of buying silver and gold are:

• Leverage accounts, futures and options – Leverage accounts, futures and options are financially risky for most investors and even for the most experienced ones. Leveraging is not recommended unless you are very knowledgeable in this area.

• Pools and Certificates – Purchasing pools and certificates make you a creditor of the bullion bank storing your precious metals. Your gold and silver are held in unallocated storage, which means that your metals are commingled with everyone else’s metals. When you buy these pools and certificates, the bank becomes the legal owner of the precious metals.

If the bank gets into financial trouble, it could sell your precious metals to stop a run on the bank. Because there isn’t deposit insurance on precious metals, they aren’t covered in case of a band loss. Deposit insurance is only suitable for currency. Not Recommended – Very risky!

Where to Buy Gold and Silver There are two primary places where to buy gold and silver. You can purchase from coin dealers or online. This page addresses both. Silver and Gold Coin Dealers Coin dealers are excellent places for purchasing and selling gold and silver. There are usually several coin shops in every major city. Before determining which coin shop (or coin shops) to purchase or sell gold and silver, consider the following.

The coin shop should be in business for at least 7-10 years. Longer is better—especially in these volatile economic times. •

Do comparison shopping when selling gold and silver. Go to several coin shops and ask what they sell gold and silver (and buyback) for. In other words, ask how much you will pay over the spot price. In that way, you can determine where you will get more bang for your buck.

Stay away from numismatic coins. A numismatic coin is a collector coin that has a value in significant excess of the base metal. You will pay a high premium that you may never get back. • Find a coin shop that deals in decent quantities of gold and silver. It’s good to have a selection to choose from.

Know your State Sales Tax for Gold and Silver Different states have different sales taxes. Sales tax are an extra cost on precious metals.

Buying small silver quantities online may not make much sense (unless you want to establish a relationship with a company that offers unique information reserved for their customers). Buying online will require that you pay for shipping, handling and insurance. For relatively small quantities, this can be a significant part of the purchase price. Also, online prices may be higher for gold or silver than from local coin shops.

For large quantities, it might make sense to purchase online. The more significant the amount of your purchase, the smaller the shipping, handling and insurance charges (as a percentage of your order) will be. Also, online companies usually have much more inventory than local coin shops.

As with coin shops, make sure any online company you work with has been in business for several years and has a stellar reputation. Having multiple places where you purchase gold and silver makes sense. It is always good to keep your options open. Someday when you want to sell your precious metals, it is good to have established relationships where you will get fair prices.

What is the Best Gold IRA?

Goldco is the #1 rated firm out of all the Gold investment companies we reviewed. Based in Woodland Hills California, the firm has been helping clients add gold and silver to their IRAs since 2006. Goldco’s expert advisers will work with you to develop a plan that will help you reach your retirement goals via precious metals. With hundreds of satisfied client ratings available online, Goldco Precious Metals is a safe choice to help you with your Gold IRA.