Globally and historically recognized as the most valuable precious metal, gold was our first iteration of money. While no longer used as such in favor of an abstract number on a piece of plastic, it nonetheless retains value for investors. Though volatile, what investment isn’t? Even with fluctuations, gold is the least changing of all the precious metals, making it the best choice for those interested in expanding their portfolio in new and interesting directions.
Hands down, a great portfolio is one that is as diversified as possible. Made up of stocks, bonds and other, more comfortable, investments, investors aim to own a certain percentage of each option based on how aggressive they want to be in terms of growth potential. As it stands, gold is a perfect addition to any portfolio. Though it runs the risk of some losses, it also brings with it the unprecedented possibility of incredible gains. For a strong addition, aim to make about 5% of your total portfolio based on gold. This will provide you yet another outlet of diversification while similarly providing you with a cushion should the market drop for a bit. Never forget that the more investments you have, the higher chance you’ll obtain independent wealth long before you say farewell to your job.
2. Limited Supply
The truth is, we’ve mined virtually all of the gold we can. In 2010, there were six deposit discoveries and only one in 2011. This means that miners are forced to dig lower, leading them to ore that is a far poorer grade. It is assumed that gold will be completely exhausted within the next 50 years. Once that happens, it’s safe to say that the depletion will make gold, once again, one of the most valuable commodities on the planet. Even with the dwindling resources, the demand for this precious metal keeps rising in regards to Asian jewelry markets and, interestingly enough, electronics. Once there is no more to be had, sellers will have the upper hand in regards to setting the price of their precious metal.
The number one rule of investing is to always buy an asset priced well below its replacement value. Gold is priced both at around exactly how much it costs to produce as well as below the margin of production costs, making it total out to be just how much it takes to produce an additional gold bullion to the total reserve. Recently, the boom in gold pricing has steadily risen, resulting in a rise in production cost. Because we are slowly running out of the precious metal, companies do what they can to make more but find themselves falling short. Unless a new technology hits the scene that cheapens the process of refinement or a surplus of ore is located, gold will remain and increase in value and rarity, resulting in a solid investment.
Above all other precious metals, gold has the history to back up its worth. Each and every time there is revolution, civil unrest or mass displacement, it’s gold that people turn to as their currency. Accepted in every country and not tied to a specific economy’s stability, this metal is what allows people to survive during the harder times. Though it’s not sought after during times of rest, any fluctuation in the global market leads to a sharp increase in its value. As mentioned earlier, this, combined with quickly dwindling caches, makes for a strong investment when you’re seeking out the possibility of high rewards. No matter what happens, so long as humans remain humans, gold will always retain a higher value than even currency.
5. Low Downside Risk
Like anything in your portfolio, there will be ups and downs over shorter periods of time. Across the long stretch, however, the best investments always continue to increase. While gold will change its price over the course of even a day’s time, it is expected to see a steady increase over the span of years. What you buy now may not be able to sustain much, but in a few years’ time, even the lowest drops will still be more than what you paid for it, resulting in a net profit. Though no one can predict just how large this profit will be, if you want the chance to reap the reward, now is the time to strike.
The best way to invest in gold for individuals with retirement accounts, aka 401K etc, is a Gold IRA…
A Gold IRA Account is a self directed Individual Retirement Account that holds physical precious metals instead of paper assets. The IRS approved gold and silver bullion are stored on behalf of the account owner in a secure location. A Gold IRA account opened per IRS rules and regulations lets you transfer or rollover funds from an existing SEP, TSP, 403b, 401k etc. into your new Gold IRA account.
Can I Buy Gold With My 401k?
There a couple of ways to buy gold with your 401k. 1) You transfer funds from your current IRA custodian to the gold IRA custodian. 2) If you’ve already received a distribution from your 401k, you can “rollover” your funds to the new custodian. Either option requires the help of a Gold IRA Company.
Is it the Right Time to Buy 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 $1500 an ounce. Billionaire Paul Tudor Jones has said that Gold will be the best investment for the next few years.
Read a review of the best Gold IRA company we’ve found.