6 Advantages of Rolling Over a 401k or IRA to Physical Gold Bullion

| August 14, 2014 | 0 Comments

In troubled economic times, many investors turn to gold as a hard asset that can be a good hedge against inflation and other risks. If you want to protect your retirement savings, you may want to look into using gold in your retirement portfolio as well. Rolling your 401K over into an IRA that allows you to own gold bullion is an excellent way to add the benefits of gold to your retirement plan. Here are some of the key advantages.

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1. Limited Supply Ensures High Value

Unlike currency or stock, gold cannot be printed or issued. It has to be mined out of the ground, and there is a finite supply of gold in the world. This supply increases very slowly as additional gold is mined. On the other hand, demand for gold can increase quite rapidly, especially as investors buy gold to protect against inflation, currency risk and economic uncertainty. Rising demand coupled with almost fixed supply leads to rising prices for gold. Gold also has an inherent value, unlike paper currency or stock in a company which could go bankrupt. 

2.  Gold Offers Protection against Inflation

Many countries like the United States continue to print more money, increasing the supply of their currency in the world. This can lead to inflation, with the price of normal goods and services going up in relation to that paper currency. On the other hand, gold is a hard asset that keeps its value. Your investments in gold could still buy as much in terms of goods and services as they did before inflation. In fact, as inflation rises, more investors typically turn to gold, which can push the price of gold even higher.

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3.  Gold can Protect You against Currency Drops

When the value of the US dollar drops against other currencies, your investments which are made in US dollars can be losing ground. If you want to protect your portfolio from that currency risk, buying gold is a good approach. The global markets for gold price gold in terms of US dollars. That means that when the dollar drops relative to another currency like the Yen or the Euro, gold becomes more attractively priced in that currency. More foreign investors move to gold, and the price of gold in dollars goes up.

 

4.  Gold Maintains Value During Times of Crisis

Whenever economic or political upheaval strikes, it can lead to wild fluctuations in the stock markets, as well as significant shifts in currency values. In some cases, a currency can experience rapid inflation and devaluation. With the global economy today, a crisis in one geographic area can easily cause ripple effects in other markets, too. In such turbulent times, gold can be an excellent hedge and a safe haven. Even if a country goes to war or its currency’s value drops precipitously, gold will maintain its value.

 

5.  Gold is a Good Diversification

Most investors know that they should diversify their portfolio, however many of them still rely almost entirely on investments in the stock market. However, when there is a high inflation, currency devaluations, or a large economic downturn, their entire portfolio could be hit at once. Adding gold to your retirement portfolio through a gold 401k is a way to further diversify your holdings and protect yourself from such an occurrence.

 

6.  Gold Has Good Long Term Prospects

Over the short term, the price of gold fluctuates up and down. However, for your retirement portfolio, you need to take a long term view, and the long term trend for gold is positive. The supply of gold is fixed, while the demand increases as investors seek something stable in times of uncertainty. Gold also has an intrinsic value, which is independent from any company’s business success, or any country’s monetary policy.

When planning for retirement, it’s important to diversify and protect your savings against inflation and other risks. Investing in gold is an approach to consider.

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