Gold IRA Investing

| January 28, 2013 | 0 Comments
Gold IRA Investment

Many people wonder how they could secure their incomes in old age. Many retirement schemes are currently in use with specific mechanisms such as a 401K being most popular. Individual IRAs are set up by an individual where they contribute cash into a scheme and will access these monies later in life (typically after 59 years of age). Most IRAs are tax deductible with funds for the gold ira investing being deducted before taxable income is calculated. Roth IRAs on the other hand utilize income after tax. The difference between the two is that at withdrawal, funds from the simple IRA will be viewed as income and will be taxed at this point. On the other hand, withdrawals from a Roth IRA are tax exempt as they are from investments on which tax has already been paid.

An individual with a gold ira investing account is free to invest funds in the IRA as they wish. There are few exceptions to what one can invest in with their IRA. Investments made by a self-directed IRA are usually through a custodian who manages the IRA (usually this would be a big company e.g. an insurance company).

Gold has been used as the de-facto currency by most societies for much of recorded history. It was only in the mid-20th century that the United States moved away from the gold standard with many other countries following suit. Many investors however continue to use gold as a hedge against economic shocks. Gold is especially valued in the east, especially the Middle East, India and China. As these regions continue to prosper, demand for the precious yellow metal will keep going up. This makes gold a particularly attractive investment opportunity.

Self-directed gold individual retirement investments are a smart investment move in whatever economic condition anywhere around the planet. This is due to the fact that gold production worldwide is quite small as compared to the amount of gold already in circulation. As such, one does not expect there to be large changes in the price of gold unless governments go on a large selling spree. A 1999 agreement between the governments of wealthy nations limits them sell no more than 500 tons of gold in any given year. During periods of severe economic uncertainty such as we are witnessing now, people retreat to Gold as a safe haven for their money. Evidence of this phenomenon can be seen at the end of the 20th century. When the dotcom bubble burst, the price of gold was at an all-time low (as people had rushed into investing in the stock markets’ tech sector). As people started searching for better investment opportunities, gold came to the rescue. In five years, the price of gold reached a thirty year high. Subsequent to 2005 the price of gold has been on a sustained upward trend that accelerated with the latest financial crises in Europe and the US.

Directing ones’ IRA to purchase gold as part of an investment mix is a good investment strategy. Had one set up a self-directed gold IRA in 2005 to hedge against any risk to their real estate investments, their IRA investments in Gold would have appreciated by a factor of 2.74 acting as a perfect hedge against their real estate investments which collapsed. With gold, one can have a simple investment strategy, invest in a sector of the economy that is booming and hedge with gold. Should the sector falter, the economic shock will usually cause the general public to rush back into gold, as such one is fully hedged. And since ones’ IRA can trade and own its own assets, one can move their assets around without much tax exposure (please note however that the IRS has restrictions to how one deals with this asset, for example one cannot deal assets back to themselves).

Investing in a gold IRA is also becoming increasingly attractive due to the poor performance of other paper based investment vehicles that are pegged to the dollar. Such investments include stocks and bonds. As some countries moot the idea of moving away from the dollar standard, and into a reserve currency, it is probably safer to bet on man’s appetite for gold. As we stated earlier the eastern worlds massive growth is projected to continue, as such, we expect it’s appetite for gold (as well as other forms of precious metals and ivory), will increase. It therefore goes without saying that any investment in physical gold or silver in a self-directed or Roth IRA will continue to produce handsome results.

Category: Investment

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