Recent events have been bringing a lot of people’s attention to gold. With the world so unstable and the stock market fluctuating wildly, gold seems like a more stable, safer investment. But a lot of people aren’t very clear about how to invest in gold, and although there are plenty of companies offering gold investments, it isn’t always obvious how they work and what they do. Hopefully, this article can clear up a little confusion and help you choose the best investment for your hard-earned money.
How the Companies Work
A traditional IRA is composed only of stocks. It can have distant links to gold, investing in gold mining or investing companies, but the IRA itself cannot include direct investments in gold. Even in most self-directed IRAs, gold is not allowed to be part of it. Gold IRAs are a specific subset that invests specifically and only in gold, but they have a lot of extra rules. This website explains just a few.
Special custodian companies handle some of the paperwork, and also handle the storage. In a gold IRA, the investor cannot store the gold themselves, or else it is considered a withdrawal. Companies specializing in gold storage are more experienced and better able to protect your investment—from thieves, damage, or simple loss.
Almost any gold above 99.5% purity is acceptable for a gold IRA. In addition to standard bars, many coins are also acceptable. However, some collectible and less pure coins are not allowed.
There are many extra fees for a gold IRA company that an ordinary IRA does not require. Maintenance fees, insurance fees, and storage fees are just a few. There are also usually fees for account setup and closure. Most of these fees are only a few hundred dollars, either each year or just once—a small price to pay for the extra stability and peace of mind that come with investments into gold.
You can go to this site , which shows some of the best companies you can choose to invest in. Make sure to do your own research and be sure you’re choosing a company and a custodian that’s right for you.
The best time to invest in gold is in the last ten years of your working life and the first ten years of your retirement. This is the time with the most risk, where a stock market upheaval could wipe out your savings. Gold is like an insurance policy against losing everything during this period.
What’s Wrong With Traditional Stocks?
So why not just use a traditional IRA with ordinary stock investing? There’s a lot of reasons. The world is always somewhat unstable, but it’s been particularly shaken the last few years.
The COVID pandemic only started the problems. A lot of manufacturing shut down, and a lot of people lost their jobs. People had less money to spend, and there were fewer products available for them to buy. The economy tanked, and the stock market went with it.
Young people, many feeling a lack of purpose and lack of career future, began to invest during the pandemic. This fresh investment and eagerness pushed money into the market, artificially inflating it and making it look like the stock market was recovering from the pandemic. Repeated crashes and spikes have occurred since then, as the market struggles to find the balance between optimism and truth.
Supply chains still haven’t recovered, and it seems like perhaps they never will. The system may have just been more fragile than anyone wanted to admit, and breakdowns are now common. May and June of 2022, for example, were a very bad time to be invested in companies producing baby formula, considering the rolling shortages all around the world. It seems more and more like supply chain shocks may just not stop, at least not for years.
The war in Ukraine only made things worse. With embargoes on Russia, Russian oil being rejected, and worldwide instability and lost confidence, the market is still stuttering from the shock of the invasion. Gas prices were rising before the invasion, but after it, they skyrocketed, and gas is still going up. And inflation isn’t helping bring stability to the market, either.
The long and short of it is that the stock market hasn’t been consistent for years, and it’s not likely to be for more years. Over time, the general trend should still be upward, but when you’re looking at your retirement, you may not be playing the long game anymore.
So Why Gold?
Gold is more stable than the stock market, because its value is inherent. Stocks are only worth anything if the company is worth anything. Companies can create new stocks, just like the government can print more money. Nobody can manufacture more gold than is in the earth, and it can’t be dug up and refined at greater speed than it already is.
That means that gold is nearly immune to inflation. The cost of gold increases at a rate almost exactly parallel to the rate of inflation. Gold won’t grow very much, but you won’t lose anything, which a normal savings account usually will.
Gold, silver, platinum, and other precious metals aren’t so much of an investment as they are a preservation. They keep your money safe from inflation. Things cost more and more every day, it seems—but so does gold. You can see this illustrated by an example.
In the Old West, a small piece of gold might only have been worth ten dollars—but then, you could get a haircut for a quarter. These days, even a small gold nugget is worth a few hundred dollars, and a haircut might be thirty. The ratio of them is still about the same. The haircut is worth the same miniscule sliver of gold it was before. The same rule is true of food, land, housing, medical care, or anything else a person needs.
Investments are risky and uncertain, these days more than ever, but gold is stable. Put your money somewhere you can rely on it.
