Gold IRA Company Reviews

Hedge against the declining dollar and money printing policies

Again, history has shown that any decline in the value of the dollar correlates with a rise in the price of gold. While all other assets tend to follow the health of the dollar, gold gives your portfolio additional protection in case the dollar goes south.

Safe haven in times of geopolitical, economical, and financial turmoil

Gold is often called the “crisis commodity” because people worldwide flee to its relative safety when world tensions rise. While governments and central banks respond to crises by printing more money, gold cannot be produced and the limited supplies make it a hot commodity during those times.

A strong case in point is the global financial crisis, which saw the price of gold rise +27.4% between October 9, 2007 and March 6, 2009. While during the same time the S&P 500 fell by -54%. Similarly, the Dot Com Crash saw gold prices rise +18% (October 2, 2000 to October 2, 2002) and the Iraq-Kuwait war coincided with a +11.1% gain in gold prices between August 1 and August 14, 1990.

Hedge against inflation AND deflation

History has shown that gold not only responds positively to inflation but holds up against deflation as well. During inflationary periods, the price of gold tends to exhibit upward price movement, although there’s no direct correlation between the rate of currency inflation and gold prices. Essentially, when investors notice that the value of their currency is experiencing volatility, they look to sound money, such as physical gold. Gold is a tested way to store their wealth as a risk-mitigating measure.

Supply and demand fundamentals

Gold is not just a beautiful shiny metal, it has real life commercial uses in various industries such as electronics, architecture, high-technology, medicine and more. In particular, gold is used widely in the production of consumer electronics, an ever-growing industry in our modern times. According to Geology.com 37% of gold, excluding bullion, is used for electronics in America.

Source: Geology.com

In fact, about $21 billion worth of gold is used every year in commercial electronics like smartphones and tablets. Since there are a limited amount of gold mines, and fewer mines are being discovered each year, this bodes well for those bullish on the price of gold in the long-run.

Store of Value

As mentioned initially, you don’t necessarily get rich by owning gold. That is not the point of investing in physical metals. However, unlike stocks and bonds, the value of gold can never be zero as there is inherent material value in the substance itself for manufacturing and industrial usage. At no point in its millennia-long history has the price of gold gone to zero.

Portfolio Diversification and Protection

As pointed out previously, at various points in its history gold has had a negative correlation to stocks, bonds, and the dollar. Is your portfolio stock-heavy? Most successful investors will tell you that when it comes to investing: you don’t want to put all your eggs in the same basket. Investing in gold and other precious metals such as silver, palladium, platinum, and rhodium offers deep diversification that can protect your wealth during market crashes.

3 Questions You Need to Answer Before Calling a Gold IRA Company

1 – What Percentage of your Portfolio Do You Want to Allocate to Precious Metals?

If you let the salesman make that decision for you, you’ll end up investing 100% of savings, and your first-born, into precious metals! Do your due diligence and speak to your financial advisor to determine what allocation you want to go with based on your objectives and concerns. Gold and silver are generally used as a hedge, or an insurance policy, in case all other dollar-bound investments like stocks and real estate go south.

2 – Bullion Coins OR Premium/Rare Coins?

Higher Quality & Detail?* Bullion coins are struck once. Proof coins are struck twice, giving them more luster, detail and shine. Visually and texturally, proof coins look better as they are meant to attract investors and collectors alike.

The IRS allows only bullion and a limited amount of proof coins to be included within a Gold IRA. The question you need to ask yourself is “do you care about the QUALITY and RARITY of the products you’re buying?” If the answer is no, then go for the common (non-proof) bullion coins like Amerian Eagles or Canadian Maple Leafs. Gold Bars are also a good option.

These products command lower premiums over spot, but aren’t rare or scarce since they are the same products being sold everywhere by all dealers. When it’s time to sell, you can sell them anywhere to any dealer but can expect to get a price close to spot price.

No premium can be added to these since they aren’t rare and the exact same coins are being sold every year. If the answer is yes, and you don’t mind paying higher premiums for such coins because you hope you can sell them for higher premiums in the future due to their scarcity, then go for proof/rare coins, but be careful as only certain proof coins are allowed within an IRA (e.g. American Eagle Proofs). Most proof coins aren’t eligible.

Selling proof coins is a bit more difficult than bullion too, unless you want to settle for a price close to spot. It’s much easier to sell them to the same company you bought them from if you want to get the best prices, so make sure their buyback program makes sense to you.

3 – Am I Opening a Gold IRA for the Right Reasons?

Once again, if you rely on the salesman of the company you’re calling, they’ll convince you that everyone and their grandmother needs to open a Gold IRA. After all, his/her commission depends on it! In reality, metals aren’t for everyone. You need to ask yourself why you want to own gold? Is it for the right reasons (e.g. portfolio diversification, wealth preservation over the long term) or is it for the wrong ones (e.g. getting rich overnight, conspiracy theories, etc). Don’t let this be an emotional decision. It should be a rational one.