Monthly Archives: February 2013

Why are people buying gold?

A lot of people have been buying gold over the past few years. For some investors, gold is a vital
part of their portfolio. While other investors buy gold in smaller amounts. Either way, it is beneficial for an investor to consider gold. Here are three things every potential gold investor should consider.

Many of the largest economies are facing problems due to unsustainable debt loads. When currencies suffer, investors suffer. One way to hedge this is to invest in gold. For example, an American living in the United States would have done well with gold as the dollar has fallen against major currencies.

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One thing about gold is, nobody is making any more gold. The housing and stock market can go up and down, but gold should continue to rise in value. Housing is cyclical and can vary from region to region. In reality, with countries such as China and India growing, gold is going to be in demand for years to come. Anyone who is thinking about gold only has to look at the last five years of equities and housing to know why gold is a safer bet.

One of the biggest benefits of gold is the simplicity. Anyone investing in other areas may have a lot more research ahead of them. With gold, an investor can make their purchase and go on with their lives. On the other hand, investments such as real estate or stocks are difficult. With real estate, an investor must follow local issues and constantly deal with problems. With stocks, an investor must follow the markets and make trades according to trends and economic policies. Simply put, a gold investor can make their purchase and not worry about the future.

Everyone should invest in gold. While it should not be the only investment one makes, it should be part of an overall portfolio. When investing in gold, an investor is protected against deflation and a poor economy. When looking at the last decade, gold has outperformed other major investment groups such as real estate and equities. This trend should continue as nations struggle to pay off their debts, and the economy remains sluggish.

The most popular way to purchase gold in 2013 has been through a retirement account such as a 401k or IRA. If you are an American worker, you should receive 401k or IRA contributions through your employer. Ask your HR deparment if gold investments are allowed within your retirement plan. If they are not, you can always open a self-directed Gold IRA and make contributions through it. A self directed IRA makes you the own boss of your retirement account so you can invest in precious metals freely.

Buying Gold Coins Through Your IRA, is it possible?

gold-etfIf you hold an IRA account, whether it’s a SEP, Traditional, Spousal or Roth IRA, you can invest in gold bullion coins and bars. Is this news to you? Many Americans ignore this possibility when it comes to gold investing. The benefit of investing through your IRA is the tax-incentive component. In fact, your investment stays tax-free for as long as you do not hold the gold yourself. In fact, you will need to find an accredited custodian to hold your gold

How Do I Get Started?

The first thing you need to do is to determine whether your IRA allows you to hold precious metals such as gold, silver, palladium or platinum. Talk to your IRA custodian, or your employer if you have a 401k plan through them.

Don’t worry, if your IRA does not allow gold, you can always open a self-directed IRA for your gold investing. The IRS allows you to open a 2nd IRA account for precious metals. Once you open your self-directed IRA, you will have to find a custodian that specializes in gold IRA rollovers and transfers. There are many companies in America that can do this.

What Type of Gold Can I Buy in my IRA

According to the IRS rules, only gold that has a purity of .999 or higher is allowed in IRAs. This includes the American Gold Eagle, Canadian Gold Maple Leaf, Austrian Philharmonic, American Gold Buffalo, Credit Suisse Gold Bars, PAMP gold bars and several other silver, platinum and palladium bullion coins and bars.

See a more comprehensive article on IRA and gold investing here.

How Much Should I Invest?

This is something that you need to discuss with your financial analyst. APMEX recommends that 10-15% of one’s portfolio should be in gold. Other companies recommend up to 25%. Certain millionnaires, such as John Paulson, have invested over 40% of their assets in gold. If you are a beginner investor, it is good to start with a low bracket and see how comfortable you feel about your gains over time.