Asset Strategy, Precious Metal IRAs, Retirement & Pensions

5 Reasons to Consider Gold as an Investment When You’re 55+

Gold Alliance disclaimer

So far, 2020 has been an incredible year for gold investing. We have helped our clients diversify their retirement portfolios via Gold IRAs, and our clients have seen their portfolios grow thanks to the rally in gold and silver. In August, the price of gold set a new record, and since January the metal has gained around 23%.

The price of gold has surged since 2019 making gold investing a must for protecting your IRA

This year has shown just how important it is to diversify a portion of your portfolio with precious metals. The pandemic threw our economy into the worst recession since the 1920s, and no end is in sight. On top of that, government debt is exploding, the US dollar is weakening, and increasing inflation is on the horizon. All of these developments speak against the stock and bond markets but are in favor of gold investing.

The closer you get to your retirement, the more important it is to reduce the risk profile of your portfolio because you will have fewer years to recover potential losses. In particular, the last decade or so before you retire is crucial to your investments. Gold as an investment asset can provide the protection your portfolio needs, but that’s just one of its many benefits. Below are 5 reasons you should consider gold investing if you’re 55 or older.

1. Gold as an investment protects against recessions and financial crises

For investors who are 55 years or older, the most important benefit of gold is its proven track record as a true safe-haven asset. Gold has survived and even thrived during times of war, financial crises, and hyperinflation over the past 5,000 years. The unique qualities of gold mean that gold investing will safeguard your wealth when other assets, such as stock and bonds, crash. The most recent example is the current pandemic, where the precious metal has soared to new heights while the stock market is still trying to recover its losses from its March crash.

The gold price has soared compared to the stock market making gold as an investment a great choice.

No matter your age, you should allocate part of your portfolio to gold. But as you approach retirement age, it’s even more important that you preserve the wealth you have built over the years so that you can feel assured you and your family have enough savings to cover rising health care costs and other expenses during your golden years. As a soon-to-be-retiree, it’s still important to plan for longevity—you have decades ahead of you, and during most of those years you will be relying on your retirement savings, such as a Gold IRA. This is making gold as an investment vehicle a must for any portfolio.

2. The price of gold will keep rising

Even with the price of gold soaring, there is still room for the precious metal to grow, and investors who take gold investing seriously will benefit from future increases in the gold price. In fact, according to Citibank and Bank of America, gold could climb as high as $3,000/oz by the end of 2021, so you are just on time to grow your wealth by investing in gold. 

Here are some of the reasons why gold will continue to rise:

  1. We’re still in a recession—and it might get worse. As the second wave of COVID-19 is spreading across the US, we will likely see more lockdowns and more business closures. This uncertainty will boost the demand for safe-haven assets such as gold and push gold prices higher.
  2. Unemployment claims are still sky-high, and due to rising COVID cases, more Americans are bound to be pushed into unemployment. Our government will need to support the economy by printing more money, which will cause the price of gold to rise.
  3. The US–China trade war continues. Tensions between the two largest economies in the world are significant, and a trade deal is further away than ever. We saw in 2019 how concerns about not reaching a trade deal shook the stock market, and if tensions worsen, investors will seek out gold in order to mitigate risk.

3. An investment in a Gold IRA protects your wealth against inflation

When you save up for your retirement, you want to make sure that you protect not only your savings but also your purchasing power. The Federal Reserve has kept interest rates record-low since the Great Recession and printed trillions of dollars. The graph below shows the money supply over the past 25 years. During each recession, the Fed has printed more money, and during the current recession money printing has taken on historic proportions.

The Fed's money printing has increased the money supply, which leads to inflation. Gold investing protects against inflation.

The Fed’s monetary policies of low-interest rates and money printing devalue the dollar and create inflation, which erodes the purchasing power of your hard-earned money. With a Gold IRA, however, your wealth is protected against inflation because the Fed cannot print physical gold.

Barron's financial experts news about gold as an investment.
According to Bank of America, we will see gold prices reach 3000 dollars in 2021, boosting your Gold IRA investments.

Investing in a Gold IRA means you can rest assured that your savings aren’t being eroded by inflation—that’s one less thing to worry about when planning for your and your family’s future.

4. A Gold IRA offers true diversification

All investments carry risks, and as you get closer to your retirement, you should lower your risk exposure. The best way to do so is by ensuring that your portfolio is truly diversified, which means it should contain assets that are uncorrelated or inversely correlated with each other so that one asset goes up when another asset goes down, thereby protecting or even growing your wealth. Stocks and other mainstream assets that make up the typical IRA or 401(k) are inversely correlated with gold: when the stock market goes down, gold typically goes up. Gold as an investment protects your savings from losses they would incur if you had not hedged your retirement savings with gold.

The illustration below shows the correlation between gold with other assets. Notice how precious metals tend to react positively when major stock indices, such as the S&P 500 and the Dow Jones Industrial Average, drop. You can also see how gold is highly uncorrelated with the US dollar; gold investing provides a clear advantage over cash holdings in times like today where the dollar is weakening.

Gold is uncorrelated with mainstream assets such as stocks and bonds, which means gold investing protects your IRA.

5. Gold as an investment is out of reach of the banking system and Wall Street

When you own physical gold, you will enjoy the security of having an asset you can physically hold. New technology has become a vital part of bank operations and the financial markets, which means banks and other financial institutions are vulnerable to cyber-attacks and other digital fraud. As a consequence, your assets are at a higher risk of being compromised or hacked. In addition, your checking and savings accounts can be frozen by your bank, and according to the Dodd-Frank Act they can actually be confiscated by your bank and replaced with bank shares. That’s the law.

By having a portion of your retirement savings in a Gold IRA, you are investing in real, tangible assets that are completely inaccessible to the banking system and Wall Street while in your full control. And when you need money during your retirement—perhaps for a dream vacation, a new car, or perhaps to pay for your grandchildren’s college tuition, you can easily convert your physical gold to cash because gold is a highly liquid asset.

How to invest in gold

The benefits of owning physical gold are clear, and you will be happy to know that gold investing is easy. Opening a Gold IRA with Gold Alliance is straightforward and fast, and we will be there to help you every step of the way. Just reach out to one of our Gold IRA experts for a free, no-obligation consultation to show you how the process works and what specific benefits may apply in your situation. Do what your ancestors have done all their life: Invest in gold.