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The average American’s IRA includes stocks, bonds, and mutual funds and is administered by large financial institutions. These traditional vehicles for wealth protection in an IRA do not provide any assurance. Case and point–the importance of diversifying in entirely different asset classes was amplified in both the 2000 and 2008 financial crises. In 2008, the stock market dropped nearly 40%, real estate values plummeted, unemployment surpassed 10%, and the dollar weakened. It became evident that, although stocks, bonds, and real estate are different asset classes, all three are highly correlated in a crisis. This perfect storm evaporated retirement savings and nearly wiped out the safety net of many hard-working Americans.

Mainstream media, employers, and large financial services companies actively promote investment in the stock market and real estate as a means of accumulating wealth. However, these institutions neglect to emphasize the value of investing in precious metals for wealth preservation. Since 2000, investing in Gold IRAs has demonstrated a strong track record, primarily due to Gold’s ability to maintain stability during volatile market conditions.

Everyone has some insurance to protect what matters most. Similar to home, auto, and life insurance, a Gold IRA is your retirement savings insurance. True portfolio diversification includes precious metals to immunize your savings from steep stock market crashes, currency devaluation, inflation, and deflation. That is why an IRA holding physical precious metals is an important option for ensuring full diversification.

Interwoven into cultures for thousands of years, Gold is respected throughout the world for its value and rich history. Now and throughout the centuries, people have continued to hold Gold for various reasons. Below are six reasons to own Gold in an IRA today.

1. A Store of Wealth:

Unlike paper currency, coins, or other assets, Gold has maintained its value throughout the ages. People see Gold as a way to pass on and preserve their wealth from one generation to the next.

2. Balance of Risk and Return:

Gold is an asset that mainly provides security and insurance. Investing in Gold doesn’t keep you up at night. It has very minimal risk and works as insurance on any other investments made that are considered risky. Therefore, properly diversified portfolios combine Gold with stocks and additional investments to provide insurance and reduce overall volatility and risk.

3. The Weakness of the U.S. Dollar:

The U.S. dollar is one of the world’s most important reserve currencies, and there are multiple factors responsible for its decline. Among these are the country’s massive national debt, budget and trade deficits, and a significant increase in the money supply due to the Federal Reserve’s monetary policies.

4. Inflation:

Gold has historically been an excellent hedge against inflation because its price tends to rise when the cost of living increases. Over the past 50 years, investors have seen Gold prices soar and the stock market plunge during years of high inflation.

5. Geopolitical Uncertainty:

In addition to times of financial uncertainty, Gold also retains its value in times of geopolitical uncertainty. It is called the “crisis commodity” because it often outperforms other investments when world tensions rise and confidence in governments is low, making people flee to its relative safety. In fact, investment analysts suggest that investors should consider exposure to safe-haven assets like Gold, based on the potential risk of a policy error by the world’s central banks.

6. Gold is a Private Form of Wealth:

In an increasingly digitalized world, where data breaches and cyber attacks are constant, privacy remains paramount. As a private form of wealth, that is both tangible and portable; physical Gold can be discreetly accumulated, easily liquidated, and traded worldwide.

In addition to physical ownership, precious metals can be acquired via paper assets known as Gold ETFs. 

ETFs (Exchange Traded Funds) are paper stocks that are backed by an underlying asset, in this case Gold, with the most-traded Gold ETF being the ticker symbol “GLD.” While a Gold ETF may be backed by Gold, it’s not the same thing as owning physical Gold. Because investing in ETFs is like buying stock in Gold, the value of these assets fluctuates with the market value of Gold, but you can never exchange the ETF for actual Gold (or any other precious metal).

ETFs are ideal for frequent traders as they offer the convenience of investing in various assets without the need for physical ownership or associated storage costs. ETFs do, however, come with recurring, annual fees that deduct a percentage of the investment’s value to cover management and administrative expenses. The leading ETF, SPDR Gold Shares’ (GLD), charges an annual fee of 0.40% and a transaction fee for each share traded.

In addition to a lack of physical ownership, the second primary limitation of a Gold ETF lies in its impracticality as a long-term investment option due to the commonly associated practice of intraday trading, where buying and selling occur within the same day to profit from short-term price fluctuations. Thus, Gold ETFs restrict the potential benefits of Gold as a long-term store of value and hedge against economic uncertainties.

For investors seeking enhanced control and a clear understanding of common law property rights, the choice is clear: owning physical precious metals stored under their name in a vault or secured depository, rather than navigating the intricacies of a complex network of securities with limited redemption rights. This fundamental distinction sets apart owning precious metals from ETFs.  

It is important to note that there have been numerous instances where sponsors of Gold ETFs abruptly suspended redemptions or imposed restrictions on shareholders, preventing them from accessing or purchasing more of the underlying security. The actions of the iShares Gold Trust (IAU) in March 2016 illustrate this phenomenon.

The following Chart highlights the difference between physical Gold and Gold ETFs.

 

	Gold ETFs	Physical Gold
Type of Asset	Paper asset with an underlying investment in precious metals	The actual physical metal
Physical Possession	No redemption options for average investors; major holders above $10 million can choose Gold or cash redemption	Yes
Portable	No	Yes
Risk associated with stock market	Vulnerable to financial systems while lacking physical security	Considered a safe haven asset, especially during market crashes
Liquidity	Only highly liquid under normal market conditions; becomes illiquid during market crashes	Very liquid in both normal and abnormal market conditions
Fees	A) Commission extracted from every buy and sell trade B) Annual Fee .40% for on-going management	One-time dealer premium at purchase No Annual Fee
Privacy & Reporting Requirements	Must report Regulated by the SEC and FINRA Personal information required at account opening	Potentially no reporting requirements when purchased Limited or no reporting requirements when sold Very Private and unobtrusive

 

How To Best Acquire Gold And Silver

Owning physical Gold and Silver is a superior long-term investment option over investing in ETFs. Unlike paper assets, physical precious metals cannot be printed by central banks. They play a pivotal role in genuine diversification and serve as a safeguard for retirement savings against vulnerabilities in financial systems.

Beginner Gold and Silver investors are encouraged to start with a combination of bars, bullion, and investment-grade coins minted by recognized national mints. Allegiance Gold works directly with the most renowned mints such as the U.S. Mint and Royal Canadian Mint.

When it comes to investing, savvy money managers advise that you spread your money around, that is, “diversify” your investments. Diversification protects you from losing all your assets in a market crash. The four main types of assets are stocks, bonds, cash, and precious metals. The whole theory of asset allocation is based on diversifying your portfolio by asset class. Therefore, a portfolio that contains only one or two asset classes is not diversified and may not be prepared for all of the swings the market can throw at you.