Precious metals offer unique inflationary protection and have an intrinsic value that carries no credit risk and cannot be inflated. This intrinsic value of precious metals that fueled empires and artists also offers unique advantages to modern investors. Precious metals offer a safe investment that protects your wealth during economic, social and political upheavals. In addition, they are portable, private and liquid.
Gold and silver are the best foundation for building a more prosperous retirement. Precious metals have been considered a valuable asset for centuries. At one time, gold and silver were the main form of currency. Unlike other currencies, these metals have maintained their value over time, which is why many investors are still using them today.
Here are some of the general benefits that you should consider if you're considering a precious metals investment strategy.
Self-directed IRA optionsOne of the main aspects of investing in precious metals that investors enjoy is the ability to open a self-directed IRA. This familiarity makes investing in precious metals more convenient, accessible and manageable. As an investor, you remain in control of your assets and determine if and when to sell or buy.
If you already have an IRA or a 401 (k), you can even use the assets to make a transfer to a gold IRA (the general term for investments in precious metals). Take time to research the best gold IRA companies and discuss your options with a financial advisor to find the best path forward.
Low market volatility and riskThe aspect of investing in precious metals that makes it so attractive to many investors is the low risk and minimal market volatility. While it's impossible to rule out the possibility of market volatility, most precious metals, in particular gold, are recession-resistant and operate separately from stocks and bonds.
Many investors use precious metals as their safe haven account, a security mechanism to protect some of their assets in the event of periods of economic hardship. The value of gold and silver continued to rise during the great recession and the pandemic, while other investments collapsed. Precious metals are considered to be more stable and predictable than real estate investments and other alternative investments.
Ideal for diversificationThe continuous increase in value, low risk and market stability make precious metals an ideal alternative investment for portfolio diversification.
It's worth noting that investments in precious metals are not without flaws. They have additional costs associated with brokerage and warehousing and lack the same tax advantages and short-term benefits as other investments. However, these characteristics are the reason why it is considered an alternative investment for diversification rather than a primary investment strategy. Talk to a financial advisor to determine if this alternative investment is the right form of diversification for your investment objectives.
Tangible productsThere's something powerful about having a physical commodity that represents your wealth. In our digital world, currencies are largely intangible; you won't find lots of cash in a vault that you can access when you need it. Because precious metals are tangible, they also offer simple liquidity. When you decide it's time to sell, you work with your broker and custodian to make it happen; there's a minimum of bureaucracy and fanfare.
This feature also contributes to its value as a safe investment.
Various formatsIn addition to several types of precious metals in which to invest, there are also several formats. When buying precious metals, you can choose between coins, ingots and rounds. Keep in mind that you can't buy precious metals yourself and then transfer them to an IRA; you need a broker who manages the purchase of approved products.
Investing in precious metals isn't for everyone, but it's a diversification strategy worth considering. If you're evaluating alternative investments, consider these benefits of precious metals before making your final decision on your investment thesis. From private investors and hedge funds to central banks and governments, demand for precious metals continues to rise. The benefits include the ability of physical gold to track the price of the precious metal and the potential for gold stocks and gold ETFs to perform better than other investments during periods of economic hardship or market volatility.
Investors should carefully consider whether they want to invest in precious metals and, if they do, fully understand the risks associated with the investment they have chosen before making any decisions on their own or using any services from an accredited dealer such as Lear Capital.