If you have watched the news at all over the past few years, you understand the economy, and the United States in general, is in a state of turmoil. Safe investments are few and far between in a market with ever-increasing volatility. Each time the stock market takes a dive, Americans lose hundreds of billions and even trillions of dollars from their retirement funds. For example, between 2006 and 2009, American households lost more than $5 trillion in the stock market. They made much of it back in the years following, only to lose about $4 trillion in August 2011 alone. The amount of money Americans had in retirement accounts fell 22% during the bear market that ended in 2009, as both stock and bond holdings declined in value by almost $3 trillion. With uncertainty becoming normal in both the economy and investment markets, you need to do something different to protect your life savings, and many investors have been keeping their retirement accounts safe by taking advantage of a little known law enacted under President Bill Clinton.
That law was the Taxpayer Relief Act of 1997, and American retirement accounts have never been the same.
When President Clinton signed the Taxpayer Relief Act, massive changes were made to the US tax code. The most notable one for us is the fact that the Act made it legal for American citizens to own physical gold and other precious metals in their IRAs. This new option, to diversify risk in your retirement accounts with precious metals, gave Americans the ability to add a foundation of solid, intrinsic value to their IRAs that was never available before. This pamphlet will take you through the many benefits of a Precious Metals IRA, but the proof is really in the numbers. Take a look at this:
Change from 8/31/01 to 8/26/11
S&P 500: +4%
As you can see, gold gained 526% in ten years. It does not take a financial expert to tell you that investors who put their money into gold back then are glad they did today!
In addition to high returns, gold is a great investment because stocks and even bonds have relatively high volatility, meaning they tend to fluctuate a lot in value. Gold, on the other hand, stays relatively consistent in terms of its purchasing power, making it ideal for the long-term investor. No matter what percentage of your portfolio you have in precious metals, it is a great diversification strategy that will provide valuable peace of mind in tough times.
We know that you are working very hard to build a secure nest egg for yourself. We also realize that you are an expert in your profession, but may not have the time to become an expert in wealth preservation. That's why National Gold Group (NGG) is dedicated to preserving your wealth and to streamlining the onerous process of setting up your new Precious Metals IRA. A Precious Metals IRA, which combines precious metals with traditional investment assets, will give you a virtually recession-proof nest egg, one that you and your family can count on. When working with NGG, we’ll explain exactly what a Precious Metals IRA is and how you can set one up. Your Account Executive is always available to answer questions and to help you decide what is right for you. Our experts are happy to discuss your specific circumstances and will be able to provide recommendations as to the best to way protect your portfolio with physical gold and silver.
A Precious Metals IRA is exactly what it sounds like -- an IRA that can hold precious metals. In addition to traditional stocks, bonds, mutual funds, and other allowable investment vehicles, Precious Metals IRAs can also hold certain types of gold, silver, platinum, and palladium as investments. Precious Metals IRAs can either be Traditional, Roth, or SEP IRAs, and are subject to the same rules and regulations as ordinary IRAs. It’s also possible to roll over your existing IRA into a Precious Metals IRA.
Precious Metals IRA account holders purchase and own the actual metals themselves. However, because the government prohibits you from taking physical possession of the metals in a Precious Metals IRA, the metals are held by the depository in a segregated account with specific assets assigned to you. It’s similar to having gold in a safe deposit box at your bank. You can visit your assets at any time to physically see and touch them, but since tax laws require the use of a custodian, you can’t take them home with you until you make a qualified IRA withdrawal. The custodian also makes ownership easier for you since you won’t have to maintain separate theft or fire protection for your metals.
Precious Metals IRAs are self-directed, so you, the account holder, must make all of your own decisions. However, this is a specialized investment market and it is important to have an experienced partner to help you make those decisions. National Gold Group Account Executives have decades of combined experience with Precious Metals IRAs and are available to give you the advice you need to maximize your portfolio’s potential.
One of the most common questions we hear from our clients is, “If Precious Metals IRAs are so good, why hasn’t my existing financial advisor recommended them?”
There are a lot of reasons traditional financial planners overlook Precious Metals IRAs. It could be that your advisor is educated in standard buy-and-hold investment strategies, with limited knowledge of wealth protection. Their asset allocation models worked well in the 1980s and 1990s as stocks enjoyed a historic bull market and interest rates fell from historic highs. As we showed earlier, it’s a different world now, but most advisors believe that things never change, even as they continue to watch their client’s retirement accounts shrink and force their clients to delay retirement.
Maybe their firm won’t allow them to offer Precious Metals IRAs. There is an extra level of work required to ensure custodians are honest and low-cost. Some firms do not want to take on those tasks. Other firms are commission driven and offer limited financial alternatives in order to maximize their own best interests.
The reason another financial advisor has not explained the benefits of this strategy really aren't as important as exploring whether or not you can benefit from it. An experienced NGG Account Executive can discuss the advantages of Precious Metals IRAs with you one-on-one. Your Account Executive can show you how gold tends to be a stabilizer in your portfolio that not only hedges against inflation but also guards against investment declines in other asset classes. In other words, regardless of where you currently have your retirement money parked, gold can be an excellent addition to your portfolio, and it’s always worth seeking out other sources of information aside from your existing advisor.
If you do choose to open a Precious Metals IRA, you can roll over your existing assets into your new account, keeping all of your traditional stocks, bonds, and mutual funds and gaining the benefits of diversifying into precious metals. Remember, your account is self-directed, so you always get the final say in what happens with your assets.
So why would you want to acquire precious metals? In a word, diversification. Simply stated, there is no better wealth protection diversification strategy than adding precious metals to your portfolio, period.
For hundreds of years, precious metals have acted as a hedge against uncertainty and dollar-backed investments (such as stocks, bonds, mutual funds, and cash) because the forces that tend to push dollar-backed assets down also tend to push the value of gold and other precious metals up. Though there are a number of reasons for this, the most important is that metals (specifically, gold) have track records that go back literally thousands of years and have survived the rise and fall of countless governments and currencies. As nations and currencies have come and gone, gold has always been a universally accepted store of value, and it will likely continue to be well into the future.
So what does that mean for you and your retirement? Because precious metals historically tend to move opposite to traditional dollar-backed, paper assets, they act to reduce the volatility of your portfolio and lessen the uncertainty of your IRA, making it a more secure and reliable retirement fund.
History proves that precious metals maintain value in volatile times. Let’s take a look at gold, typically considered the best precious metal to hold because it is the oldest, most recognized, and most trusted store of value. We’ll examine the period from 2005 to 2010, a rather typical time in history featuring wars, political unrest, and fairly mild inflation. The price of one ounce of gold rose from $445 to $1224, a gain of $780 or 175%. Not bad for a five year period, right? Now let’s examine the US dollar over that same period of time. The Consumer Price Index tells us that the purchasing power of $1 fell to $0.89 between 2005 and 2010, meaning the dollar lost about 11% of its value over the same five year period. Gold preserved buying power, beating inflation while stocks were declining. Gold also significantly outperformed bonds over that time as well.
Gold and other precious metals have continued to increase in value as investors faced staggering losses of dollar-valued assets on Wall Street and runaway government spending around the world. Though the dollar has been declining and governments have been running deficits for decades, the global recession in 2008 demonstrated the severity of the problems. The dollar continues losing strength on a nearly daily basis, which inevitably drives the values of precious metals up as investors look for a safe haven. As you have probably, and unfortunately seen, all of this can take years of savings and gains from your retirement fund. It’s extremely important to understand the dynamics involved for the future, and take action now to protect your portfolio.
The laws of supply and demand drive prices in both the commodities and stock markets, which means there are never any guaranteed outcomes or returns on your investment. Unfortunately, that’s just not how the market works. All we know for sure is that gold has outperformed the dollar on average for the last several decades, resulting in substantial growth of its value as an investment asset. Because the factors that caused this to happen are still in play (and are actually getting more profound), most analysts expect these trends to continue well into the future.