4 Proven Benefits of a Gold and Silver IRA That Strengthen Your Retirement Portfolio

by Mar 19, 2021Investment Strategy, Precious Metal IRAs

Why should you open a physical Gold and Silver IRA? Here are 4 proven reasons.

It’s no surprise that more and more people choose  a physical gold and silver IRA to help them gain more financial security. But is a gold or silver IRA the right path for your future financial success?

Ultimately, there aren’t a lot of asset class options for financial retirement plans available today. Most people are offered stocks, bonds, and mutual funds, which build slowly over the years. However, these options are most often tied to the viability of the stock market. And with many of the biggest stock market crashes in history happening just in the last 20 years, it’s not a question of if but rather a question of when, so most people are looking for other ways to secure their financial future.

That’s where gold- and silver-backed IRAs come into play. 

If you’ve been looking into how an IRA with physical gold or silver can help your finances, here are four benefits to diversifying your portfolio with a Precious Metals IRA that go beyond stocks, bonds, and mutual funds.

1. Gold and silver are uncorrelated to the stock market

Your standard IRA filled with stocks and bonds is attached to the health of the stock market. While the stock market has its ups, it most certainly has its downs as well. The unfortunate side effect of the downside movement is that it may take quite a bit of time for the market to recover after a crash. 

It can take the stock market over three years to recover from smaller dips, and after the stock market crash of 1929, the market needed 25 years to see a full recovery. 

Putting 100% of your portfolio into a market that may have a slow recovery time is one of the biggest gambles that you can take with your money, mainly because you don’t know if you’ll be in one of those long recovery times when you need the money for your retirement.

When you add physical gold and silver to your portfolio, you are adding more security because gold and silver don’t follow the stock market’s ups and downs. 

As a matter of fact, it’s just the opposite. While on certain days they may move together, when you look at long historical periods, it’s obvious to see that the price of gold tends to go up when the stock market dips or crashes. 

Take a look at this chart, which shows some of the biggest events in the stock market compared to what was happening with gold at the same time:

During most stock market crashes, physical gold increases in value protecting your IRA.

The trend of gold performing well when the stock market isn’t doing well is a clear sign that diversifying your portfolio with gold and silver gives you a chance at better stability for your financial future. Here’s how.

2. Portfolio diversity protects your financial future

History shows that if you include physical gold in your investment portfolio, it performs much better than a portfolio that includes only stocks.

Do you remember being told to “never put all of your eggs in one basket”? This expression is meant to warn people against focusing all of their time, attention, and money on one single thing.

It applies perfectly to your finances.

Putting all of your money into an IRA that depends on the stock market’s health makes your financial future completely dependent on whether or not a crash occurs. 

In the last 20 years alone, we experienced three of the biggest stock market crashes in history. Do you think we have seen the last stock market crash?

If not, how do you protect your portfolio? 

Diversify, diversify, diversify. 

Alright, you’ve probably heard that term over and over again (and now three more times), but the truth is that if you put all of your money into one basket (the stock market), you’re really just gambling on whether the bottom is going to fall through before or after you retire (because the stock market always has it’s downs). 

And in major market crashes, the entire basket of stocks may go down, so you are not diversified if you are 100% invested in any one asset class. 

In severe market crashes, bonds and stocks go down together, showing the poor faith at the time in securities. And with more than 70% of economists predicting a recession sooner rather than later, now is the perfect time to look into ways to get a portion of your money out of the market.

When you consider how gold and silver grew in value over the last 20 years, beating every stock market index many times over — and this despite the economic instability surrounding them — you should take notice. 

The word “stability” is key here. Although gold and silver do have their ups and downs, they are considered the best inflation and market hedge because they thrive in times of uncertainty when stocks and bonds don’t do well.

So, what’s the big deal about gold and silver being physical assets? How does the physical aspect lead to more value?

3. Your portfolio value is tied to something tangible

With every paycheck, you hand money over to your IRA or 401(k). 

Sure, you might be the one controlling where it goes and how to apply it to the market, but that money doesn’t exist for you until you withdraw it.

Many people are comfortable with this because that’s the way it has been for years. But should they be comfortable with something that depends solely on how well our economy is doing?

Paper assets do well for a lot of people, especially those who can predict how the market is going to shift, turn, crash, or rise. However, for most others, having something tangible or physical gives them an assurance that their money isn’t just blowing around in the wind.

Precious Metals IRAs offer the assurance that you have something physical to back your financial future. These assets become an insurance policy on the money that you have in the stock market. 

How? 

When opening a Gold and Silver IRA with physical metals, your stock market and cash holdings are protected by gold or silver.

The key here is that your finances are BACKED by something physical. In a standard IRA, it’s all paper (or electronic paper) that is being passed from one to another. It’s given a value based on how the market is doing.  

On the other hand, physically owning something as reliable and tangible as gold or silver protects all of your money against inflation and the stock market.

Gold- and silver-backed IRAs give you a little extra insurance this way, but there is more to gold and silver. 

As a matter of fact, precious metals deliver more than the US dollar can.

4. Precious metals outperform the US dollar in purchasing power 

Throughout the years, the strength of the US dollar has fallen. While there are a lot of factors that contribute to this, there is a way to combat the fall of the US dollar. 

The chart below shows the performance of gold versus the performance of the US dollar over the last 50 years.

The purchasing power of the dollar has dropped over the last decades while the price of gold has exploded which is great for people who have a gold or silver IRA.

As you can see, the decline of the dollar hasn’t negatively affected the price of gold. As a matter of fact, the price of gold has outperformed the US dollar’s purchasing power since 1971 and the elimination of the Gold Standard. When our government let the gold price float against the dollar, it started showing how the US dollar value is constantly deteriorating.

One of the best ways to combat the fall of the US dollar and the resulting inflation is to acquire  physical assets like gold and silver. And adding gold and silver to your IRA portfolio is one of the best places to begin. 

Is a Gold and Silver IRA right for you?

So, how can you tell if Gold and Silver IRAs are right for you? The first thing you should do is consider your portfolio. Diversifying your portfolio with gold and silver gives you insurance against inflation. 

Next, it’s important to think about how much you trust where your money currently is. There aren’t many options for investing your IRA, and most of them rely solely on the health of the stock market and Wall Street’s fair play. If you think the stock market is trustworthy and believe that there will never be a crash, recession, or lull again, you’re probably really comfortable with where your money currently is.

However, if you have watched the stock market over the last 20 or 30 years, you might feel a little less comfortable. If that is the case, there is a hedge. An insurance policy. Nobody should advocate you put all your eggs in any one basket. This includes gold or stocks. However, having a portion in physical gold and silver will provide you with all the benefits and help you avoid all the risks. This is a true safety net. 

Finally, if you still aren’t sure if a Gold or Silver IRA is right for you, you have to consider the US dollar’s current strength. Based on the chart above, you can tell that gold has consistently outperformed the US dollar, and that trend isn’t likely to change very soon. You can’t print gold. You can print the dollar, and that is all the difference.

If you’re interested in learning more about how a physical gold–backed IRA can help you diversify your portfolio and protect your financial future, reach out to us for a free no-obligation consultation. All it takes is a phone call to change the outlook of your financial security.