Why you might want a gold IRA

The best way to save for retirement is to put money into an individual retirement account (IRA). Most IRA accounts, though, have almost all of their money in stocks and bonds. In bull markets, stocks and fixed income are great choices. Bear markets, however, put traders at a huge risk. One of the best ways to avoid this risk is to invest some of the money you get from your IRA in real gold.

Gold Purity Standards Determined by the IRS In order for an account to be considered a gold Individual Retirement Account (IRA), it must satisfy the purity requirements established by the Internal Revenue Service (IRS). In addition to this, the account must not be held by the individual who owns it but rather by an IRA trustee.

Diversifying What You Own

Individual equities have consistently shared a close connection with one another. When there is a general decline in market conditions, the correlation between various stock prices almost invariably goes up.

In other words, the value of most stocks will decrease after a significant drop in the market’s overall value. 

During a market downturn, gold may do better than stocks

In the past, there hasn’t been much of a link, if any, between the price of stocks and the price of real gold. In seven of the last eight bear markets where the S&P 500 fell more than 15%, physical gold did better than stocks, usually by a large amount. In six of these stock bear markets, physical gold gave a positive return; in three, gold gave returns of more than 10%.

Help against rising prices

If you want to safeguard the purchasing power of your portfolio from the effects of inflation, one of the best reasons to acquire a gold IRA is to do so. Gold is an excellent hedge against significant declines in the value of fiat currencies such as the United States Dollar, the Euro, and the Japanese Yen. 

Too much paper money is being printed, and central banks are free to print money and make currencies worth less. 

Population Globalization, getting older, and technology Globalization and technology may help keep prices in check, which could make monetary policy less useful as a way to get the economy moving again when it slows down. 

How well does gold work? 

The Great Depression had been going on for a while. Gold has done very well in the past during times of very low inflation. During the 1930s Great Depression, the United States went through its worst time of deflation in history. 

During this time, the dollar was backed by gold. In response to the state of the economy, Franklin D. Roosevelt raised the price of gold from $20.67 to $35.00 per ounce and lowered the value of the dollar by 70%. During the first few years of the Great Depression, home prices fell by more than 50 percent, and from its highest point to its lowest point, the Dow Jones lost 90 percent of its value. 

On the other hand, gold has never acted like a normal good. When the price of everything else falls, gold might be seen as a safe place to put your money. A gold IRA could be a good way to protect a portfolio during times of severe deflation.