During the 2008 Money Financial Crisis, many portfolios took a significant hit. Stock prices took a plunge, real estate was in the tank, and many had their confidence shaken in the viability of the once churning American economy. If you had invested any money in the market or other ventures, you probably did not have the best reaction to these difficult times. That event probably also determined how you moved forward picking up the pieces from the financial disaster last decade.
Chances are, you began to look into other places to put your money that were a bit more secure in terms of their ability to give you a sizable return on a consistent basis, and something that was not historically easily devalued. If there has been one thing that has stood the test of time, it is precious metals. They are things that people have always sought after, and for as long as there has been record keeping people have used them as currency. In fact, there was a time in the United States when all the money was backed by gold. Even though those days are gone, gold and silver still retain a worth that makes them an attractive investment.
How Bad was the 2008 Crash?
Many economic analysts view it as the worst since Black Friday in 1929, the crash that lead to the Great Depression.
One of the effects of the Great Depression was high unemployment, which hit as high as twenty-five percent in some places. While not as high as it was then, a high unemployment is something we have had to deal with since that point. And its effects have not abated since many people have given up trying to find a new job, or are under employed. Another result of the crash then, and the more recent crisis, was inflation. These events have triggered a rise in prices that makes the money we earn worth a bit less, particularly since employers typically are slow to match salaries with the rate of inflation. This last little factoid is what makes the hyperinflation that follows a financial melt down so dangerous. This then triggers a loss of confidence on the part of the consumers we rely onto keep the economy going. Then come government bailouts, which means a further increase in inflation since they control monetary policy.
Those who had diversified their portfolios in advance of these crises by investing in precious metals were the ones who weathered the turbulent economy the best. Further, during these moments in history, those metals typically rise in value. Money these days is basically worthless paper, or the questionable value of electronic currency. Thus people like for something that has physical, tangible worth, and this has always been gold and silver. The next time the bottom falls out from the market, and history says that it will happen, make sure you are prepared by having at least a portion of your money put into precious metals. During that time everyone seemed to spend less, earn less, and dollars became worth less (though not quite yet worthless). However, not everyone lost money. In fact, some wise investors were actually able to turn a hefty profit amidst the ensuing financial turmoil. But how?
Capitalizing on Fiat Currency Devaluation: Gold and Silver Investing
If there is one thing that will insure that the value of precious metals like gold and silver it is that they will rise in difficult times.
Because of inflation and falling stock prices, people tend to look for tangible assets that do not lose their value. This has been something that society has done for thousands of years. Almost from the beginning of recorded history, people have used it as currency to trade for the commodities that we need on a daily basis, or want as a luxury item. And when the economy begins to slide, the value of precious metals begins to increase. This is as true in 2015 as it was it at any other point in our past.
Smart investors put their money in precious metals in difficult economic times because it retains its value. This was exactly the case in 2008, as the demand for gold quickly drove up prices. You can rest assured when you invest in them that it will be worth as much down the road as it is now, and will more than likely be worth more. Very rarely will you see it go down in value. This is a good thing to know in times of financial crisis because it means that you will not be completely wiped out. It is also handy to have when inflation is on the rise. Because inflation tends to devalue fiat currency, which is paper money that is not backed by physical gold, it means that your gold will bring you more money should you need to cash it in. That will allow you to keep the things you need to survive.
If you want further prove of this phenomenon, here are some statistics. When the financial crisis began in the summer of 2008, you could purchase gold at $799.70 per ounce, an already fantastic sum. Towards the end of what some, probably misguided, economic crisis, the same substance was trading at $1917.90 per ounce. In other words, it rose in value by over 100 percent in just three years. The fact that it more than doubled is something rare, particularly in light of how quickly it did so. Stocks typically do not do that, no matter how anticipated their opening on the markets. Further, they did not guarantee a return on an investment on their return as does gold.
Many people needlessly suffered losses as a result of the 2008 Financial Crisis. Like the very money we spend, our government has a vested interest in making sure that people stay invested in the stock market, which is why so many of those companies took bailouts. Because they took bailouts, we basically are spending our money twice on the products that they sell. When the government decided to take our money off the gold standard, it initially tried to control the supply, thus making it more incumbent upon us to invest in Wall Street. However, we have retained the freedom to invest in precious metals and help us ensure, as individuals, that we will not go broke because of the mistakes of others.
Securing Your Retirement Savings Value with a Gold IRA
The value of the U.S. Dollar is slowly depreciating and this can have a costly effect on your 401 K accounts without a gold IRA.
The longer you keep your 401 K retirement fund in dollars the less you will actually have when you are ready to retire. How can you secure your retirement fund from this type of depreciations? If you already have a 401K from a previous place of employment than you may be able to rollover your money into another type of retirement account.
Investing your 401K into an IRA or a self directed IRA allows you to invest your money through a number of different holdings. These types of holdings such as real estate investments or precious metals are far more stable and profitable for you. If you are however, working a job that your 401K is currently active then you will not be able to rollover your current 401K to a new IRA account. You can contribute to and open an IRA account alongside your current 401K.
A gold IRA (precious metals IRA) is one that converts your previous 401K into gold. These type of IRAs are one of the more effective ways to ensure your retirement savings is safe from devaluation and debasement. With a gold IRA you will not have to worry about your financial freedom and can entrust that the fund you have been saving for years remain safe.
There are certain limitations when it comes to a gold IRA one being that not every kind of gold can be used in an IRA. There are specific gold coins and bars that have been approved by the internal revenue service that can be used for IRA accounts. These regulations are found in Section 408(m)(3) of the internal Revenue Codes you can also refer to this list of the types of precious metals that are allowed in an IRA.
Another precious metals IRA requirement the IRS enforces is a custodian or trustee is present to oversee transactions that relate to a self directed IRA. Luckily, custodians services are offered from a number of management companies as well as investment firms. These companies are highly trustworthy and can greatly benefit you in building a stable and profitable IRA account. Look at this list for some of the most reputable precious metals IRA custodian companies in the industry.
The Bottom Line
Converting your 401K plan into a Gold IRA gives you the security of investing your retirement fund in a profitable and stable account.
Since gold is considered a rare element it holds a great deal of value. Studies have recently revealed that a majority of the gold reserves could be mined within the next twenty years. This could result in gold price reach over five thousand dollar an ounce.
An accurate explanation of the why gold is a favorable investment, especially during economic uncertainty was discussed in April 2008: