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The Pros and Cons of Opening a Precious Metals IRA

For most people, a gold IRA is the smart choice. It has so many valuable upsides that it seems like the right investment for everyone. Although nothing is ever perfect. In some situations, a gold IRA might not be the best choice to meet your needs.

No one knows your financial hopes, dreams, and goals better than you. You’re the only one who can decide if this investment vehicle suits your financial purposes.

To help you decide, we’ve shared the major pros and cons of a precious metals IRA with you below. Give this information your complete attention. And use it to determine if a gold IRA is the ideal choice to meet your needs.

Gold IRA Pros

  • Gold historically maintains and grows its value
  • The US dollar is weak
  • Gold hedges against inflation
  • Gold investments protect against deflation
  • There is an increasing demand for gold

Gold Historically Maintains and Grows its Value

From a historical standpoint, gold has maintained and grown its value over the ages. People have trusted and appreciated the value of gold for thousands of years. But more recently, gold has become a hot commodity. And it shows because it continues to gain additional value.

In the year 2000, gold was worth $279.29 per ounce. In 2010, gold was worth $1226.66 per ounce. Today in 2020, gold is worth $1940.43 per ounce. And recently it was valued at $2061.50 per ounce at the high of the year. To say gold maintains and grows its value is an understatement. This investment grows like a weed over time.

The US Dollar is Weak

The US dollar is a highly respected and sought after currency. Make no mistake about it. But due to the economic uncertainty and stimulus taking place in the US, the dollar is becoming weaker. This loss of value convinces investors that it’s time to make changes. It tells them that it’s time to buy gold.

The value of gold rises even higher when investors flock to it because of a weak dollar. That’s why the value of gold has risen nearly 25% this year. Choosing the right gold company to begin investing in a precious metals IRA is a wise choice right now. You can quickly and easily capitalize on the economic uncertainty plaguing the US for the time being.

Gold Hedges against Inflation

Another important thing to note is that gold has historically acted as a hedge against inflation. For the last 100 years, investors have watched stock prices plunge at certain points in history. While this is happening, the price of gold tends to soar.

When inflation is at its peak, Fiat currencies lose strength and more dollar bills are needed to make purchases. On the other hand, gold loves inflationary periods. Precious metals tend to thrive in an inflationary environment. They’re a great way to store value when your regular currency – the US dollar – is losing value.

Gold Investments Protect against Deflation

Economies also enter periods of deflation. When this happens, business slows down to a crawl. The economy is battling too much debt. And prices tend to decrease across the board. The last time this happened on a global scale was during the Great Depression.

The buying power of gold skyrocketed during the Great Depression. People were hoarding cash during this period. But the US dollar or the UK pound weren’t the most valuable assets. Gold was worth more and possessed massive value for the times. It went much further than Fiat currencies.

There is an Increasing Demand for Gold

The demand for gold has never been greater. Investors are buying it up in droves because they fear an impending market crash. Countries including China and Russia are buying hundreds of tons of gold per year for the past decade. And nations around the globe are consuming gold for ostentatious purposes more than ever.

Begin investing in gold IRA right away. The best gold companies can help you get started on your journey to financial freedom.

Gold IRA Cons

  • Additional Fees & Expenses
  • There is a small possibility of theft and fraud
  • No dividends or interest payments

Additional Fees & Expenses

Nothing is perfect in this life. A precious metals IRA has additional expenses that you won’t pay with a traditional plan. Why? You’ll have to pay annual custodial and storage fees. And many gold companies charge one-time setup fees.

To cut back on expenses, find gold companies willing to waive the initial setup fees. They exist and they’ll help you save money from the get-go.

While you’re at it, you should only do business with companies that charge the cheapest storage fees. And pick a custodian that offers their custodial fees at a flat rate as opposed to a sliding scale. Sliding scale fees add up and can eat away at your profits.

There is a Small Possibility of Theft and Fraud

When you own a physical commodity like gold, the possibility of theft and fraud always exists. But realistically, this will never happen. Today’s gold storage facilities possess state-of-the-art protection. They also insure all of their financial transactions – meaning your precious metals investments.

Can a custodian steal from his or her clients? Yes because anything is possible. But this isn’t likely to happen. It’s too easy for the custodian to get caught. So try not to worry about this unlikely scenario.

No Dividends or Interest Payments

You will not receive dividends or interest payments on physical gold investments. It gains value over time due to scarcity, demand, and the overall economic picture. Understand this going in and you’ll never miss dividend and interest payments as you watch your account value grow exponentially.

Bottom Line

Investing in a precious metals IRA certainly has its fair share of ups and downs. But when you think about where we are right now, this investment has never been better. The value of gold is through the roof. The economy is on the brink of disaster. And the smartest people are moving away from Fiat currencies and into more stable investments like precious metals.

Are you ready to protect your future? Learn more about opening a gold IRA today. And remember to always choose the best gold companies with great reputations and you can’t go wrong.

 

About the author

Alice Instone-Brewer

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