With the financial markets currently taking a beating, many investors are actively searching for safe alternative investments. However, it is difficult to find suitable investment options given the political and economic turmoil in almost every part of the world. In fact, most experienced investors are increasingly turning to precious metals because they have proved to be a good investment, particularly in times of uncertainty. With that in mind, here is some more information on rolling over a retirement account into a gold and silver IRA or holding physical gold and silver as a hedge against inflation.
What is Gold IRA?
Before proceeding further, it is necessary to cover the subject of IRA rollovers because majority of traditional IRAs do not allow precious metal investments. Luckily, you can rollover your retirement savings (401k) to a gold for IRA account. A rollover simply involves transferring your 401k from a traditional IRA to gold backed IRA. It is important to note that you can do this transfer either directly or indirectly. In a direct rollover, your current IRA custodian would transfer your retirement savings to the custodian of your new gold/silver IRA. You do not handle your own savings in any way during a direct transfer. On the other hand, an indirect transfer involves withdrawing money from your current IRA and depositing the same in your gold backed IRAs. It is not advisable to do so because an indirect transfer attracts hefty IRS penalties (up to 20% of your savings).
Why Carry Out a Gold IRA Rollover
1. Volatile stock markets
Stock markets worldwide are in turmoil save for a few bright spots in African and Asia. Starting with the US, the Dow Jones Industrial Average (DJIA) fell by more than 1,000 points at one point in late August 2015. The Standard & Poor’s 500 stock index has not fared better, experiencing multiple percentage point seesaws on an almost daily basis.
In China, the Shanghai Composite Index plummeted by 38% between early June 2015 and late August 2015 causing economic experts to question the sustainability of China’s rapid growth. The situation is even worse in Europe where governments are struggling to maintain fiscal discipline, spur economic growth, solve Greece’s financial problems and manage a growing refugee crisis all at once.
The Australasia region is smarting from the economic woes bedeviling China, its key trading partner and economic driver. Japan is struggling to resolve numerous problems including a shrinking population, low productivity, an aging workforce, and huge government debt making the country unattractive to investors.
2. Ballooning US debt
According to figures published by Forbes, the US national debt stood at $18.2 trillion in April 2015, up from $7.3 trillion in 2004. While financial experts expect this debt to grow to $21 trillion by 2019, there are no concrete debt repayment plans or plans to reduce the debt-to-GDP ratio below 100% (currently at 102.6%).
3. Falling oil prices
Oil prices have fallen so low a barrel of oil is currently retailing just above the $40 mark, according to the Wall Street Journal Data Group. The bad news is oil prices are unlikely to rise significantly in the near future due to factors such as an oil glut that currently stands at three billion barrels, non-reliance of US on oil from Middle East producers, a cooling Chinese economy and the re-integration of Iran into the global energy market.
4. Likelihood of an economic crash
Many respected economists/market analysts, including Jerome Levy Forecasting Center’s David Levy, say there are signs of an imminent global economic recession. If it occurs, expect the value of financial assets, such as stocks, to crash and the value of precious metals to rise. Investors usually snap up precious metals during times of economic and political uncertainty to avoid extreme value erosion of their portfolios.
5. Dollar losing status as the world’s reserve currency
The International Monetary Fund is mulling including the Chinese Yuan in the Special Drawing Rights (SDR) currency basket. This means the dollar is losing its value as the world’s reserve currency of choice to competitors such as the Yuan. In fact, data published by The Economist shows that the Yuan accounted for 1.1% of the country’s official reserve assets, 1% of cross-border payments and 0.8% of currency transactions in gold spot markets.
The BRICS block is flexing its muscles by establishing a financial institution to rival the IMF and the World Bank. The New Development Bank (NDB) is already up and running with an initial capital pool of $50 billion. This capital fund will grow to $100 billion over time. The NDB does not intend to use the dollar as its reserve currency.
7. Diminishing precious metal resources
According to Mansoor Barati, a metals expert at the University of Toronto, silver reserves could run out as early 2029 if current demand/supply levels remain unchanged and mining companies do not come across new deposits. The result will be rising prices as silver becomes rarer and mining/exploration activities become cost-prohibitive. Gold production is facing a similar scenario, with production in once top producer, South Africa, declining over the years, according to Bloomberg. This means gold prices are likely to rise in the future.
9. Fort Knox gold
According to Koos Jansen, has submitted Freedom Of Information Act (FOIA) requests to access US gold reserves audit reports, the Counsel to the Inspector General Department of the Treasury can only provide two audit reports for the 1974-1986 period. Even Germany, which has 674 tons of gold stored at Fort Knox, has faced difficulties trying to withdraw its haul. Senator Ron Paul in a congressional hearing voiced many people’s suspicions when he said the feds could secretly sell US gold reserves without anyone knowing.
Investors are increasingly losing confidence in the global financial markets due to various economic and political factors. As a result, many investors are turning to precious metals in a bid to protect their portfolios from value erosion. You, too, can protect your financial future by rolling over your 401k to a gold IRA or even purchasing and holding physical gold and silver.
Fill out the contact form on our website http://spot-gold-silver.com to talk to a precious metals specialist today.