Should Precious Metals Be In My Portfolio?
When I look at my investment and retirement portfolio I constantly struggle to determine if gold and silver physical precious metals should be one of my investment options. I’ve been investing in the stock market and I am fully divested in Mutual Funds and Stocks. But now I’m just a few years away from retirement and I wonder if I should move some money to a more stable investments like Gold Coins or Bars.
Pro for Precious Metals Investing
There are several ways I can add precious metals investing to my portfolio. First I need to rule out buying my gold via stocks, mutual funds, or ETFs. I’m not considering these options as they are tied to the markets and I’m looking for investments that cannot be influenced by a volatile stock market.
Pro #1 – I own an Asset
Being invested in precious metals means I own a physical asset. I can purchase coins, bars, bullion, rounds, or any other gold or silver product. I physically own the product. I can hold it and secure it in a safe at my home or in a safety deposit box at the bank.
Having physical possession of the item means I can do with it as I choose. If my cash runs low, I can travel to a local coin shop and sell my metals.
Pro #2 – I can Rollover Funds and defer taxes till I take a distribution
Yes, I can use some of my current retirement funds in my IRAs or an old 401(k) to fund my self-directed Gold IRA. When you choose to roll over from a current retirement account there are no tax consequences. With most IRAs and 401(k) accounts, you can roll over one or more times per year without paying taxes. You are moving from one retirement account to another.
Pro #3 – Hedge Against Inflation or Depreciating Dollar
Yes, gold can help you hedge inflation. As a backing for your capital the gold can give you the means to leverage more. The dollar buys less today than 10+ years ago. The cost of goods is climbing with your income and the dollar in your savings is still the same.
Considering the economy is in a state of uncertainty and a possibility of a recession on the rise owning physical gold keeps me out of the stock market and owning an asset that can still appreciate.
Cons for Precious Metals Investing
Investing in gold or silver may not be a good choice for all investors. You need to consider both the positive and negative when buying metals.
Con #1 – Value Flattens
Yes, the value of your asset can do one of three things. First, it can do nothing and stay at or near where you bought the coins or bars. Thus, over the next year or several years, you get no appreciation for the purchase. Second, it could go down and if you sell when the price is lower then you could see a loss on your investment. Third, the price could increase, and when you sell you could see more money coming back than it cost to purchase.
With all investments, you have these same three scenarios to consider. Precious metals investing is no different.
Con #2 – Purchase the wrong Coins or Bars
When investing in precious metals there is a huge difference between being an investor in gold or silver or being a speculator with numismatic or rare coins. Understand the market you choose to be in and where the value for the item comes from along with where the price for the item comes from.
Rare coins and numismatics have value based on the perceived value of the vintage coins. The value comes from different sources including; supply and demand, rarity, quality, and more.
Bullion and Coins get their value primarily from the spot price of gold. Consider the melt value – if you melted down the coin to take the gold or silver what would you get in the end? There is a difference between coins, which have a monetary value on the coin, and rounds which are minted by private mints and have no monetary value as they cannot be used as legal tender.
Where to Purchase Gold and Silver for Investment Purposes?
When you are ready to purchase your precious metals for investment there are several choices to choose from. Determining which online or local coin shop to purchase from can be difficult. One such company is Blanchard Gold which provides a large selection of options for your buying needs. The positive of Blanchard Gold is they will also purchase your coinage and bars when you are ready to sell.
Having a dual source for both buying and selling is good for your investment decisions.…