Gold and Silver IRA.... Are you freaking kidding me???
Welcome back friends. I was asked a "Serious" question the other day by one of my readers. They understood and agreed that buying "Paper" gold and silver is a bad idea, vs physical, but they have become convinced that investing in a Gold or Silver IRA is a smart investment.
"FORGIVE THEM FATHER, FOR THEY KNOW NOT WHAT THEY DO".
I've already explained this to the reader, but let me explain it here for others who may simply be lurking the blog and not replying directly.
FIRST: And foremost..... Gold and Silver are NOT INVESTMENTS!!! Do some people invest in them? Yes. Do some of these "Investors" follow my blog and comment? Yes. Have I mentioned that one of the reasons you can buy gold and/or silver is so that you can use the rise in price to reduce debt or buy something at a discount? Yes. But that doesn't make gold and silver an investment. Let's make this simple. Gold and Silver is like keeping cash in your wallet, in a bank, in a safe, or under the mattress. The difference however, is that Gold and Silver will NOT LOSE BUYING POWER or value like the paper cash will. Remember; give or take a few minor periods in history, you can buy the same thing with an ounce of gold or silver today, that you could buy almost 100 years ago. You can't do that with cash. If your grandfather put $1,000 in cash in his bedroom, which was equal to say 20% of his income, (Average income was between $5,000 - $6,000), That $1,000, because of inflation and such, would require approximately $7,500 - $8,000 today, to buy the SAME THING. But basically, it's still just $1,000. It's buying power has decreased.
An ounce of gold in 1960 costs $35. That was 1/142 of the $5,000 income. Today, the gold is worth say $1100, and 1/142 would mean it's equal in value to a $146,200 income. Even if gold didn't shoot up in today's value since the debacle of 2008, and we used the gold price LOW between 1979 and 2005, which is averaging around $400; that means that gold increased 11.5 times. Which means, percentage of your income would mean today the average income would have to be around $57,500. HEY WHAT A CONCEPT!!! The median HOUSEHOLD income in the united states is $52,500 in 2015. What does that mean? The gold bought in 1960, would have the SAME BUYING POWER as buying gold today. And that's using conservative average value of $400 an ounce. That's why we buy gold and silver. It's a HEDGE against inflation, fiat currency devaluation, etc.
SECOND: The other main reason for not buying gold or silver IRA's, besides it NOT being an investment, is because you need to have PHYSICAL POSSESSION OF IT!!! The main reason is because you don't want to deal with "COUNTER PARTY RISK". If you've never heard that phrase before, let me make it quite simple for you. If you don't physically hold it, then you can't control it. Just like paper, there's no GUARANTEE that you'll get it back when you want it. They might tell you that they'll give you the "DOLLAR EQUIVALENCE" to it, but what good is that if the dollar tanks and becomes worthless. What about what happened in Greece, when the banks wouldn't allow people access to the money in their accounts or even to safe deposit boxes? What if the government wanted to "Seize" accounts for whatever reason? The point is, counter-party risk is not something you want to deal with. Granted, a Gold/Silver IRA will "Supposedly" maintain value better than gold/silver stocks/ETF's which could become totally worthless. But there is no guarantee you'll be able to get your physical gold/silver back.
I am not opposed to IRA's, 401K, 457B, ROTH, or any other type of "Retirement Investment" account. I myself have some. But I understand that they are "Investments". There is risk in it's performance, and there are timing concerns along with tax implications. Obviously, there are tax concerns on capital gains with gold and silver when you sell it too. But these taxes are usually much lower that "Income Tax" on your retirement investments.
So remember: Gold and Silver are NOT INVESTMENTS:
Then what are they for??????
And remember........ "IF YOU CAN'T HOLD IT......... YOU DON'T OWN IT"!!!!!!!
Take care:
CYA: SE:
"FORGIVE THEM FATHER, FOR THEY KNOW NOT WHAT THEY DO".
I've already explained this to the reader, but let me explain it here for others who may simply be lurking the blog and not replying directly.
FIRST: And foremost..... Gold and Silver are NOT INVESTMENTS!!! Do some people invest in them? Yes. Do some of these "Investors" follow my blog and comment? Yes. Have I mentioned that one of the reasons you can buy gold and/or silver is so that you can use the rise in price to reduce debt or buy something at a discount? Yes. But that doesn't make gold and silver an investment. Let's make this simple. Gold and Silver is like keeping cash in your wallet, in a bank, in a safe, or under the mattress. The difference however, is that Gold and Silver will NOT LOSE BUYING POWER or value like the paper cash will. Remember; give or take a few minor periods in history, you can buy the same thing with an ounce of gold or silver today, that you could buy almost 100 years ago. You can't do that with cash. If your grandfather put $1,000 in cash in his bedroom, which was equal to say 20% of his income, (Average income was between $5,000 - $6,000), That $1,000, because of inflation and such, would require approximately $7,500 - $8,000 today, to buy the SAME THING. But basically, it's still just $1,000. It's buying power has decreased.
An ounce of gold in 1960 costs $35. That was 1/142 of the $5,000 income. Today, the gold is worth say $1100, and 1/142 would mean it's equal in value to a $146,200 income. Even if gold didn't shoot up in today's value since the debacle of 2008, and we used the gold price LOW between 1979 and 2005, which is averaging around $400; that means that gold increased 11.5 times. Which means, percentage of your income would mean today the average income would have to be around $57,500. HEY WHAT A CONCEPT!!! The median HOUSEHOLD income in the united states is $52,500 in 2015. What does that mean? The gold bought in 1960, would have the SAME BUYING POWER as buying gold today. And that's using conservative average value of $400 an ounce. That's why we buy gold and silver. It's a HEDGE against inflation, fiat currency devaluation, etc.
SECOND: The other main reason for not buying gold or silver IRA's, besides it NOT being an investment, is because you need to have PHYSICAL POSSESSION OF IT!!! The main reason is because you don't want to deal with "COUNTER PARTY RISK". If you've never heard that phrase before, let me make it quite simple for you. If you don't physically hold it, then you can't control it. Just like paper, there's no GUARANTEE that you'll get it back when you want it. They might tell you that they'll give you the "DOLLAR EQUIVALENCE" to it, but what good is that if the dollar tanks and becomes worthless. What about what happened in Greece, when the banks wouldn't allow people access to the money in their accounts or even to safe deposit boxes? What if the government wanted to "Seize" accounts for whatever reason? The point is, counter-party risk is not something you want to deal with. Granted, a Gold/Silver IRA will "Supposedly" maintain value better than gold/silver stocks/ETF's which could become totally worthless. But there is no guarantee you'll be able to get your physical gold/silver back.
I am not opposed to IRA's, 401K, 457B, ROTH, or any other type of "Retirement Investment" account. I myself have some. But I understand that they are "Investments". There is risk in it's performance, and there are timing concerns along with tax implications. Obviously, there are tax concerns on capital gains with gold and silver when you sell it too. But these taxes are usually much lower that "Income Tax" on your retirement investments.
So remember: Gold and Silver are NOT INVESTMENTS:
Then what are they for??????
- Long-Term Inflation – While the correlation between measured inflation and the price of gold isn’t perfect, over the long term (30+ years) it comes pretty close.
- Uncertainly Risk – Examples are: the solvency of sovereign nations, or the chance of going to war. Meaning you will need to use gold and silver to barter for goods.
And remember........ "IF YOU CAN'T HOLD IT......... YOU DON'T OWN IT"!!!!!!!
Take care:
CYA: SE:
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