Post COVID-19 Scenario: The Value of Precious Metals for a Successful Retirement Plan
COVID wreaked havoc all around the globe. The markets and economies have still not fully recovered from the losses even after 2 years of the pandemic striking. When things are tough in stock markets, many investors turn to safe-haven assets such as precious metals. While silver, gold, platinum, and palladium are all vulnerable to volatility, most people believe they are better and more consistent investment options for preserving and growing wealth.
Actual precious metals cannot be held in a traditional individual retirement account (IRA). However, there are dedicated IRAs for precious metals that allow you to invest in silver, platinum, gold, and other precious metals for retirement.
In this blog, we’ll discuss the safest precious metals to invest in for your retirement plan.
What Is a Precious Metals Individual Retirement Account (IRA)?
A dedicated precious metal IRA is a self-directed personal retirement plan that focuses on precious metals. Self-directed IRAs let you invest in a wide range of unusual assets, such as gold, silver, palladium, and more, property investment, and even cryptocurrencies. This is in addition to the traditional IRA alternatives. However, the contribution restrictions are the same.
Since gold and silver have historically increased in price over lengthy periods of time, many people choose precious metals as a part of their retirement plan.
Incorporating precious metals in your retirement fund can help you secure your money in a variety of ways, like lowering investment risk and volatility, acting as a buffer in the case of a recession, and offering tax-efficient refuge for possible gains.
Which Precious Metals to Invest in?
Here are the three safest precious metals you can invest in for your retirement plan.
Gold recovered some ground it had lost earlier this year in the 4th quarter of 2021, as mounting concerns about the severity and impact of the Omicron variant of the coronaviruson the world economy boosted safe-haven demands. Seasonally robust retail buying in major regional marketplaces also helped offtake.
Consequently, gold gained 4.4% during that time, finishing in 2021 at 1,820 dollars per ounce.Despite its incredible showing in the 4th quarter, gold ended the year losing 6.3% of its original value at the start.
Following excellent performances in 2019–2020, gold’s decline in 2021 was mostly due to its inability to profit from rising inflationary concerns at a moment when its appeal was fading.
Firstly, the vaccine-driven growth in the economy boosted the US dollar and fueled a massive stock market rise, lowering interest for safe assets. Secondly, during the 2nd half of 2021, the Fed’s aggressive rhetoric and actions limited gold’s response to rising inflation, attempting to force it to trade laterally instead.
As concerns regarding the omicron variant fade, the Federal Reserve’s fiscal policy will again play a crucial role in determining gold price movements in the upcoming months. Experts believe gold will not see sharp growth in terms of price in 2022 but expect it to recover in the upcoming years, which makes it a safe option to invest and buy in the dip.
Silver, like gold, completed the 4th quarter of 2021 in loss, but it had a far better quarterly performance, increasing by 7.2% compared to 4.4% for gold.
Despite a good finish to the previous year, both metals saw annual losses. Although gold kept its worth better, dropping by only 6.3% against a 15.3% drop in silver.
Silver’s lack of success in comparison to gold has been primarily due to its strong industrial base. Silver is classified more as an industrial metal instead of a precious one since its industrial demand is more than 60% of tangible consumption. An expected and anticipated recovery in worldwide manufacturing output, and thus manufacturing requirement for silver was slowed by numerous bottlenecks in 2021, implying that supply recovered faster than demand.
During the 2nd half of the previous year, however, investor desire for silver was dragged down by fears that the US Fed Reserve wouldincrease interest rates earlier than predicted. The expectation of the beginning of a new cycle by the Federal Reserve will heavily influence investor mood.
Meanwhile, growing doubts about the depth of the post-pandemic world economy will limit the industrial market growth. This, together with a strong recovery in supply, will help to close the fundamental gap, resulting in a more stable silver market by the end of 2022.
For the 6th year running, the platinum trade was in a substantial surplus in 2021, with the supply excess roughly quadrupling year to year. A slower than expected rebound in demand as well as a robust comeback in platinum mining production, assisted by the clearance of in-process inventories, were the key causes. Unlike in 2019 and 2020, buyers were cautious about investing in platinum for the majority of the year. As a consequence, platinum lost 14% of its worth in 2021, finishing at $962 per ounce.
The excess is predicted to grow slightly in 2022 since the same key drivers are expected to prevail throughout the first quarter of the year, if not longer. In the short term, an excess supply of platinum is not expected to produce a lot of physical purchases from buyers, but it might become a tempting prospect for short traders and sellers looking to bolster bearish bets. Platinum rates are expected to fall even more in 2022, with an average of $1,086 every pound.
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