Why Are Retirees Looking At Gold Investment?
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You may have come across advertisements on television, radio, and online platforms from gold brokers about how gold is a great investment. It may not seem too convincing to you since gold doesn’t pay any dividends, or interest and its value could stay still for up to a decade, realistically speaking.
All of this doesn’t add up to an attractive investment. Still, many people who are close to retirement or have retired are dedicating significant portions of their investment portfolios to gold, including gold bullion bars, coins, ETFs, and gold mining stocks.
Let’s have a look at what’s motivating retirees to consider gold as an investment option.
The Bullion Market Has Minimum Risk
There are many ways of investing in gold, but the most straight forward way is purchasing gold bullion bars. To utilize your retirement fund to invest in bullions, you’ll only have to notify your accountant, and they will link you with a self-managed superannuation fund.
Besides retirees, it’s a great time for other investors to consider investing in gold bullion as experts predict that the gold market will surge this year. Many Americans are weighing their choices and opting to invest in the precious yellow metal to secure their future and a thriving retirement.
The Historical ‘Safe Haven’ for Investors
The purpose of your retirement fund is to store and preserve all the capital and cash you’ve earned during your life to keep you comfortable, secure, and protected when you’re no longer working.
Financial advisors advise retirees to create diversified portfolios that include everything from risky stocks with great returns to properties, less risky blue chips, and assets such as gold, silver, and cash.
Traditionally, the yellow metal has been the oldest form of money used ever since the age of barter system; however, the fact that it cannot be printed and debased makes it a better option than currency.
When you secure your earnings by purchasing gold, you invest in an asset that has been famous for securing value throughout history. Analysis of past trends shows that the price of gold tends to surge during economic downturns, making it an excellent hedge for inflation, deflation, and hyperinflation.
So, while we’re at it, let’s have an in-depth look at how gold prices have performed historically.
The Price of Gold Throughout History
In 2001, the price of gold closed at an average of$271 per ounce; however, it continued to skyrocket, and only a decade later, it reached its peak in August 2011, with a year high$1,896 per ounce in—an increase of almost 700 percent. While gold prices have been on a break recently, certainly, they won’t stay this way for long.
If you’re still unsure, we’ll let the numbers do the talking: 2019 closed at an average gold price of $1,393 —up from $1,158 in 2015.
As of March 23rd, 2020, the prices have already reached a year high of $1687. Considering that the prices have gone up by 2.55% over only three months and also amid the deadly global COVID-19 pandemic, it’s safe to say that gold is the most reliable way to secure capital during an economic crisis.
The stock markets have tumbled due to the economic downturn, and panic-stricken investors are liquidating their portfolios due to the fear of a potential market breakdown. However, many investors are investing heavily in gold coins to strengthen their portfolios.
They are doing so because of one reason:gold prices tend to decline in the initial phases before they begin to skyrocket amid an economic crisis.
This trend has been observed during several notable financial crises in history, such as the Latin America debt crisis in 1982, the Japanese stock market bubble burst in 1990, the Asian financial crisis in 1997, and the infamous Global Financial Crisis (GFC) in 2007.
In his article for Vanity Fair, Matthew Hart, author of the book, Gold: The Race for the World’s Most Seductive Metal, wrote about how gold continued to shine amid the GFC. He referred to gold as “Honored through the ages, the standard of wealth, the original money, the safe haven.”
According to Hart, the prices of gold seem to be feeding on the tribulations, while other giants were crashing down in the form of subprime mortgages, default credits, and other complicated assets.
The ability of gold to maintain its value over a long period makes it an ideal investment option for a retirement fund.
Gold Isn’t Rare but Finite
The gold producing companies around the globe are craving for gold. According to analysts, the world may have discovered all the major deposits of gold, and the reserves have begun depleting. The world’s most significant source of gold, Witwatersrand Basin in South Africa, used to contribute to half of the world’s gold production.
Over the past decade, its production has declined to 170 tons per year. The amount of gold standing above the ground is increasing by a dawdling rate of 1.6 percent, with 3000 tons of new gold mined every year.
The gold mining industry might even hit an economically unstable point by 2050, according to research. For retirees, it could mean that right now is the ideal time to invest in gold, while it’s still available and buy-able. It’s a finite resource, and with a further decline in gold reserves, its value will undoubtedly skyrocket.
If you want to enjoy a prosperous retirement, it’s essential to keep your financial health in excellent shape. Investing in gold to strengthen your portfolio is the best way to ensure financial stability and security in the long run.
Orion Metal Exchange is one of the top gold investment companies with over five decades of experience in the precious metals industry. Our highly reliable services include precious metal investment for IRA accounts, secure vault storage, and safe home storage.