Reasons Americans are Buying Gold and Silver IRAs

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Last Updated on: 25th December 2020, 06:10 am

Gold and silver have long held a place in the investment portfolios of investors looking for a store of value and a hedge against inflation.  In these times of seeming continual financial crisis, many Americans have turned to gold or silver IRAs as investment vehicles for a portion of their retirement funds.

Gold and silver as inflation hedges

A prominent reason for the popularity of gold and silver as IRA investments is their ability to help preserve your purchasing power in times of high inflation.  Historically, the advantage these precious metals have over other forms of financial value such as fiat currencies is the difficulty involved in producing them.  While a fiat currency such as the dollar can see its quantity increased dramatically at little cost via the printing press or its electronic equivalent, an increase in the quantity of gold and silver can only come as a result of mining them from the ground at great cost.

Thus when prices are rising due to currency debasement, gold and silver tend to rise in value as well, helping to preserve your purchasing power.

The continuing financial crisis

While the great financial crisis of 2008/2009 seems at times to have abated, its effects are still being felt even today, as was seen recently in the Cyprus crisis.  While central banks around the world have increased the issuance of currency to provide liquidity to deal with the crisis, in Europe especially this does not seem to have led to robust economic performance.

Thus, the financial crisis, in one form or another, appears to linger on.  This provides ample motivation for Americans to turn to gold and silver investments for a portion of their IRAs, given that the creation of currency to deal with the crisis has inflationary implications.

The importance of preserving your purchasing power in retirement

Inflation is especially dangerous to retirees, as their income tends to be fixed to a greater degree than that of those currently in the working force.  Employed individuals typically have the opportunity to see their salaries or earnings rise with or above the rate of inflation, in addition to being able to change jobs or pursue training or further education to increase their earnings power if necessary.

Retirees, on the other hand, generally don’t have the same flexibility when it comes to preserving their purchasing power.  This is one reason gold and silver IRAs can be worthwhile investments for investors in this category.  With their long record as inflation hedges, gold and silver stand to benefit if the cost of living rises substantially.

Gold and silver in your IRA

Gold and silver IRAs allow investors to buy physical gold and silver in the form of approved coins and bullion.  This gives you the comfort of owning actual gold or silver, as opposed to a paper substitute in one form or the other.  Gold coins such as the Canadian Maple Leaf and American Eagle are eligible to be held, among others, as are selected silver coins.  Gold and silver bars or rounds produced by approved manufacturers are also eligible, provided they are of sufficient fineness.  Acceptable fineness for gold is .995 or better and .999 or better for silver.