How To Use a Gold IRA for Long-Term Wealth Preservation

Most people looking to preserve their wealth don’t venture past traditional investments like stocks, bonds, and mutual funds. However, for those who want to establish strong financial futures, a gold IRA, or Individual Retirement Account, is a worthwhile investment to consider. This self-directed IRA allows you to grow your wealth and diversify your portfolio with precious metals in addition to other investment vehicles.

Discover everything you need to know about using a gold IRA for long-term wealth preservation with this helpful guide. When you need extra assistance, turn to the experts at Oxford Gold Group to learn more about investing in precious metals.

How Does a Gold IRA Contribute to Long-Term Wealth Preservation?

If you’re just starting on your gold investment journey, you might wonder what makes gold a solid choice for building long-term wealth. The rich history of this precious metal is a major factor, along with its lasting impact as a currency.

Historical Significance of Gold as a Store of Value

Gold has been a status symbol since the days of ancient Egypt. Once those in power gave value to the metal through jewelry and as currency, the rest of society jumped on board. Across centuries, people viewed gold as a symbol of wealth, and today’s gold’s cultural significance prevails.

Gold’s value is more than just its image in society. It doesn’t corrode like other metals and is therefore a reliable material for long-term wealth. Gold is rare and hard to mine, further increasing its value.

What Role Does Gold Play in Preserving Wealth Over Extended Periods?

Economists note the importance of gold throughout modern history, particularly when the stock market plummets and the country endures a recession. During the stock market crash of 1929, gold cost $20.67 per ounce. In the Great Depression, Americans saw gold as a source of wealth to the point that the cost hit $35 per ounce by 1934

Flash forward nearly a century, and gold continues to be suitable for preserving wealth. The 2008 financial crisis saw gold reach an all-time high of $1,032 as many Americans panicked over the decreasing value of the dollar. Gold prices continue to rise during today’s economic uncertainty, making it a popular investment for people looking to preserve their wealth.

How Does Gold Act as a Hedge Against Inflation?

pile of gold nuggets on dollar banknotes

The first thing that comes to mind for anyone considering a gold IRA for long-term wealth preservation is the always-topical question, “How well does gold hedge against inflation?” Gold has been a popular and dependable hedge against inflation. Even as inflation swelled in the 1970s and the dollar became less powerful, gold continued to offer a 35% return.

However, in recent years, gold has been slightly less powerful as an inflation hedge, since gold’s value has not increased along with consumer prices. While gold is a strong hedge against inflation long-term, its price is changing with the consumer price index, indicating it is not as powerful an inflation hedge as investors once hoped.

Compare Gold’s Performance to Other Traditional Investment Options

Traditional stock options and inflation-specific I bonds tend to be the most steady, long-term investments during economic turmoil.

However, gold does perform better than cryptocurrencies like Bitcoin, which lost more than half of its value within a year amid rising inflation. Despite increasing inflation rates, the recent demand for gold remains high as investors purchase gold for its long-term value.

Choosing the Right Gold Investments for Your Gold IRA

man picking wooden block with lightbulb on top

Before opening a gold IRA for long-term wealth preservation, it’s crucial to understand your different investment possibilities.

Types of Gold Allowed in a Gold IRA

You can put either gold coins or gold bars and rounds in a self-directed IRA as long as they meet the purity standards of the Internal Revenue Service. Gold coins need to:

  • Be 99.5% pure
  • Be in their original packaging
  • Come with a certificate of authenticity

The only exception to this standard is one of the world’s most common cold trading coins, the American Gold Eagle coin. The United States Mint guarantees the gross weight, gold content, and purity of these coins, so they are popular for gold IRAs.

Other precious coins like the Gold Canadian Maple Leaf or the British Royal Mint Gold Standard Coin are options, too.

Gold bars and rounds must meet government specifications for weight and purity. Our selection of gold products includes a mint condition gold bar available in either one-ounce or ten-ounce sizes.

Physical Gold vs. Non-Physical Gold

Choosing a gold IRA vs. investing in physical gold depends on what you’re looking to get out of your investment. You can pass physical gold down to loved ones, whereas a gold IRA doesn’t allow for beneficiaries. Instead, this investment account has a custodian who can transfer funds as needed.

A gold IRA provides more tax benefits since you don’t need to pay capital gains tax should you decide to sell. It allows you to diversify your assets, though you’ll have more wealth, privacy and control with physical gold.

Is a Gold IRA Suitable for Everyone Interested in Long-Term Wealth Preservation?

There are a few caveats to know about gold IRAs if you plan to open this type of retirement account.

Who is Eligible to Open a Gold IRA and What Are the Requirements Involved?

Anyone can open a gold IRA assuming they meet the following criteria. Investors must use precious metal investment companies like Oxford Gold Group rather than traditional brokers. These custodians handle the tax information and oversee the storage of your contributions.

Just like a conventional IRA, there are limits to your annual contribution to a gold IRA. The annual IRA contribution limit for 2023 is $6,500 for anyone under 50. Those over 50 can contribute up to $7,500 per year.

Diversification Strategies with Gold IRAs

man holding dollar bills allocating investment budget

A balanced portfolio comprises several types of investments and doesn’t “put all eggs into one basket.” A gold IRA for long-term wealth preservation offers a valuable diversification opportunity.

Balancing Investment Portfolio with Gold: Allocating Assets Between Gold and Other Investments

Many investors choose to split their wealth between several different assets so investments can survive periods of market volatility. A mix of stocks, bonds, funds, an IRA, and physical assets lets you balance your portfolio. Investing in gold lets you diversify — you can set up a self-directed gold IRA or keep physical gold in addition to stocks, real estate, or other investments.

Rebalancing and Adjusting Your Gold IRA Over Time

Monitor your gold investment’s performance and make adjustments when necessary. Remember to focus on long-term investment value instead of making changes every time the market fluctuates. Possible adjustments involve switching your investment between a gold IRA and physical collectibles or even investing in gold funds.

What Are the Possible Risks Associated with a Gold IRA?

Any investment comes with varying risks, and a gold IRA is no different. Gold has tangible uses for jewelry and valuable collections, but it can be a bullish investment since it pays no earnings or dividends.

Investors are subject to several fees to set up the account, store precious metals, and work with a custodian.

Despite a few risks, a gold IRA remains a solid choice for investors. If you’re looking for a way to balance your portfolio, discuss a gold IRA for long-term wealth preservation with your financial advisor.

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