You’d be surprised to find that investing in gold has always been seen as a form of protection against any possible financial distress on the stock markets. Gold is a valuable investment because of its potential to increase its value even in tumultuous times. For example, in 2021, analysts have predicted an increase in the value of gold despite the ongoing market unpredictability. The fact of the matter is that gold is a precious metal. As a result, it has diverse properties. For instance, you can use it as jewelry or currency. Moreover, the value of your gold isn’t affected by common monetary policies or even market trends that affect paper money or stocks. In fact, you can have a gold IRA account to help protect any of your retirement savings from any market fluctuations. But what makes gold a smart investment that can protect the value of your financial assets? You should keep on reading to find out the compelling reasons why you should invest in gold today.
What is a Gold IRA account?
First things first, you should understand what a Gold IRA account is before you find out the reasons behind the increase in the value of gold in the current market. Let’s say that you have physical gold and other precious metals that you want to invest in. When you have a Gold IRA account, you have a retirement account that has added benefits. The thing is, you want to have more control over your investments, no matter how small they are. In addition to having control over your precious metals, this type of account allows you to invest based on your specific tax treatment. You can even take your distributions in the future. The great thing is that you can still assign your beneficiaries, access your quarterly statements, and check your balances whenever you wish to.
The following are the 3 types of Gold IRA accounts that you can open.
- A traditional Gold IRA account with a contribution limit of $ 5,500 or $6,500 if you’re over 50.
- A Roth Gold IRA that offers you after-tax retirement savings.
- SEP Gold IRA accounts are available for you as a business owner or a self-employed individual.
Reasons Why the value of Gold is Increasing
Despite any geopolitical factors that may affect the stock market, gold prices are positively affected. The fact is, gold remains a precious metal that’s seen as a haven for investments. In fact, gold tends to outperform most of its counterpart asset classes. The following reasons should shed some light as to why this is the case.
1. Demand and Supply
Gold is a great way to save for the future because there’s an increasing demand for it. In recent years, analysts have predicted that gold demand will continue to rise due to its many uses. For example, gold is used in electronic and medical devices. If the continuous developments in the technology industry are anything to go by, investing in gold should continue to increase in demand to meet the supply requirements.
2. Protected from Deflation
Did you know that gold can serve as an efficient hedge against inflation? This means that when you invest in gold, you protect your retirement funds from any potential financial crises.
3. Inverse relationship with interest rates
You’d be surprised to find that when interest rates go up, the price of gold goes down. However, since interest rates are low due to market volatility, the price of gold is at an all-time high.
The Bottom Line
The fact of the matter is that you want to invest in a precious metal that can withstand the pressures of inflation. While inflation has been stable at 2%, experts predict that it will become a problem soon. As a result, you should invest in gold since it’s always been known as an inflation hedge.