As you approach retirement or maybe you are already retired, it's essential to consider the volatility of the stock market and the potential impact on your retirement portfolio. In times of uncertainty, many investors turn to precious metals as a way to protect their wealth.
In this article, I'll explore the benefits of owning precious metals, how interest rates influence their value, and how physical gold can safeguard your retirement when banks such as the Silicon Valley Bank are under regulatory scrutiny.
I'm sure you are as concerned as I am...
Banks are failing again for a whole different reason today than they did in 2008. In 2008, the stock market crashed and banks were extended beyond their means in their real estate portfolios. As the banks crashed so to did the real estate market in 2008 and with any depression we saw business close and construction halt. Many people were out of work trying to determine their next move.
What is it that we are expecting in 2023?
I know that for the past three years we have been reading about how the market will crash and we'll have another recession or depression. But, while we wait, we are feeling the effects of the economy with instability in our government, infighting amongst our political parties, our concerns over foreign affairs before our own people, our cost of simple groceries getting out of control, and so much more.
Should we expect a future where the dollar is worth more and we can feed our families with $100 a week? I don't see a positive direction regarding the inflation we're experiencing or the depression our country is encountering.
What am I doing to safeguard my retirement and hedge the current inflation? I'm buying gold and silver. Just one month ago, from the time of this writing, I was quoting prices of Gold at $1,950 per troy ounce. In mid February I watched and purchased gold as it went down to as low as $1,815 per troy ounce. I took advantage of the decline in gold over a short 30 day period and doubled my physical holdings. As of today the gold price has climbed to $1993.70 per troy ounce. An incredible surge in less than a 15 day span has given me appreciation of value for my holdings.
I'd like to walk you through why owning precious metals is a good option for any investor portfolio currently retired or looking to retire in the next 10-15 years.
Why Owning Precious Metals is Good for Your Retirement Portfolio
One of the main advantages of owning precious metals such as gold, silver, platinum, or palladium is their ability to diversify your portfolio. Precious metals have low correlation to other asset classes, such as stocks and bonds, meaning that their price movements are not strongly related to those of other investments. As a result, adding precious metals to your portfolio can potentially reduce your overall portfolio risk.
Precious metals are also a tangible asset that can hold their value over time. Unlike paper currencies, which can be devalued by inflation, precious metals have intrinsic value based on their rarity and demand. Furthermore, precious metals are not subject to the same counterparty risks as many other financial assets, such as stocks and bonds, which rely on the solvency of the issuer or counterparty.
How Interest Rates Affect the Value of Precious Metals
Interest rates have a significant impact on the value of precious metals. When interest rates rise, the opportunity cost of holding non-yielding assets such as gold or silver increases. As a result, investors may shift their capital from precious metals to other investments that offer a higher yield, such as bonds or dividend-paying stocks. This can cause a decline in the price of precious metals.
Conversely, when interest rates fall, the opportunity cost of holding precious metals decreases, making them more attractive to investors. Furthermore, lower interest rates can lead to inflationary pressures, which can increase the demand for precious metals as a store of value and hedge against inflation.
How Physical Gold Can Safeguard Your Retirement Portfolio
In recent years, there have been several cases of banks coming under regulatory scrutiny, such as the Silicon Valley Bank, which was fined for its anti-money laundering program deficiencies. This has led many investors to question the safety of their financial institutions and the security of their retirement accounts.
Physical gold, on the other hand, is not subject to the same counterparty risks as many other financial assets. When you own physical gold, you have direct ownership of a tangible asset that you can store and protect yourself. This can provide an added layer of security to your retirement portfolio.
Furthermore, physical gold is a globally recognized form of currency that can be easily traded and sold. This means that in times of crisis, such as a stock market crash or a currency devaluation, physical gold can potentially provide a liquid source of funds to meet your financial needs.
Why Investors Should Look at Buying Physical Gold and Silver in 2023
Looking ahead to 2023, there are several reasons why investors should consider adding physical gold and silver to their retirement portfolios:
- Rising Inflation: The US economy is experiencing rising inflation, which can erode the value of traditional investments such as stocks and bonds. Physical gold and silver have historically been effective hedges against inflation, making them attractive to investors looking to protect their purchasing power.
- Geopolitical Uncertainty: Geopolitical tensions around the world continue to create uncertainty in the financial markets. Physical gold and silver are considered safe-haven assets that can potentially provide a store of value during times of geopolitical instability.
- Portfolio Diversification: As we mentioned earlier, adding physical gold and silver to your portfolio can potentially reduce your overall portfolio risk. With the stock market
As we all approach our retirement years, or maybe you are one that is currently reaping the rewards of years of savings and hard work, it's essential to consider the volatility of the stock market and the potential impact on your retirement portfolio.
Precious metals, such as gold and silver, offer several benefits to investors looking to protect their wealth, including diversification, intrinsic value, and low correlation to other asset classes that are directly linked to the stock market or influenced by economic turmoil.
While interest rates can impact the value of precious metals, they remain attractive to investors looking for a hedge against inflation and geopolitical instability.
Physical gold provides an added layer of security to your retirement portfolio, as it is not subject to the same counterparty risks as many other financial assets.
As we look take in the first quarter of 2023 and look at the remaining three quarters we have in front of us, will rising inflation and geopolitical uncertainty make owning physical gold and silver even more attractive? Adding these assets to your retirement portfolio can potentially reduce overall portfolio risk and provide a source of liquidity during times of crisis.
While the other investors are still trying to figure out the stock, bond, and mutual fund markets, take advantage and choose diversification for your portfolio.
I'd suggest checking our my review of the 5 Best Gold IRA Companies. These business can help you purchase physical gold with cash or inside an IRA. Check out this blog on purchasing Silver versus Gold my be the best option for you in 2023. It dives deep into the price of silver vs. gold and how you can diversify your portfolio with a less expensive precious metals choice.
Don't sit back and wait to see what happens in the markets in 2023. Be proactive and diversify your portfolio to safeguard your retirement savings.