Gold has always held a specific and complex place in the hearts of man. Throughout ancient civilization, gold has been a symbol of wealth, prosperity, and power. Gold is lustrous and beautiful, but most of its value is actually derived from a social construct.
Still, for as long as we all agree that gold has value, it will continue to be valuable. It is a logical choice for exchange and its elemental properties make it highly sustainable. Societally and economically, it is held as valuable and humans are innately drawn to it.
Gold has stood the test of time against all economic strife, including inflation, crashes, and even war. It is the commodity of choice for any troubled time. And as such, it makes sense as a safe diversification of your financial holdings.
Should You Invest in Gold?
Even though people and economies alike generally agree that gold will always have value regardless of the paper currency market, there are some fundamental issues to gold as a commodity.
The main issue is that there is no way to “use up” gold. It is an element and a precious metal – once it is mined out of the ground, it will be a part of the market in existence in one way or another.
Because of this, gold doesn’t play by the rules of supply and demand that typical commodities like oil and corn do. Regardless of the demand for gold, the supply can only ever go up. There is a slight possibility of a cap or plateau in gold supply, eventually, but even this is currently theoretical.
That being said, as gold is still a universally accepted form of payment, the demand for gold is universal as well, irrespective of economic fluctuations even on a global scale. You need to be proactive, not sitting idle on your cash, and gold is a great way to diversify investments.
What Drives the Price of Gold?
Gold prices are still subject to fluctuations. The majority of the movement in gold prices is due to the central banks of nations around the world. These banks use gold as a way to diversify their monetary reserves, as opposed to relying purely on paper currencies.
Generally speaking, gold tends to be inversely related to the price of the US dollar, largely because the metal backed the dollar for so long. As a result, gold is often seen as a strong protector against inflation. Weak dollars drive gold prices higher and vice versa.
Investing in Physical Gold
There are numerous ways to invest in gold, the most obvious being physical gold.
Most often, people think of the gold bullion, shiny gold bars ranging from a few grams to 400 ounces.
The Bullion – Quick facts
Another form of physical gold is jewelry, but purchases in jewelry tend to carry more investment risk than other physical gold forms.
Gold Jewelry – Quick facts
The last common form that physical gold takes is gold coins. These can be trickier investments, depending on the demand coming from collectors for specific coin types.
Coins & Collectibles –Quick facts
Investing for Retirement with Gold IRAs
In addition to physical gold investments, a savvy move for the smart investor is to set up for retirement through the use of gold. Traditional gold will move with the price of gold, but as we have seen, over the long term, gold holds value remarkably well.
This makes it an excellent choice for long-term, retirement accounts, and gold IRAs are meant to do just that.
What are Gold IRAs?
A Gold IRA refers to a special kind of IRA retirement account where the retirement investment in the account is gold. Some IRAs will also allow other precious metals such as silver, platinum, or palladium.
Gold IRAs are subject to contribution limits and distribution rules just like traditional and Roth IRAs, and it is possible to open a gold IRA through a broker, as well, although these are referred to as broker-dealers, as they also provide the gold that goes into the account in the form of bars or coins.
These IRAs must be held separately from other IRAs, however, and they can come with higher fees since there is also the cost of insuring and storing the physical gold.
Gold IRAs can be set up with pre-tax money or post-tax money, like a Roth IRA, but they do require the use of some kind of custodian, like a bank or brokerage firm, or like a broker-dealer, mentioned above.
Your assets can’t be stored at home unless you count it as a withdrawal and pay the required taxes.
Like physical gold, a gold IRA is like a holding, storing away for difficult times. In the case of the retirement fund, regardless of inflation, economic uncertainty, or other trials, your IRA is likely to trend sideways, or even peak in response to declines in the dollar.
What is a Good Strategy for Investing in Gold?
Since gold comes with unique considerations, like insurance, storage, and resistance to the typical rules of supply and demand for commodities, it’s good to have strategies in place to ensure all your gold investments are high-quality, high-value, and sure to stand the test of time.
If you invest otherwise in financial markets, you will see that trading in gold can bring in unexpected profits with good strategic practices, much like trading in stocks and ETFs, in addition to protecting your existing wealth.
If you’re worried about your gold going stale, follow the trends like the big institutions do, and make money using gold trading strategies.
The best trading approach involves following the market and performing your research before any and every gold investment. This includes chart analysis with Fibonacci retracements as well as watching for seasonal trading highs and lows.
Whether you decide to buy and sell gold now as physical investments, or store it long-term for retirement as a gold IRA, following these strategies will maximize your profits with precious metals.
Gold in Patterns
Like many commodities, gold prices move in patterns, following the seasons of the year. There are certain times when gold trends higher and the price is stronger, and there are times when gold trends lower, with a weaker price.
You can also follow the trend of the relative dollar strength, as we have noted, gold prices tend to correlate with the US dollar fluctuation in an inverse pattern as well.
Gold price follows a seasonality, or a seasonal cycle. This is a critical way that we can see what big institutions and smart money are doing and when.
Gold tends to go up the first, third, and last quarter of the year, experiencing periods of lower value mid-year. A chart of gold’s average return over a year or several can show you exactly what months are best for buying and selling, even though overall, gold tends to trend pretty sideways.
Fibonacci, Support, & Resistance
Like trading with stocks, the use of indicators like Fibonacci retracements can show you the areas of support and resistance for the price of gold.
Generally speaking, these indicators allow you to see when you have an opportunity to, for example, add more gold to your IRA or sell off some of your physical investments.
In combination with seasonality patterns, these simple strategies can help you make the most of your gold investments – just be sure you have your trading strategy in place and prepare for the appropriate times to trade with the big, smart money, not against it.
What are the Best Gold Investment Companies?
Once you know the best way to invest in gold as well as how to make the most of each gold investment, the last step is choosing reputable companies for your investments.
These three companies are great resources for investing in gold when you’re ready:
Goldco is one of the most well-known companies in the precious metal industry. It began strictly as a web-based gold and silver retailer, but has since expanded to include both traditional and precious metals, like gold, IRAs.
Goldco is best suited for seasoned, savvy investors who want to have greater amounts of control over their investments. Due diligence is necessary if you decide to self-direct your IRA, as there are a wide variety of custodians and storage options available.
Augusta Precious Metals is a specialized precious metal company dedicated to providing best-in-breed customer service. They are a highly reputable and highly-trusted broker-dealer, offering gold bullions, coins, and IRAs.
Augusta Precious Metals is extremely highly rated across the Better Business Bureau, TrustLink, Trustpilot, and Google. They offer a plethora of resources and tools sure to be of service to any level investor. Their streamlined processes, low fees, high transparency, and free shipping and insurance make Augusta Precious Metals a great choice no matter where you are in your gold investment journey.
#3. Birch Gold Group
Birch Gold Group has been in business since 2003, selling physical gold for IRAs as well as for personal possession. Based out of California, Birch Gold Group prides itself on high-quality transactions and furthering consumer education.
Birch Gold Group is another highly reputable company, but their transparency and pricing structure does leave a bit to be desired. Overall, if you are looking to make large purchases, or if you want to browse their consumer education resources, Birch Gold Group makes for a solid pick.
These days, investing in gold is a relatively straightforward process. If you want to make your portfolio inflation, recession, and even, bullet-proof, diversify with precious metals and you’ll be golden!