Precious Metal IRAs: A Safety Net In Times Of An Unstable Dollar?

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Political and economic developments have seemingly threatened the overall stability of the U.S. financial system.

In the former, a European power struggle between Russia and Ukraine and rising tensions between China and Taiwan have left many citizens with fears of a third World War. In the latter, a year’s worth of quantitative tightening by the Federal Reserve has placed a strain on the U.S. economy and even triggered the fall of Silicon Valley Bank.

While both political and economic tensions have eased slightly, the investors’ psyche is likely anxious. Gold, a historical safe haven in times of crises, currently hovers around its highest-ever historical price, while other precious metals like Silver and Palladium have made significant price ascensions in 2023. 

Chart of EUR/USD in the past 2.5 years. Source: TradingView.

In comparison, the U.S. dollar’s value has deteriorated significantly within the last two years. Using the euro-to-dollar (EUR/USD) foreign exchange pair as a proxy, the chart above shows that the number of Euros needed to buy one U.S. dollar declined 22% between Dec. 18, 2020, and Sept. 29, 2022. Similar proxies for the U.S. dollar like the U.S. Dollar Index have also suffered declines in the double digits. 

Inflation, the dollar’s main adversary, has declined from a peak of 8.9% (based on the Fed’s CPI measures) in mid-2022 to 5.0% as of April 2023. While declining inflation has helped recover some of the U.S. dollar’s value, investors remain vigilant to the economic and political threats that may disrupt this recovery. 

Investing In Gold: A Hedge Against Political And Economic Uncertainty?

Gold and precious metals have served as safe havens in a number of periods of political and economic uncertainty. 

Gold is perceived to be far more stable than fiat currencies in moments of crisis, helping investors diversify their savings and develop an “anti-fragile” approach to economic shocks. A new survey shows that 10.8% of the American population possesses stores of gold, and 11.6% of Americans possess silver stores, too. 

Some potential benefits of investing in gold include maintaining value while paper currencies become devalued, serving as protection during inflationary periods, providing tax benefits to account holders and belonging to a highly liquid market (i.e. gold is easy to sell and buy). 

How To Buy Gold 

There are many potential avenues to purchase gold — Investors seeking to purchase gold can do so through proxies such as gold stocks, gold Futures, gold exchange-traded funds or gold mutual funds, each of which is available through regular brokerage accounts. Alternatively, investors seeking to purchase physical gold can do so through precious metals dealers, pawn shops or jewelry stores. Another way to get physical gold is to go through a self-directed IRA custodian, which will store the gold for an investor’s Individual Retirement Account (IRA) in an IRS-approved facility 

On the investor’s gold-purchasing journey, it’s often important to have a reputable expert from which to chart the best course of action. This expertise can be gleaned from precious metal specialists like Birch Gold Group. Since 2003, Birch Gold Group has helped over 23,000 customers protect their IRAs through the purchase of precious metals. As a precious metal dealer, the company offers a plethora of gold and silver products for the investor to choose. It is also an expert on precious metal IRAs, capable of answering any questions about account setup, taxes, gold custodians, account rollovers, storage and more. 

When investing in gold, who you buy from is often as important as the investment itself. Birch Gold Group says its goal is to ensure that investors can feel safe with one of the most reputable precious metal specialists in America. With top ratings at customer-review agencies like Trustpilot and Gold Dealer Reviews and endorsements from celebrities like Ben Shapiro and Jordan Peterson, Birch Gold Group holds a reputation for excellence that few can compete with.

Excited to begin the gold-investing journey?

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Featured photo by Scottsdale Mint on Unsplash.