Are you thinking about investing in a Precious Metals IRA, but not sure if it’s right for you? Well, we have three powerful reasons as to why you should:
- The IRS has created “loopholes” for the ownerships of gold and silver.
- You can protect your retirement savings from a severe market correction.
- You can protect yourself from taxes and wealth-destroying effects of government-sponsored inflation.
Now, let’s break those reasons down.
Reason one: The IRS has created “loopholes” for the ownerships of gold and silver.
Yes, the IRS is making precious metals ownership more attractive than ever. Hidden in today’s tax code are 3 “loopholes” you can use to your advantage. Here’s how…
Loophole #1: Penalty-Free Asset Transfer
It’s perfectly legal to transfer any of your retirement assets currently invested in Wall Street straight into precious metals, without any kind of tax or early withdrawal penalties. Regardless of the type of retirement account you currently hold, the process is quick and painless.
Loophole #2: Offset Exit Costs On Distributions
According to federally and state regulated custodians. For tax purposes, all metals are assessed at melt value when you take a distribution. So if the melt value on your metals is lower than the spot price whenever you take a distribution — which it very often is — then you can pocket the difference.
This gives you the chance for greatly reduce exit costs. Think of it like this: Your home’s property taxes could be based on an assessed value that’s significantly lower than market value. The market can keep going up, but the assessment stays the same. Whenever you decide to sell, you gain the benefits.
Loophole #3: Freedom & Privacy for Storing Your Metals
If you want your precious metals quickly accessible, a unique kind of IRA allows you to receive them at home and store them close by, in an IRS-approved facility of your choice (for example, a safety deposit box at your bank).
In an emergency, your metals will always be within reach. And with this method, your IRA-held precious metals receive tax-deferred status, so they can appreciate in value without any immediate tax liability. Plus, your investment stays private, so the IRS does not know what you are holding in your self-directed IRA.
Reason two: You can protect your retirement savings from a severe market correction.
The market is overdue for a correction. We’re living in the third longest bull market in history. And history tells us that markets don’t go up forever. At some point, they correct…
prices fall. The longer the bull market, and the higher prices have risen, the bigger the correction could be. And what happens to precious metals prices during a correction? Let’s look back at the biggest corrections in U.S. history – comparing the S&P 500 index to gold prices – and see what the numbers say…
1929-1941: The Great Depression
The S&P 500 experienced 11 major corrections throughout the Great Depression, starting with a 67-day decline of 44%, followed by a 783-day losing streak shedding 83%. Over the same period of time, gold prices climbed from $20.67 to $35.00, an astonishing 69% increase and new historical high. And prices held steady at that level through the entirety of The Great Depression!
1973-1974: 1970s Recession
Monetary instability and political turmoil in the early 1970s resulted in one of the most severe global crashes in economic history. From 1973 to 1974, the S&P lost 48% of its value. Meanwhile, gold prices rose from $76 in January 1973 (at the start of the crash) all the way to $179 in January 1975, when the S&P was at its lowest.
1980-1982: Fed “Stagflation” Overstep
Runaway inflation paired with stagnant growth (i.e. “stagflation) pushed the Federal Reserve to abruptly raise rates to over 20% in the early 80s. As a result, the economy instantly pulled back into a recession, and the S&P lost 27% of its value between 1980 and the middle of 1982. What did gold prices do? They set a new all-time record at $850 on January 21, 1980.
1987: “Black Monday”
The advent of automated “program trading” triggered a massive selloff on October 19, 1987, known as “Black Monday.” The following market correction caused the S&P to drop 33% of its value in just 101 days. During the 3 months that stocks and other investment instruments crashed, gold prices managed to grow by 4%.
2000-2002: Dot-com Bubble
What started as a legitimate boom from the explosion in consumer Internet access during the late 90s quickly evolved into a dangerous technology bubble, fueled by rampant speculation and an absurdly overvalued equities market. When the bubble finally popped, the S&P fell by almost 50%. Gold prices, on the other hand, increased by roughly 26% during the same timeframe.
2007-2009: Subprime Mortgage Crisis
In 2007, the U.S. began its largest and most severe economic downturn since the Great Depression. The S&P lost a devastating 56% of its value, the second-worst correction in the index’s history. Again, gold prices made amazing strides in the face of overwhelming economic adversity. Gold sat at $754 in October 2007, when the crisis began. By the time the crisis ended in March 2009, gold was at $897. Then gold reached its highest price ever recorded, which still stands today, in August 2011 at $1900, while the economy remained in shambles and Americans continued trudging through The Great Recession. Now that you know the history, what do you think gold prices will do when our next crisis arrives?
Reason three: You can protect yourself from taxes and wealth-destroying effects of government-sponsored inflation.
The problem with paper (fiat) currency is that it can be created out of thin air at zero cost. In the past, paper dollars had to be printed to inflate the money supply. Today, all central bankers have to do is make a few journal entries on a computer screen.
Official inflation rates in the United States are currently around 3%. But those of us who live in the real world know that this figure is…less than accurate.
Home prices, for example, have risen dramatically since 2009. Some areas have experienced 8-10% price gains year over year.
And it’s not just homes that are outstripping inflation. Healthcare insurance rates have skyrocketed… college tuition has outpaced official inflation by a long shot…even food prices are rising much faster than 3%.
Inflation has a way of eating away at your wealth. As the money supply grows, a dollar tomorrow is worth less than a dollar today. If you have cash sitting in a bank account, it is slowly losing value every day, every week, every month.
This isn’t just a high-brow economic theory or some abstract academic argument. It’s very real for retirees living on fixed incomes. Each year, their fixed incomes buy them less and less. This is the devastating effect of inflation.
Is there something you can do to protect yourself? Yes. You can invest your hard-earned money in gold and silver. Both metals tend to go up in value as inflation increases. The faster inflation happens, the faster the prices of gold and silver rise.
So now you know why you should open a Precious Metals IRA, but which one is right for you? Click here to see if a Depository IRA or a Home Delivery IRA is better for you. Ready to learn even more or take the plunge and open a Precious Metals IRA? Call our team at (844) 824-5051.
About the Author
