Dateline: Tbilisi, Georgia
Update 2023: Soaring living costs, rising government debt, a flagging dollar and the ever-present spectre of a potential recession are just some of the factors driving investors to return to man’s most enduring store of wealth, gold.
Governments, too, wary of further geopolitical shocks and market volatility, are also building up their reserves. China now has more gold than at any time in history, a clear sign that it’s preparing for further shocks ahead.This makes it a good time to start thinking about gold investment while also looking at other ways to diversify your wealth and protect your assets. Are you prepared if the worst comes to the worst? Or are you worried about that next unforeseen shock that’s waiting just around the corner? Time to stop worrying and get prepared, talk to Nomad Capitalist about creating your holistic Action Plan today.
Gold has one role on this planet and that role is that it is the only true store of wealth. From the times of the ancient pharaohs, gold has been coveted, hoarded, traded and used as a stable method of exchange for goods and services.
Today, it serves as an excellent way to invest using your otherwise stagnant retirement account.
We frequently discuss the idea that the only reason society stopped using gold and started using paper to pay for goods and services is that gold is not easily portable in large amounts. However, its heritage as a medium of exchange gives it value.
To give you some kind of idea about the stability of the gold price is this fact that was relayed to me some years ago, in the 1800s a one-ounce gold coin could purchase a well-tailored suit in Savile Row in London’s Mayfair.
The same one-ounce gold coin can still purchase a well-tailored suit. Not one paper fiat currency has been able to beat that stability that physical gold offers. Reserve currencies like Britain’s pound sterling or the US Dollar have lasted merely decades, while gold has remained rock solid for thousands of years.
Gold isn’t sexy in modern terms like an exotic stock option or a derivative because it doesn’t offer any return on investment. It has one primary function: to store and preserve wealth.
Historically gold has been the currency of the elite. The super-wealthy who hold the strings of our presidents and prime ministers and make all the decisions about what happens to humanity.
They covet gold and use gold to hold their wealth. They have the gold and they make the rules.
In the Great Depression of 1929, thousands of people lost fortunes buying stocks and shares because they thought the stock market would continue to rise forever, a bit like today’s empty stock market rallying.
In times of volatility, everyone and their mother rushes to the umbrella of gold. Not just any gold financial product, mind you, but physical gold in bars and coins.
There are many fancy paper financial instruments they call gold, but these paper ETFs, futures, options, and other derivatives are not real they are basically made up junk. Paper gold is something that banking oligarchs can use to churn ever-increasing commissions and fees out of unknowing investors.
They are used for quick investments without having to move a few tons of gold from this bank to another bank. However, it’s entirely fraudulent.
There are more than 100 paper gold contracts to one physical gold contract traded today; possibly even more than that. These gold contracts never reach maturity because there is not enough production of gold to fulfill these contracts.
Instead, futures contracts are merely bought back at a later date by the same banking institutions that issued them. Meanwhile, lead times for the delivery of physical metal should increase exponentially. JP Morgan is one withdrawal from running out of deliverable gold.
That’s what makes gold such an attractive long-term asset to hold in your retirement account: scarcity.
The global economy could easily end up on the brink of disaster. Holding some gold protects part of your retirement account from the madness.
While you may not have a lot of liquid assets to purchase gold coins or bars to store at home, it is possible to own gold in your IRA using retirement money you already have.
This is known as the “Gold IRA”, a form of Self-Directed IRA in which you roll your existing IRA, 401(k), or other retirement account over in a way that legally allows you to own physical gold.
Not a gold ETF and not a gold mutual fund or some mining stock… but real gold safely stored in a high-security vault.
It may not be possible to move your IRA money into gold stored offshore, but if you don’t have a large retirement account OR if you only want to diversify a small part into gold, owning domestically stored gold in your existing IRA may make more sense than moving your entire IRA offshore.
Reasons to buy gold in your IRA
Global commodities have fallen to record lows causing volatility in countries like Brazil, Russia, India, and China.
The derivatives market is at nightmare proportions and the majority of these financial instruments are interest rate dependent, which means any changes in interest rates will cause a monumental crash. The top 5 US banks have a total derivative exposure of $247 trillion.
The Federal Reserve is holding $4.5 Trillion of low-interest bonds, any upward movement of interest rates will see the Fed bankrupt itself because a $1 billion bond at a return of 0.5% is not going to be worth as much as the same $1 billion bond at a return of 0.75%.
There is no longer any room for maneuver except more quantitative easing. More zero percent interest rate loans to buy back toxic debt and get the taxpayer to pay it back.
The US Treasury has claimed the national debt is just over $19 trillion and has not amended this amount for months. The government is not including contingent liabilities of another big bank imploding, nor the costs that another financial crisis would have.
The money you put into a bank is an asset of the bank. Banks can no longer be declared bankrupt because they can either be refinanced by bail-ins using depositors’ money or be bought out.
Congress has toyed with a spending bill that makes the American taxpayer responsible for any derivative losses that a bank may suffer. The stock market is being manipulated by corporations buying back their own stock to distort P/E ratios.
Being able to borrow at 0% interest allows them to buy back the stock and since there is less stock available on the market the earnings look better divided by less stock.
I frequently speak about market volatility and hedging your investments with gold. It is better to hold physical gold that has stood the test of time as a store of wealth, than a huge share portfolio to bankrupt corporations.
How to set up a gold IRA
If you have an IRA, you can rollover to physical gold until economic stability resumes, or if you can liquidate your IRA take physical possession of precious metals.
I have a lot of experience dealing with US gold companies in one of my former businesses. Almost all of the major players in the US are located in Los Angeles, and a number of them have gotten in trouble for selling overpriced numismatic coins that I never recommend.
A friend of mine recently re-introduced me to the CEO of Regal Assets, a company that matches my philosophy: they don’t sell numismatics at insane premiums, they set up your gold IRA rollover for you for free, and they have free storage for one year followed by a flat “all you can eat fee”.
You can contact them by calling 1-855-726-4405; feel free to tell them I sent you.
If you don’t have a lot in your IRA but just want to “free” your money from possible government intervention, Regal’s program makes a lot of sense because they don’t charge you a rollover cost.
In comparison, the offshore guys I recommend would charge a few thousand dollars to handle an SDIRA rollover; Regal pays those fees for you. You might pay a point or two more buying gold with them than with a discount online broker, but you also get free storage for a year and someone to talk to.
The biggest advantage of Regal for me is that they are one of the only companies I know of that can store your IRA’s physical gold at Brinks’ vault in Singapore.
You probably know that I’m a big fan of Singapore for offshore gold storage, and as someone who wouldn’t want my gold in the United States, the Singapore option is a game-changer for me. It’s the only thing that would motivate me to write about US retirement account strategies for gold.
The other really cool thing about Regal’s gold IRA program is that you can store an unlimited amount of gold for as little as $150 a year. Also, the first year is free. Even if you have $1 million to invest, your storage fees will be the same.
Regal does make up for this by charging a little more than some other gold dealers. With a gazillion outfits in the US hawking bullion coins at silly prices, Regal told me they decided to take my approach: charge a little more and roll everything in so no one feels nickeled and dimed.
I know from my years working behind the scenes with gold companies as clients that “1% over dealer cost” gold coins are usually the beginning of a bait and switch to sell overpriced numismatics. What company can afford to buy expensive endorsement ads on Fox News and talk radio only to make $6 on a coin?
I’ve looked into gold IRAs for US readers before, and most of them only offer Brinks storage in Salt Lake City. That’s not exactly great for protecting yourself from a future gold confiscation.
The process of converting your paper IRA into physical gold takes a few weeks, and it’s often better to take action sooner than later.
Weapons of mass financial disaster are waiting for you and your retirement account. If you don’t want to look for international investments to put into a self-directed IRA, then a domestic gold IRA is the next best thing considering the alternative is manipulated paper.