About Gold as a Hedge Investment In, or Outside, Your IRA in 2021

The year 2020 will be remembered in history as a defining moment for this generation of humans. The economic success of countries around the world, the lack of global conflict, and the technological advances we’ve enjoyed since 1945 have created a sense of personal security, unlike that experienced at any time in history.

The possibilities of worldwide economic collapse, famines, and political chaos were considered events of the past, eliminated by mankind’s ability to control its destiny and optimistic expectations of a prosperous and safe future.

On January 11, 2020, the Chinese government reported the first known death in the Wuhan city from the new virus, commonly known as Coronavirus or Covid-19. Less than one month later (February 2), the first death outside China from the illness occurred in the Philippines. Less than two weeks later, France announced a virus-caused death followed by the first reported death in the United States on February 29, 2020.

Governments around the world declared national emergencies and instituted quarantines and stay-at-home orders. Thousands of businesses – small and large – terminated, furloughed, and cut the pay of employees. Many closed their doors, unable to continue without the resources needed to survive under these conditions. With the loss of customers and productive capacity, countries’ GDPs quickly contracted, triggering massive amounts of new government debt to sustain critical programs and relieve suffering. In the United States, the Congressional Budget Office estimated a 38% drop in GDP and a single year deficit increase of over $2 trillion.

The Brewing American Retirement Crisis

As has probably become disturbingly clear by now, if you’re an American or own any assets priced in US dollars, then you’re staring down the barrel of what may be the biggest financial crisis America has ever faced.

We’re not alone in our assessment. Some of the best-known names in financial analysis are deeply concerned at what’s now brewing in our retirement system, growing like a malignant tumor and feeding off the careful plans, hopes and dreams of ordinary Americans like us.

Sadly, COVID-19 has lit a match to it, and as this crisis deepens don’t expect continuing bail outs from the federal government – because this time they’re the ones adding fuel to the fire by going trillions or more dollars into unsustainable debt trying to keep COVID-19’s economic consequences under control.

Ultimately, “How are they going to end up paying for it all?”

In a nutshell, as the Fed desperately pumps money into the economy in an attempt to prevent things from getting worse, your hard-earned savings are losing value.

This is why we’re trying to warn as many American families as possible, because MUCH of this is preventable by sensibly adding gold as a hedge investment to your portfolio along with its sibling silver.

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The Investor’s Dilemma

No expert predicted the extent of lost incomes, consumer product hoarding, ineffective or absent critical healthcare supplies, projected food shortages, or the confused, often conflicting governments’ response to the Covid-19 pandemic. No one can forecast if or when the virus will be controlled. Will today’s environment become the new norm?

Robert Shiller, the 2013 Nobel Laureate economist, writing in the New York Times, claims the world has never experienced an event like the Covid-19 pandemic. “The tools of Statistical analysis and machine learning, powerful as they are, can’t adequately assess what the world is experiencing.” When asked if the market is cheap today, Shiller replies, “It’s not as highly-priced as it was just months ago.” He worries that the market might replicate the experience of the Great Depression. From 1929 to 1932, the S&P 500 lost three-quarters of its value and did not return to the same level until seven years later.

Investment firms Goldman Sachs, J.P. Morgan, and UBS predict a global recession of indeterminate length following the virus. Few reputable stock market investment firms are willing to make a clear prediction about the direction of the market in the next few years, preferring to rely on simple advice that stocks will be profitable over the long-term. It is unclear whether they mean one year, two years, five years, ten years, or more. Nebulous, mealy-mouthed advice is little help for investors who have seen their portfolios drop 20%, 30%, or more and do not know what to do.

“There is no precedence for the situation we are facing now. An epic battle of humanity trying to combat a new virus for which there is no cure and still no clear signal, a global asset price collapse at the end of an aging and highly indebted business cycle, and central banks with limited ammunition, desperately trying to regain and maintain control.”

Sven Henrich, NorthmanTrader

Investing in gold simply protects. The fact that you can buy Gold inside an IRA at a massive tax advantage is just the icing on the cake.

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Likelihood of an Extended, Deep Recession

As of the end of 2020, global government debt has exceeded $60 trillion, with an estimated global GDP just short of $81 trillion in the final hours of 2020. Most of the world’s industrial countries’ GDP shrank in 2020 due to the coronavirus. Factors that could further imperil economic growth into 2021, which continue to be a concern, are…

• Repeated epidemics of Covid-19

  An inability to find a vaccine for the rapidly evolving virus could result in rolling shutdowns of industry and communities in the future…

• Decline in petroleum prices

  The failure of the producing countries to stabilize prices amid a global decline of demand disrupt distribution channels and escalate international tensions, especially in those countries that rely significantly on oil revenues…

• US and China conflict

  The confluence of trade, Covid-19, and Hong Kong issues – especially in the wake of a hotly contested, and quite frankly questionable, campaign for the U.S. Presidency – escalates tensions that might end in war.

• Demand for social programs

  Citizens in many countries have experienced mass layoffs, deficient or absent health care, and stagnant job growth. They will pressure national, state, and local governments to expand service despite reduced revenues from income, property, and sales taxes.

• Higher interest rates

  Nations have been able to service growing levels of debt due to historically low-interest rates. If interest rates rise, the cost to maintain the existing levels of debt in the world will increase significantly. For example, a return to the 30-year average interest rate of 5% would require interest payments of $825 billion, or half the amount collected on all personal income tax.

• Excessive low-grade corporate debt

  U.S. corporate debt as of August of 2020 has exceeded $10 trillion, prompting many investment firms to warn their clients of the increasing risk of holding low-rated investment corporate debt. The BBB-rated debt accounts for more than 50% of the total market value of investment-grade debt.

Are investors headed to the Perfect Storm? Probably not, but the odds of an extended recession are high. If not likely. In past times of confusion, gold prices increase because people want a safe place to put their cash. In this uncertain environment, hedging your investment portfolio with gold is warranted…

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Safe-Haven Investments

Ownership of such assets is intended to protect real economic value against economic catastrophe.

Investing in a safe-haven investment is defensive (averting future losses) and offensive (preserving value that can be used for future opportunities). Many Investment managers recommend portfolios with 10%-20% of their value in assets that function as an insurance-like hedge that increases in value whenever systemic markets crash.

Assets such as fine art, wine, exotic cars, and real estate are sometimes promoted as recession-proof investments, generally by those who stand to profit from the recommendation. Such items are illiquid and often require extraordinary expertise to value.

Gold – the Oldest Safe-Haven

Mark Spitznagel, Founder and Chief Investment Officer of Universa Investments, writes in Barron’s magazine that gold, as a safe haven, “looks pretty golden.” The Motley Fool, one of the stock market’s best-known stock advisory group, concurs: “When capital markets are in turmoil, gold often performs relatively well as investors seek out safe-haven investments.”

Finally, the editors of Yahoo Finance write, “Gold has a knack for retaining value, and it is especially popular during downturns when it typically performs well as an investment. For some reason, humans place value in the tangibility and allure of gold, like Gollum to the ring.” The implied message from these and other financial experts appears to be: “Buy Gold.”

The fact is that, if paper money were to suddenly become worthless, the world would have to agree on something of value to facilitate trade, most probably gold as in the past. This is one of the reasons that investors tend to push up the price of gold when financial markets are volatile. Gold has maintained its purchasing power over a vast span of history, and that is not likely to change.

• Sumerians

  Men and women of the world’s oldest known civilizations wore gold chains and jewelry.

• Egyptians

  Prized by pharaohs of 3000 years ago, the capstones of the pyramids in Gaza were made from solid gold. The death mask of King Tutankhamun was covered with gold leaf.

• Incas

  The Peruvian civilization considered the metal as “sweat from the Sun God”. Their Spanish conquerors found rooms, statues, and a throne of pure gold, fueling rumors of a city of pure gold, El Dorado.

Multiple mentions of gold are found in the Torah (the Old Testament of the Christian Bible). The Roman and Greek cultures valued gold, even decorating themselves with jewelry and gold adorned clothing.

The appeal of gold and the possibility of “striking it rich” has drawn thousands of adventurers to remote, often hostile regions around the world whenever news of gold discoveries appears.

Brazil in 1693, Australia (the 1850s ), South Africa (1886), the Klondike (1896), and Kenya (1932) are just a few of such migrations during the past five hundred years. Some observers claim the discovery of gold at Sutter’s Mill, California, was the critical impetus leading to California’s statehood and the building of the transcontinental railroad system.

Gold and Mercantilism

Adam Smith, sometimes called the Father of Capitalism, created the Mercantile system that affected foreign trade between nations for several hundred years. His theory was based on the belief that a nation’s wealth depended on its gold and silver stores.

To boost a country’s coffers, the government restricted imports (keeping gold in the country) while boosting exports (drawing gold from other countries to the Treasury). The consequences of England’s restrictions on imports to the American colonies are considered one of the Revolutionary War causes.

For centuries, governments around the world tied their currency to gold, effectively limiting the potential supply of money to the country’s gold reserves (the Adam Smith effect). Because of World War II and the need for foreign debt to fund the war and rebuilding, most countries agreed to back their national currency with gold at a fixed exchange rate (Bretton Woods).

Gold and American Currency

Before America adopted a gold standard in 1879, the country’s currency was backed by silver (each dollar could be exchanged for 371.25 ounces of silver with a ratio of silver to gold set at 15 to 1. In other words, the de facto rate of a dollar bill was 24.75 grains – a grain is equal to 0.00228571 ounces – or 0.056 ounces of gold. The Gold Standard Act of 1900 eliminated the exchange for silver, establishing gold at a ratio of $20.67 in currency to 1 ounce of gold.

Facing the ruins of the Great Depression, President F.D. Roosevelt forbade banks to export or redeem paper currency for gold in 1933. He subsequently required all gold coins and gold certificates in denominations of $100 or more to be turned into the Federal Government in exchange for currency. After the gold was collected, the official gold price was raised to $35 per ounce, where it remained until 1971.

The President also made the private ownership of gold coins or bullion illegal for Americans, punishable by up to ten years in prison. The action was thought necessary to back new currency issues since gold remained the official exchange medium between countries.

President Nixon abandoned the gold standard in 1971. Since then, the dollar has been a “fiat currency” whose value is backed by the United States’ full faith and credit. His action eliminated the practice of foreign governments exchanging dollars for U.S. gold reserves. On January 1, 1975, restrictions on the ownership of gold in any form by Americans were eliminated.

Is Gold a Good Hedge Against Inflation and Deficits?

In a nutshell, yes. When governments run significant budget deficits, the temptation to print more money can be irresistible. Many economists justify the politicians’ deficit spending by theorizing that printing money is just a “merger of fiscal and monetary policy.” Their analysis effectively rejects the commonsense adage, “There is no free lunch.”

In effect, the magic occurs by printing money to buy Treasury debt that will never be repaid. The lender (the U.S. Government) and the borrower (the U.S. government) are the same. The logic also assumes that most future buyers of debt will continue to be U.S. citizens or institutions who now owe about 61% of Federal Government debt. The possibility that refinancing the 39% of the debt owed by foreign investors might not be possible in the future is rarely considered.

When more money is printed, consumers gain a temporary boost in purchasing power until firms raise prices on the products they have to sell.

Cycles of printing money and raising prices can quickly become run-away inflation, or hyperinflation, as experienced in Hungary after WWII or Yugoslavia in 1994.

Investors can either proceed with the new thinking about government debt or consider examples throughout history when governments exceeded their capacity to pay their debts. If you have not decided whether or not to buy gold in these troubled times, consider the advice of Jared Dillian, an investment strategist at Maudlin Economics.

As the author of Street Freak: Money and Madness at Lehman Brothers Jared Dillian writes, “The price of gold also goes up when the federal deficit grows, as it’s doing now. This was the other reason gold more than doubled between 2009 and 2011: The government’s annual budget deficit soared into the $1.8 trillion neighborhood. Now the government is talking about running the biggest deficit in the history of the United States. Even bigger than we had in World War II. And that bodes well for gold.”

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Investing in Gold

All potential investments should be scrutinized to avoid scams, tricks, and exaggerations. Precious metals have attracted their share of crooks over the years, ready to separate the greedy and fools from their money. Potential gold purchasers should recognize the difference between actual physical gold metal and “paper gold.” The latter includes…

• Gold ETF shares

  Gold ETF shares are simply a digital version of gold, not gold itself. The gold is owned and handled by a trustee, usually a bank. Shares in a gold ETF can rarely be used to redeem any gold.

• Gold mining stocks

  Companies in all industries benefit from higher prices for their products. A mining stock’s value is based on the financial operations and assets like the shares of other publicly traded common stocks. Market trends (prices going up or down) influence their value more than gold prices.

• COMEX gold futures

  Most gold futures contracts are never exercised (no actual gold is delivered or received). The Futures market primarily exists so that industry principals can stabilize prices and costs (hedgers) by transferring the risk or price movement to speculators. A single contract represents 100 troy ounces of gold. The amount of gold represented by the outstanding futures contracts is substantially higher than the actual gold held in the Exchange warehouse.

For many people, the best “gold” for investment is physical gold. It can be purchased from, and sold to, reputable dealers, assayed, and stored by owners in their choice of secure locations.

Gold Prices

In America, the U.S. Official Government’s price of gold was unchanged at $35 per ounce between 1934 and 1971. The price per ounce was raised to $38 in 1972 and $42.22 in 1973. While Americans were restricted from owning gold, investors of other nations were active buyers. The world’s price of gold per ounce rose $37.44 (January 14, 1971) to $2,061.50 on August 7, 2020.

Despite laws prohibiting ownership of gold, wealthier citizens of the world have always owned gold as a hedge investment against inflation, completing transactions and storing the metal in offshore accounts. Many, unwilling to break national laws, turned to gold coins, albeit with questionable numismatic value.

Types of Gold Metal Investments

The more popular investments are gold bullion coins issued in various weights and issuers. Popular coins include the American Gold Eagle bullion coin, the Canadian Gold Maple Leaf, and the South African Krugerrand. Privately minted gold bars and rounds are also available in various weights from precious metals dealers.

The Federal Trade Commission warns that “unscrupulous sellers often overprice their coins, lie about the bullion content, or try to pass off ordinary bullion coins as rare collectible coins… private mints issue coins that look like bullion coins minted by foreign governments, but may have little or no gold content.

Your best defense is to study the market and choose your dealer carefully.”

Precious Metals Self-Directed IRA

Using an IRA to hold precious metals that do not generate income is not recommended for everyone. Before establishing a Gold IRA, consult with your financial adviser to understand the benefits and disadvantages.

Final Thoughts

Gold has demonstrated its investment benefits over a long period. It is considered by financial advisers and investors to be one of the safest investments, the price often tracks in opposition to the stock market or economic swings. If you are worried that a recession and an accompanying bear market will devastate your portfolio’s value, you should seriously consider owning gold.

Jim Rogers, a co-founder of the Quantum Fund advises, “First, do your homework, don’t buy gold because you heard me say it or even because you say it. But if people do not own [gold], they should start after they’ve done their homework.”

You’ll be glad you did.

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Gold has always been used as a means to preserve wealth.

In the Financial Crisis of 2007 – 2008 millions of Americans were horrified to see their IRAs and 401ks lose over HALF their value.
But those who had planned ahead with Gold saw 200-400% increases.

… as quoted above, “there is no precedence for the situation we are facing now” and it’s likely going to get worse before it gets better

Gold in Your Home

Gold and Silver Bullion Coins, easy to carry and easy to hide, are a key part of many American’s preparedness strategy

Gold in a Secure Vault

For larger bullion bars and rounds, or quantities of coin, we can arrange ultra-secure vaulting far out of reach from greedy banker cash grabs

Gold in Your IRA

If you have a retirement plan, you should hold a portion of gold to help offset risks from the currently brewing financial crisis

Frequently Asked Questions

So, What’s the Catch?

Well, unfortunately not everyone qualifies, but if you can answer yes to the following 2 questions, you’ll instantly qualify to receive a free 2021 Information Kit at absolutely NO cost, and NO obligations to you…

1. Are you concerned about your retirement account or savings account?
2. Is the value of your retirement account(s) or savings account(s) individually, or combined, over $100,000?

If your answer is yes, request your FREE 2021 Gold Information Kit that explains how you can start hedging your IRA, 401(k), or other eligible retirement account against volatility and uncertainty with gold bullion bars and coins TAX FREE, and without taking out a single penny out of your pocket or from your bank account!

Hedge Your Portfolio with Physical Gold and Other Precious Metals, the Right Way

Given the brewing economic and geopolitical uncertainties at work, as well as their consequential market volatility, and the potential upswing in precious metals value under such conditions that these legitimate concerns entail, doesn’t it make sense to add physical gold to your portfolio?

The Birch Gold Group’s award winning kit has been moving fast, but there should be a few left — if you act now and get yours absolutely free as our special gift to you.

Requesting your absolutely free 2021 Gold Information Kit will easily be the smartest investment decision you’ve ever made — one that could preserve, protect and even grow your investment portfolio — in the months and years to come.

Thousands of Americans have already protected their investment portfolios and retirement accounts from the next big stock market crash by sensibly investing in precious metals bullion bars and coins. Don’t wait until it’s too late for you…

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