It is no secret that the value of the U.S. dollar has been declining steadily on world markets. This decline is solid evidence of America’s deepening financial troubles and the negative impact of a budget deficit of $1.4 Trillion. Investors are realizing that their dollar-denominated assets have statistically declined a shocking 82% since 1971.
The entire story about the decline of the U.S. dollar would require an in-depth understanding of a great many factors. Nevertheless, one thing has become crystal clear: Paper assets tied to the value of the dollar are declining and any near-term appreciation seems unlikely.
Gold, on the other hand, has a 3,000 year history as currency despite the fact that many individual investors continue to view gold as just a commodity like wheat, copper or pork bellies. During much of its history, gold has been a universal exchange medium. Simply stated, gold retains its purchasing power. While dollar-based assets have been declining in value, gold has appreciated steadily.
Inflation reduces your purchasing power. However, historically, as inflation increases, so does the price of gold. Thus, gold is well known to be a hedge against inflation. During the five years when inflation was at its worst (1946, 1974, 1975, 1979 and 1980) the return on the Dow Jones was -12.33%. Inversely, the average return on gold was +130.4%.
Today, it is permissible to convert Traditional and Roth IRAs into gold IRAs using specified proof and bullion coins and bars. A steadily-increasing number of investors are making this switch based upon historical data and informed predictions that the value of gold will continue to trend upward. We believe that traditional IRAs invested in paper assets are vulnerable to economic uncertainty, inflation and geo-political tension. Therefore, rolling some of these paper assets into a Gold IRA is an excellent protection and safety measure.
