- December 18, 2018
- Category: American Bullion Scholarship
American Bullion is proud to announce the winners of the 2018 Annual Scholarship Essay Program! If you are considering entering, or wondering how to win a scholarship of your own, read the essays below to learn more. Winners are selected from qualified entrants each year, and the entries of winning students can help you learn how to get a scholarship of your own.
Three college scholarships worth $1,000 each were awarded. Over 1000 applications were received in total and three talented students were awarded scholarships worth $1,000 each. Applicants were asked to write an essay answering the question, “What are the benefits of including Bitcoin and physical gold in an IRA?” Participating students offered a wide range of viewpoints, each with its own approach and opinion. American Bullion is proud to award this scholarship to the deserving students below. The 2018 winners are:
- Michelle Kocanda – Pasco-Hernando State College
- Erik Reese – West Los Angeles College
- Andrew Hatch – Florida State College at Jacksonville
We congratulate the winners and thank everyone who participated. The winners’ essays are below. For information about the 2019 scholarship opportunity at scholarship page.
Winners’ Thoughts & Essays
Michelle Kocanda
“I’m honestly shocked that I won this scholarship and was not expecting this news at all. This will be a big help in paying for college and helping me work toward earning my computer engineering degree – financing was a huge issue I was worrying about. Now with this scholarship, I have peace of mind in knowing that a decent amount for next semester will be paid for.“
Essay
Planning for retirement is an important part of planning for ones future. The amount of money that is put toward retirement can determine someone’s quality of life after they leave the workforce, for this reason it is important to plan for the unexpected and diversify the amounts and kinds of investments in a retirement account.
Historically the U.S dollar used to be backed by gold, however this is no longer the case. While this may not cause a problem in a person’s day-to-day life, the effects of it can be seen when examining the trend of inflation. The United States has not experienced hyperinflation similar to Venezuela or Zimbabwe, but according to U.S Inflation Calculator, the economy has experienced a 97% increase to cumulative inflation over the past twenty-five years. This inflation means that over time the U.S dollar has had less and less buying power – something that could be detrimental to retirement plans if it spirals into a critical state. If a person planned ahead and invested in other currencies, such as gold and bitcoin, then they would not be as badly affected by hyperinflation if the U.S dollar ever did reach that point.
Between November 2008 and September 2011, gold experienced a steady increase in price and has not dropped below $1,000 per ounce since. While the prices given are in U.S dollars, the prices for other countries followed the same trend of a steady increase with no significant decrease in price. As long as gold remains a precious commodity, it will always have a high international value. This means that any gold a person invests in for retirement will be guaranteed to still have value when they are ready to retire. Having this guaranteed return can give a person the security and comfort of knowing that no matter what happens before they are ready to retire, the gold that they have invested in will still hold its worth.Bitcoin is a newer currency that exists completely within the realm of the internet and was invented in 2009 as a way to facilitate peer-to-peer transactions. It works by storing the data about bitcoin transactions in block chains, these block chains are then stored across multiple servers. Handling the information this way makes it nearly impossible for hackers to change values regarding how much bitcoin an individual has and how much it is worth. It was also designed in such a way that only a certain amount of it can be in circulation at any one time, so it does not carry the risk that traditional currencies do of potentially becoming devalued. Investing in a new currency, especially one such as bitcoin, will always carry some degree of risk. However bitcoin’s reliance on the internet is also causing its value to remain high. As more people gain access to the internet bitcoin’s popularity will rise and it will begin to be accepted by more major companies. This rise in value can already be documented, from April 2017 to April 2018, its price rose from one being worth $1,040 to being worth $8,200. So while it may involve some risk, adding bitcoin to a retirement account can have a large payout that does not depend on other economic factors.
It is good to start planning and saving for retirement early, some sources say to start investing as soon as a person starts their first job. But not all investments carry the same risks or benefits and while investing purely with U.S dollars might be the easiest route, it is beneficial to diversify the investments and have a back-up plan for the unexpected – such as the U.S dollar losing value or bitcoin suddenly spiking in value.
Erik Reese
“I am completing my Associate of Science at West Los Angeles College with a degree in Computer Science. I haven’t yet decided whether I will attend Northern Arizona or Arizona State, in order to complete my Bachelors degree, but I greatly appreciate the opportunity to participate in your essay contest. Thank you.“
Essay
With talk of cuts to Medicare and Social Security, it seems like the perfect time for American workers to get a firm grip on supplemental retirement plans. IRA’s are the perfect vehicle to shore up what most had previously considered “guaranteed retirement income” and because IRA’s serve as long term investment vehicles, it is critical that they are well diversified, utilizing both long and short term financial products, with varying risk factors. Gold and other precious metals are a great IRA addition, because they serve as a hedge against cataclysmic financial mishaps that can cause tremendous damage to typical financial products like stocks, bonds, and Treasury Bills. The financial mishaps I’m referring to could include, but are not limited to, a stock market collapse, runaway inflation, and or dollar devaluation for any reason. Gold and other precious metals have a long history of maintaining or increasing in value when other financial instruments flounder or collapse entirely. Gold’s value is universally appreciated, which is why the first stop for any conquering army, has always been the loser’s treasury.
Generally speaking, gold and other precious metals have a history of long term appreciation, which bodes well for their inclusion in an IRA. But due to their inverse reaction to cataclysmic events and their ability to offset losses incurred by other elements of the IRA, their inclusion is practically required. Financial advisors typically recommend a 5% to 15% portion of the retirement portfolio to be in precious metals. Physical precious metals are the best sort, because they are currency. Gold ETF’s, mining stocks, and the like are based on the value of gold, but don’t offer the same immediate utilization availability.
Bitcoin is another financial tool that merits serious consideration for IRA inclusion. It’s a new financial instrument, whose value has exploded in public sight, since coming onto the scene. Like gold, Bitcoin is not backed or affiliated with any particular country, government, or central bank. It is a crypto-currency that facilitates financial transactions by digitally exchanging anonymous and heavily encrypted hash codes across a peer-to-peer blockchain network. Unlike the U.S. dollar, gold and Bitcoin have a limited supply. Gold supply is limited by the accessible amount present on Earth and Bitcoin is limited to 21 million Bitcoins, when fully issued. The first Bitcoin purchase transaction occurred in 2009, when a pizza was purchased for 10,000 Bitcoins. Today, one Bitcoin is worth more than $7,000. Needless to say, Bitcoin’s value is highly volatile. In spite of this however, it has great potential for long-term appreciation and that’s the name of the retirement game. And because it isn’t tied to a particular currency, just like gold, it is not negatively affected by the same factors that can wreak havoc on traditional financial investments.
In summary, Bitcoin, gold, and other precious metals are not only viable long-term investments for an IRA, but as they rise and fall over time, astute investors can cost average, by buying when prices drop below previous purchase levels, allowing for even greater long-term gains. And all the while, they are providing protection from potentially cataclysmic financial events that could greatly and detrimentally affect retirement portfolio values.
Andrew Hatch
“With the cost of education rising each year, the generosity of American Bullion is keeping that cost affordable for hardworking students attempting to get a great education. I truly can’t thank them enough. With their financial help, I will be able to spend more time focused on my degree without the fear of accumulating the debt that comes with it.”
Essay
Anytime an individual is researching how to invest their hard-earned money, the most commonly discussed principle is how to diversify. Diversifying is highly encouraged because it reduces the risk of losing money by spreading the funds over a multitude of different companies, countries, or asset classes. The most common mistake made by people looking to diversify is that they choose to spread their funds out over similar performing investments, such as choosing multiple companies in the same sector, only choosing to invest in a specific capacity index fund, or only investing in foreign stocks. People who do this are ineffectively diversifying because their funds will still follow an upward or downward trend, which will hinder their potential to maximize their gains and minimize their losses. When it comes to diversifying a retirement fund, most advisors will recommend putting a percentage of the funds towards stocks and the remaining percentage towards bonds. The purpose in doing this is to preserve a portion of the money in a very low risk investment making a very small return while putting the remaining amount in a higher risk investment to potentially realize more returns. This specific percentage varies with how close the retirement date is, and how risky the investor is. While there is nothing wrong with this method, choosing to diversify a retirement account with gold and bitcoin has more potential to bring a higher rate of return, which will result in a more comfortable retirement. With some years bringing in over 30% return, gold has historically proven itself to be a sound investment. While it has its ups and downs in the short-term, the long-term picture reveals that it has been very rewarding. The benefits of buying gold as an investment is the hedge against inflation it provides, the fact that there is currently nothing that can replace it, which means it will always hold some value, and how it responds positively in situations that might negatively affect the value of paper currencies. Bitcoin, on the other hand, is a very volatile investment. It has great potential in the short-term, but it hasn’t been around long enough to really determine how well it will perform over the life of a retirement account. One of the benefits of investing in bitcoin is that it can be an incredible investment if the idea becomes a universal currency as intended by the creators; however, if the idea falls flat over the next couple of years, the investor could lose all of their money. The main reason for why one should diversify their account with these two investments specifically as opposed to the traditional stocks and bonds is because gold and bitcoin are on opposite sides of the investing spectrum. With gold being a physical commodity that will likely never lose all of its value and bitcoin being an abstract currency that has proven itself able to soar to new heights, the retirement account will reap the rewards of having a stable, consistent investment with gold, which provides greater returns than bonds, and a very high risk, very high reward adventure that can be found in bitcoin.
The views and opinions expressed in the above essays are those of the authors and do not necessarily reflect the views of American Bullion, Inc., its affiliates, or its employees. American Bullion does not guarantee the information’s accuracy or completeness, and does not recommend that the information serve as the basis of any investment decision.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.