We often refer to gold being used as a store of wealth for “generations,” but how far back might those generations go? Would you believe 1,300 years?
On December 6, 2022, CNN and other news outlets reported an amazing discovery: a stunning necklace found at the burial site of an Anglo-Saxon woman who died sometime between 630 and 670 AD, according to archaeologists at the Museum of London Archaeology. But while this is an incredible once-in-a-lifetime discovery, what shocked me is what they found on the necklace of this “woman of high status”: gold coins.
It seems that even 1,300 years ago, we understood the power of physical gold and how important it could be to keep a certain amount on hand to protect our futures.
Physical gold can be an important part of any retirement portfolio.
I’ve discussed the benefits of holding physical gold in a retirement portfolio many times in our “Gold News & Views” offerings. As discussed above, gold has a long, long history of use as a store of wealth. More recently (say, in the last 100 years), gold has historically risen in price, sometimes dramatically, during times of economic uncertainty. And as an asset that is known for its long-term growth, gold is often considered to be an ideal addition to a retirement portfolio.
By opening a precious metals IRA, you can enjoy the same tax benefits as with a traditional IRA along with the benefits of physical gold ownership. And if, once you begin taking distributions from your precious metals IRA, you choose to take distributions in kind (meaning you take out what you put in, rather than liquidating the portfolio and taking cash), you’ll still get to hold your precious metals in your hands, store them however you see fit, or pass them on to the next generation.
In my mind, though, the greatest benefit of adding gold to a retirement portfolio may be peace of mind. Knowing that a portion of your wealth is protected using the exact same type of asset (gold coins) that a woman used to display her own wealth 1,300 years ago is something I find very comforting.
Even within the world of physical gold, additional diversification is possible.
Diversifying your retirement portfolio with physical gold and/or other precious metals can be a great way to add an extra layer of wealth protection—but it doesn’t end there. You can amplify your diversification strategy by adding multiple types of gold to your IRA. Specifically, I’m referring to proof gold—coins that often share the same weight, purity, and even designs of their bullion counterparts but which offer a different set of benefits.
Just as with a bullion gold coin, a proof gold coin is guaranteed by its issuing government for its weight and purity. But unlike a bullion coin, a proof coin features an increased level of detail in its design, which is given a frosted appearance, while the background, or field, has a mirrored finish.
While their appearance is stunning, proof coins have another important aspect: just how few of these coins exist when compared to their bullion counterparts. In 2021, for example, just over 1.1 million 1 oz. Gold American Eagle coins were minted (counting both Type 1 and Type 2 designs). Meanwhile, only 28,000 1 oz. Proof Gold American Eagles were struck. That’s less than 3% of the bullion coins’ mintage released that same year—and that relatively low mintage can mean additional growth down the road.
Proof gold can add an additional level of protection to your gold IRA.
Diversification is all about protecting your wealth from sharp economic downturns. By utilizing multiple assets and asset classes that respond differently to the same economic factors, you can help lower your overall risk exposure. In other words, in the event of a recession (like the one many analysts are still predicting for 2023), a well-diversified portfolio might be expected to take a smaller hit and recover more quickly than a portfolio allocated entirely to a single asset or asset type.
Every portfolio is unique, built to address each person’s unique financial goals and level of risk tolerance. But no matter what those goals may be, proof gold remains a powerful option for those looking to protect their wealth. And who knows? Perhaps in another 1,300 years, it will be your gold that makes headlines around the world.
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