Scan the headlines today, and one thing becomes clear: Current economic conditions are still creating worry among consumers. On May 13, 2022, Fox Business reported that “consumer confidence tumbled more than expected, to a fresh 11-year low in early May, reflecting heightened concerns among Americans about the hottest inflation in a generation.” Google Trends confirms this, with searches for the word “recession” increasing by around 400% between February and May 2022.
Consumers aren’t alone in worrying about a recession. On May 16, 2022, The New York Post reported that “former Goldman Sachs chief executive Lloyd Blankfein is warning there is a ‘very, very high risk’ of recession.”
During my tenure as Director of the United States Mint, I saw Americans facing similar worries during the Financial Crisis of 2007–2008 and the following Great Recession. And while the cause of each economic situation is different—inflation is currently at a 40-year high of 8.3%, while during the Great Recession, it hardly went above 2%—the way many individuals are protecting their portfolios, especially their retirement portfolios, is the same: with precious metals.
Diversification is about reducing overall risk exposure. This can be essential in retirement planning.
Much of the current economic situation is a bit of a déjà vu for me. During the Financial Crisis of 2007–2008 and the Great Recession, demand for gold bullion coins went up 700%, and demand for silver bullion coins went up 400%, with gold reaching a then all-time high. With the start of the COVID pandemic, we saw demand for gold bullion coins go up 800% and demand for silver bullion coins go up 200%. The increase in demand was so high that the U.S. Mint’s production could not keep up. And once again, gold prices reached new all-time highs.
There are many reasons consumers may turn to precious metals during times of economic uncertainty, but one major reason is a reduction in risk exposure. By diversifying the assets in your portfolio, your portfolio may be less impacted by big swings in the market than if you keep all your wealth in a single asset or asset class. Precious metals like gold and silver, for example, have often seen stability or even growth when more traditional assets like stocks experience uncertainty. This is why diversification plays such an important role in long-term and retirement portfolio planning: Longer-term strategies can often benefit from lower risk exposure.
A precious metals IRA can help introduce additional diversification to your retirement portfolio and offer peace of mind.
One way to introduce alternative assets to your retirement portfolio is through a self-directed precious metals IRA. Unlike conventional IRAs, a self-directed IRA allows you to diversify your retirement portfolio with traditional as well as alternative assets, including precious metals. You command full control over your asset mix, allowing far greater room for diversification and thus more potential for lowering your overall risk exposure.
As Director of the United States Mint, when I saw demand skyrocket for precious metals bullion coins, that demand coincided with an explosion in the growth of precious metals IRAs. In other words, while individuals were snapping up gold and silver, a good portion of those coins were being used to open precious metals IRAs. That’s not a coincidence in my opinion.
Why did so many Americans turn to precious metals and precious metals IRAs during the Financial Crisis of 2007–2008 and the Great Recession? I think much of it had to do with peace of mind. Precious metals have a history of long-term growth and use as a hedge against market uncertainty, and those who purchased gold and silver coins to keep at home had the added benefit of being able to physically hold a portion of their wealth in their hands. For those who opened or added to a self-directed IRA, having total control over its asset mix—and knowing that mix includes precious metals—may have provided additional peace of mind.
Every financial situation and set of retirement goals is unique, and thus every retirement portfolio may also be unique. In the face of our current market uncertainty, a precious metals IRA through U.S. Money Reserve may help shield your wealth and offer peace of mind through diversification.
To learn more about the benefits of owning a precious metals IRA, CLICK HERE to request a FREE copy of our Gold IRA Information Kit.