The favourite topic of our older American friends who are born during the baby boomer years is Gold IRAs these days. Gold IRAs are traditional individual retirement accounts (IRA) and they choose gold amongst silver, platinum and palladium to be placed in the IRAs. Gold is favoured because it is the purest form of money. In times like now, of failing performance of the global economy, gold is the ultimate asset.
Patrick explained to us over the dinner that IRA gold is the type of retirement plan in the US that allows him to defer taxes on retirement savings. One reason why he prefers it is of its advantage that contributions to his account are tax-deductible. He did not like other forms of investment. One of the key reason is that IRAs offer a lot more flexibility since they are managed by custodians such as financial institutions such as banks, insurance companies, mutual funds and brokerage firms.
Besides tax benefit, he gains protection from bankruptcy and creditors.
Citing one example about how Gold IRA reduces the volatility of his retirement portfolio, he mentioned his father purchased $10,000 gold bullion coins in 1971 and held on to it during the oil crisis, inflation, devaluation of the U.S. dollar, Savings and Loan scandal, recession, tech and internet bubble, 911, and a real estate bubble, and the current recession. He said if he were to sell that gold today, it would have been for at least $300,000 or more.
To think about it, it is really true that in this planet, the most durable wealth-preserving asset is none other than gold.
On second thoughts, if gold is something that governments can't devalue, having no interest rates, no board of directors, it is something which no politicians nor central bankers can mess with its value with. In this way, gold has preserved investors purchasing power over a span of some five thousand years and has survived every economic crisis.
This is a hot topic since the United States government currently allows certain bullion and proof coins to be held in an IRA for retirement plans. Gold IRA transfer being something that Patrick can make at any time with his existing IRA. He can even make the transfer as often as he wants. He also spoke about rollover which his father can turn around and deposit what he receives from his existing retirement account to his retirement plan custodial account.
I think the comparison of gold 401k to these gold IRA are the same when we discuss about the Singapore's system of Central Provident Funds. Just that 401k gold is when Americans like Patrick can place the physical gold in his IRAs while Singaporeans way of retirement count on the CPF.
