Stock markets took a pummeling last week and they look set for another volatile week ahead, as the implications of an escalating coronavirus outbreak and slumping oil prices spooked investors.
Last Monday, stock markets posted their biggest losses since the 2008 financial crisis. It can be a good opportunity to get your investment strategy in check sooner than later.
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The question is not if the coronavirus will cause a recession, but how severe that recession will be.
Many are even talking of a coronavirus-caused depression. It is, in fact, a COVID-19-related economic shutdown going on right now. While the official unemployment rate is at around 15%, the real rate is probably closer to 25%.
A recession is defined as two consecutive quarters of declining gross domestic product (GDP), while a depression is generally defined as a recession that either lasts longer than two years or that features a 10% drop in GDP.
Preliminary estimates for GDP are not looking too good. Second-quarter GDP is expected to fall by as much as 50% which is a bigger drop than during the Great Depression.
Since the Great Depression featured a 30% GDP decline, the effect of the coronavirus on the economy could clearly be catastrophic.
Stock markets have already taken a huge hit from the coronavirus. The S&P 500 has fallen farther quicker than it did during the Great Depression, and since we are still in the early stages of a shutdown, markets can only fall further from here.
Although the stock market is primed for recovery when the coronavirus crisis passes (it might take 12-18 months or more according to Government officials), investors who have not already taken the time to protect their assets need to do so immediately.
Gold has protected people through thick and thin for centuries, and it will not be any different this time around. No matter how bad the coronavirus epidemic gets, gold will continue to work and be a safe investment.
Historically, precious metals move in the opposite direction of traditional securities like stocks, bonds, and mutual funds. When the stock market goes down, the price of gold and silver tends to rise.
Investors are flocking to gold for security, but Bloomberg recently reported that gold is now in short supply!
Here is a direct quote from the article:
“It’s absolutely crazy what’s going on,” Karl said. “Right now, if somebody wants to buy gold, I wish them all the best in finding it.”
Reductions to the labor force mean that less gold and silver are being mined. The demand caused by wealthy investors looking to increase their gold holdings could lead to a huge spike in the price of gold.
The Bloomberg article goes on to say:
“People should have gold and this may be a good time to increase holdings in gold.”
“Market risk and uncertainty are long term drivers of the price of gold, our expectation is we’re going to continue to face one of those two factors.”
Cavatoni is indicating that the price of gold is going to continue to rise, and this is just the start. The market risk and uncertainty the Coronavirus has caused has only grown since the interview.
Last week more than 3 million Americans filed for unemployment which is an all-time record high. That shatters even the peak of the great recession which was 665,000.
This pandemic will eventually end, but its effects on the economy will be long-lasting.
Unlike stocks, bonds, and mutual funds that are all tied to the dollar, precious metals stand on their own.
When the stock market tanks, the price of gold and silver is not affected. In fact, as Cavatoni mentioned, it often rises during these times.
Steve Brice, chief investment strategist at Standard Chartered Private Bank made this statement in an interview with
“When looking for money-making opportunities in uncertain times, it is vital to remember the core investing strategies: go gradual and diversify.”
“Market volatility is something that investors should be prepared for, despite the recent volatility being quite extreme. Start small and ensure you are diversified across major asset classes (equities, bonds, cash, and gold) and major regions/sectors.”
Quartz means that precious metals sellers are using people’s fears of market turmoil to convince them to invest in an asset like gold or silver coins.
They are not saying it is a bad idea to invest in precious metals, quite the opposite, but Quartz means that some sellers price their coins at double their actual value, and that can leave the investor poorer.
Except for the fact that there are many unethical sellers out there, it is a natural reaction that gold and silver become attractive in times of uncertainty. It is simple supply and demand. When the supply decreases and the demand goes up, the price goes up.
Investors rush to buy the safe haven asset amid the global economic and financial market turmoil and to such an extent that it creates a strain on supply. The lack of transport and processing capacity has also been exacerbated by a surge in demand.
However, do not despair.
There are still suppliers of precious metals that are not out to cheat people in a time of crisis and can meet the demand for precious metals when people are looking for a safe investment or financial insurance.
|Goldco is the leading provider of precious metals IRA’s. They pride themselves in customer service and the ability to help individuals diversify their retirement accounts.|
|Goldco Precious Metals
21215 Burbank Blvd Suite 600
Woodland Hills, CA 91367
If you are looking for a tried and true investment that can provide stability to your portfolio, consider a company like Goldco.
Goldco specializes in helping you identify which precious metals are right for you.
Goldco has its headquarter in Woodland Hills, California, and the company has helped thousands of people diversify, grow, and protect their wealth with physical metals like gold, silver, platinum, and palladium.
Goldco’s mission is to help Americans protect their retirement accounts from stock market volatility and inflation through the use of precious metals.
“Precious metals should not be seen as an investment, but as financial insurance”, Gerszt says.
Inc. Magazine named Goldco the third fastest-growing financial services company in the US in 2015.
And the Los Angeles Business Journal named it the 17th fastest-growing company in the greater Los Angeles Area.
Goldco offers two major services: precious metal IRAs and direct purchases, but you can also purchase cryptocurrencies from Goldco’s sister company.
Non-IRA Precious Metals
Any investor can buy precious metals through the company. You do not have to be a certain age or have earned income.
When you buy precious metals outright, you can either keep them in a secure vault or have them delivered to your home—whichever you prefer.
Precious Metal IRA’s
As long as you have earned income and are under age 70½, you are eligible for a traditional IRA. Goldco offers gold IRAs, silver IRAs, or a combination of both.
Per IRS regulations, Goldco stores IRA precious metals in a third-party, state-of-the-art vault.
It uses Equity Trust Company as its preferred IRA custodian.
Goldco has a sister company, CoinIRA, which offers cryptocurrency IRAs for investors interested in digital currencies.
Due diligence is important before investing money into anything, whether it is stocks, bonds or gold. How do investors know they are working with a legit gold IRA dealer?
Fortunately, the World Wide Web makes it difficult for companies to hide. Clients can go online and vent any frustrations with these gold IRA companies.
As you can see, it is difficult to find any negative reviews about Goldco, despite their fourteen years in business:
Precious metals IRAs at Goldco must pay storage fees every year.
For non-segregated storage, the annual charge is $100. For segregated storage, it is $150.
There is also a yearly IRA maintenance fee of $80. Once a retirement account reaches $100,000, the annual fee increases by $50.
In addition to the annual fees, there are also one-time charges. An IRA has a setup fee of $50 and depositing funds by wire is a $30 charge.
Adding up all the fees, we see that a Goldco IRA with non-segregated storage costs $260 for the first year (setup fee, wire fee, annual fee, and first year of storage) and $180 every year after that, assuming no additional wires.
While this may seem like a lot of fees, regular taxable accounts at Goldco have no fees of any kind. There are no annual fees, start-up costs, or storage expenses.
The required starting balance for an IRA is $20,000-$25,000. For taxable accounts, the minimum is $3,500.
Precious Metals IRA Fees
Goldco Fees For Non-IRA Transactions
The easiest way to start a Goldco Precious Metals IRA, is to fill out an application online and you will be contacted by a gold IRA expert from Goldco.
As with all financial accounts, personally identifiable information such as social security numbers will be required during the establishment of an account.
If you do not already have a precious metals custodian company, Goldco will assist you in setting up an account with one of their recommended custodian companies.
As part of the setup process, Goldco will either mail or email you a comprehensive guide explaining the precious metals options for you to review before making a decision on what types of metals to place in your IRA.
Question: Do my precious metals have to be bars or can they be coins?
Answer: While some coins can be included in Precious Metals IRAs, only certain coins are IRS approved for inclusion in IRAs. In fact, not all bars or bullion are IRS approved. The IRS maintains a list of acceptable forms of precious metals for IRAs. Goldco deals in a variety of precious metals for IRAs within IRS guidelines.
Question: Can I choose any custodian and storage company or do I have to use Goldco’s recommended companies?
Answer: Yes. While Goldco recommends Self Directed IRA and Equity Institutional as custodian options and Sterling Trust for storage, you can choose your own custodian and storage companies.
Question: Can I store my precious metals at home?
Answer: No. IRS rules forbid keeping your IRA precious metals at home or in a standard safety security box. They must be held by an approved non-bank trustee or a bank within IRS guidelines that restricts access and keeps all precious metals segregated by the customer. This ensures exact metals purchased by a specific customer are returned to that same customer once legal distribution requirements are met.
In other words, just like a Traditional IRA, the access to the precious metals in your Precious Metals IRA must be restricted in specific ways to ensure deposit and disbursement laws are followed.
Question: Are the values of the precious metals I buy for my IRA guaranteed?
Answer: No. Like all investments, the future value of precious metals is not guaranteed and can rise or fall based on a variety of market influences.
Question: When will I be eligible for distributions from my Goldco Gold IRA?
Answer: At age 59½, you or the beneficiary of your Precious Metals IRA can start taking penalty-free distributions from the account, according to the IRS.
Question: How long does it take to rollover a Traditional IRA into a Gold IRA?
Answer: Usually around two weeks, although Goldco stresses each application is different and the amount of time varies on a case-by-case basis.
For a more comprehensive Q&A section of gold and silver IRAs, please read:
Goldco has associates ready to answer any questions you have or help you with account-related issues. The company’s normal business hours are:
|Monday to Thursday:||8:00 am to 5:00 pm|
|Friday:||7:00 am to 4:00 pm|
You can also send an email at [email protected].
Based on the statements from the experts, I would definitely say it is a good idea to invest in gold and silver in a time of crisis.
Especially, because precious metals stand on their own and are not tied to the dollar like stocks, bonds, and mutual funds.
Gold and silver prices generally move in the opposite direction of paper assets and will, therefore, provide a good hedge against inflation. The weaker the dollar becomes, the better gold performs.
In fact, the relationship between gold and the dollar is often seen as an inverse one. A weaker dollar normally results in a higher gold price, while a stronger dollar results in a lower gold price.
Gold and silver are a “safe haven” for those looking for shelter from more traditionally volatile investments, like stocks.
We are moving towards inflation when the dollar is going to be worth nothing, so it is best to get your investment strategies in check sooner than later.
For more information about how to invest in gold, silver, and cryptocurrencies, I highly recommend that you check out howtoinvestgold.com. You will find everything you need to know to protect your assets and diversify your portfolio with precious metals and crypto.
Please feel free to reach out if you have any questions about this article. I would appreciate it if you would like to share your thoughts in the comment section below.
|Disclaimer: The owner of this website is not licensed as an investment advisor and, accordingly, does not make any recommendations regarding clients’ personal investment portfolios. It is recommended that you carefully evaluate and research the risks and rewards associated with investing in alternative assets such as physical precious metals and cryptocurrencies before you make a purchase.|
About The Author
Stina Pettersson is an aspiring entrepreneur who is working on achieving her goals as an Internet Marketer.
Stina was tired of her corporate job as a Marketing Specialist and wanted to stand on her own two feet.
Stina is originally from Sweden but has resided in the U.S. for the past seven years.
“My main goal is to maintain a flexible lifestyle, where I set my own schedule. Even that I work hard, I love what I do every day, and I also have the opportunity to help other people which is a huge gift.”