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Regardless of your traditional investment preferences, tangible assets like gold and silver can help make the profitability and safety of your retirement portfolio far more attainable.
Simply put, gold can reduce the volatility of your retirement savings. Historically, gold has moved counter to the direction of stocks, bonds and mutual funds. Technically speaking, precious metals are "negatively correlated" to stocks.
Examining the charts will bear this out. If we go back to the time when Nixon took us off the gold standard, allowing gold to once again trade freely in the marketplace, we watched gold rise from $42 an ounce in 1972 to a bubble high of $850 an ounce in 1980. During this same time, gold climbed some 1700% and the Dow slipped 8%.
Over the next 20 years, we saw real estate rise through the Reagan years and stocks through the 90s led by the technology sector. The Dow climbed some 1300% over the 20 year span, while gold prices gave back bubble gains and then some, falling 65%.
What happened from 2000 to present is likely painfully fresh on everyone's mind. The Dow is hanging on to slim gains of about 4% over an 11 year period. Gold on the other hand has risen about 400%. To neatly summarize, gold is up 34 fold over the last 39 years and the Dow is up 16 fold.
Which has done a better job of preserving purchasing power over the long term?
If you asked anyone who owned gold during the entire period of 39 years, if they had any regrets for doing so, I would suspect only Gordon Brown would try to answer yes.
I provide this illustration to make the case for gold as part of a long-term savings and retirement plan such as an IRA. If you are going to put money away for the day you get the gold watch, why not have a portion of it in Gold or some other precious metal. However, retirement planning isn't just about saving money. It's also about diversifying to avoid the economic erosion of your assets. Here are some of the pitfalls you can avoid.
• Rising inflation • Rising interest rates • War and world tensions • A volatile stock market • Bank defaults • Weakening dollar.
Inflation, in particular, can wither away a plan's assets. For example, say you contribute $10,000 a year for twenty years at 8% interest.
With no inflation, you'll receive $50,338 a year for twenty retirement years. But with 5% inflation (the average rate over the past twenty years), you'd only get $18,602 per year for twenty retirement years.
Clearly, you should plan for inflation and position yourself to survive or take advantage of crises as they present themselves.
To learn more, visit Lear Capital to request FREE information and take advantage of a myriad of FREE information services. See why gold may now be just on the first leg of another historic rise.