Protect Your Retirement Savings – Gold Helps Manage Your Risks

| January 27, 2018

Saving for retirement? A healthy portfolio is a diverse one. You need a mix of stocks and bonds that will generate investment income and grow your savings, but you also need to mitigate your risks. In the event of a market crash, your savings could be wiped out if you picked the wrong investments and didn’t take steps to protect yourself.

Gold is one of the most reliable alternative investments for weathering economic storms and preserving your retirement savings – and you can make them part of your RRSP or LIRA.

Gold ETFs

Nothing beats physical gold bullion for investment. The cost of gold ETFs rises over time as the fund sells gold to pay for expenses, reducing the gold allocated to each share.

ETFs are also shares of gold futures, which means it’s possible for them to be sold short, i.e., the physical gold is unavailable when the contract needs to be fulfilled.

Plus, as bank bail-in regimes come into play to protect taxpayers from footing the bill for the mistakes of “too-big-to-fail” banks, ETFs are considered creditors who could be forced to cover a bank’s liquidity shortfall in a financial crisis.

A bank bail-in could see your investment confiscated to prop up the bank in a time of crisis, when you personally need it most.

Gold Coins

But not all physical gold is created equally. As an investor, you want gold bullion, whether that comes in the form of bars, coins, or wafers (and sometimes bullion jewelry, although this is best avoided except under very specific circumstances).

One mistake some new gold investors make is buying numismatic (or semi-numismatic coins) as if it were gold bullion. Numismatic coins have value to collectors, not investors, who are only concerned with the spot price of gold bullion.

In other words, investors care about the gold the coin is made of, not what’s stamped on the face. You want to hold gold bars in your RRSP, or bullion coins, not numismatic coins, because you may never see a return on those high premiums.

Gold bullion

Premiums are charged by gold dealers for handling the transaction and they can range wildly, from a reasonable 2% to as high as 75%. This is the price over spot, which is what an ounce of gold trades for.

Premiums should always be reflected in your ROI and keeping them as low as possible improves your returns. Gold bullion coins and bars are available from gold dealers such as Silver Gold Bull, who also have lower premiums as online dealers with lower costs.

When you’re investing, the only stamp that matters is the stamp from the Mint that tells you its purity and its origins.

When it comes to coins, if the purity is lower, it should weigh over 1 troy ounce. For example, Gold American Eagles are only 0.92% gold, but they still contain 1 ounce of gold.

Gold coins may come in lower purity levels because gold is so malleable; other metals are used to dilute the gold so that the coin isn’t easily scratched or dented. If you have any questions about the gold content of a coin, ask gold dealers like Silver Gold Bull before you invest.

Investing in gold is a safe long-term strategy that will benefit your RRSP. When you buy larger quantities of gold, you save on premiums and that makes bars a more sensible option if you’re making a significant investment. Start saving for retirement today with gold bullion.

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Category: Investing

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