Why Hedge With Gold This Year? Central Banks Are On Board

Economic times are changing, and gold is playing a substantial role for investors and central banks. Due to recent massive purchases from China and Russia, gold sales have reached a six-year high according to the World Gold Council, a leading authority on gold.

Central banks are in a diversification mode away from the US dollar, with gold reserves surging over 145 tons in the past 3-5 months. This figure is a 68% increase from the previous year. The Council also notes increased gold purchasing activities by other countries
such as Columbia, Qatar, and Ecuador. With this overall rise in central bank purchases, gold prices are steadily going up. Ironically, as the central banks accumulate more, retail investors are complacent.

In the meantime, this activity sets up a foolproof scenario for financial institutions and large private investors to accumulate precious metals that smaller retail investors are leaving behind. Effective small investor diversification strategies are instead benefitting central banks and big investors. So, why hedge with gold this year? As the central banks migrate away from the US dollar to hedge against a vastly uncertain global economy, investors should recognize their intelligence. The central banks are well aware of the current movement in gold supply and the fact that small mining companies manage nearly one- quarter of gold production. As well, investors often turn to gold when the economy is uncertain or unstable. Gold is a form of sound money, unlike the speculative form of paper money. There are several other reasons besides central bank actions to consider hedging with gold this year:

1 Stock Market Enthusiasm To Recession. While stock market enthusiasm is at an all- time high given recent trends, so comes the opinion that America is due for a downturn. We felt it in December, but the market made a rapid recovery in early 2019. Historical data shows a slowdown or recession likely every ten years. Many investors find this time, when the party is soon to end, the best time to diversify in precious metals, especially gold and silver. Some call it recession-proofing.

2 Political Landscape Drives Gold. A US presidential election drives gold, regardless of your party preferences. Gold prices tend to rise along with demand in the pre- and post-election months. It is often a time when the gold standard is promoted in lieu of whatever political outcomes please or displease the general American public.

3 The Federal Reserve Failing Us. The Federal Reserve made attempts to normalize interest rates last year, but the Federal Reserve balance remains high, and the cost of living is continually going up. When (not if) a recession strikes, we may not be able to count on the Fed. This drives investors to consider gold as a safe hedge again, the inevitable.

4 The Global Outlook. The World Economic Forum articles indicate that our worldwide geopolitical situation is at more risk

than ever before, with economics and foreign trade tensions some of the prevailing concerns. Potential uprisings between nations lead to monetary repercussions, and that drives the demand for gold for many countries (as seen in the recent central bank actions).

5 The Weakening US Dollar. The US dollar as a world currency is becoming more controversial as countries’ economies fluctuate and international trade agreements waver. Wolf Street states, “The US dollar’s role as the global reserve currency is defined by the amounts of US dollar- denominated assets – US Treasury securities, corporate bonds, etc. – that central banks other than the Fed are holding in their foreign exchange reserves.” They go on to say,
“To diminish the dollar’s role as a global reserve currency, these central banks would have to dump the dollar.” The fact
is, central bank holdings are as low as they have been since 2013. This fact drives the desire to hedge with gold, as it rises and the dollar depreciates.

6 Living Expenses on the Rise. As the cost of living continues to rise in many cities, some middle-class Americans feel the pain. Many families find it challenging to withstand everyday living expenses, and yet wages rarely change to keep up with inflation. These are times when gold inspires small investors as a safe haven asset and long-term strategy.

7 Historically, Gold is Safe Money. Interestingly, gold has surpassed the test of time, while many alternative forms of currency have come and gone. According to J.P. Morgan, “Gold is money. Everything else is credit.” The central banks own significant amounts of gold; why wouldn’t the small investor get on board before the prices skyrocket. In fact, in 2019 alone, the central banks acquired up to 651 tons of gold. While the overall goals of central banks may not be the same as they are for small and large investors, everyone shares a common philosophy: hedging with gold in the case of economic and geopolitical uncertainties is a responsible move.

Keep in mind; the Federal Reserve still holds the largest gold reserves in the entire world. The adage that states “you want what you can’t have” is not yet the case. The reality is, gold supply is on a slow decline while gold production is decreasing; this, in turn, is leading to increasing gold prices. The reasons banks and investors turn to gold are not always obvious or expected. There is no wrong time to invest in precious metals. Whether we face an economic boom or bust, gold is still a proven investment. Hedging with gold is fast becoming a popular solution for uncertain economic times, but the time to invest might be this year.

Learn how a Gold, Silver, & Precious Metals IRA can help you hedge against inflation

Inflation is likely to continue after the election – what YOU can do about it

We’re in the final stretch of a hugely stressful election season. It feels like the results will be existentially important; like everything could change in one night. Some say there will be violent riots no matter what the result – or nonresult! Some say WWIII could start. Many are convinced the other half of the country is evil and hateful because of who they are voting for. It is truly sad to see the country so divided and we certainly pray for a peaceful outcome.

One thing we think will not change, in spite of best intentions and best possible management, is inflation. There are many reasons to think that inflation will only increase in the coming years. Here are our top 5 –

1. Supply Chain Disruptions:

o The COVID-19 pandemic exposed vulnerabilities in global supply chains, leading to delays and shortages. These disruptions can persist due to factors like ongoing labor shortages, transportation bottlenecks, and increased regulation in key industries. If manufacturers and suppliers continue to struggle to meet demand in face of lagging supply, prices for essential goods and services may rise as competition for limited resources intensifies.

2. Increased Demand:

o As economies continue to bounce back from lockdowns, consumers have been eager to spend, leading to a surge in demand for goods and services. This increased consumption can outstrip supply, particularly if production capacity has not fully recovered. Industries like travel, hospitality, and entertainment may see sharp increases in demand, driving prices higher as businesses attempt to capitalize on the renewed interest.

3. Rising Energy Prices:

o Energy costs are a critical component of overall inflation, influencing everything from transportation to manufacturing. Geopolitical tensions (e.g., conflicts involving major oil-producing countries) can lead to spikes in oil and gas prices. Additionally, efforts to transition to renewable energy can lead to short-term volatility in fossil fuel prices, which can further affect inflation if available alternatives aren’t as efficient or functional yet.

4. Wage Growth:

o As labor markets tighten, companies may be compelled to raise wages to attract and retain employees. While higher wages can improve living standards, they can also lead to increased costs for businesses. To maintain profit margins, companies may pass these costs onto consumers through higher prices, contributing to inflation. Additionally, if inflation expectations become ingrained in wage negotiations, it can create a vicious cycle of anticipated inflation and higher wage demands to keep up.

5. Monetary Policy:

o Central banks, like the Federal Reserve, may adopt accommodative monetary policies to stimulate growth, especially during downturns. The Fed is in the process of cutting rates again. Prolonged low-interest rates and measures like quantitative easing increase the money supply, which can lead to inflation if it outpaces economic growth. If central banks are slow to react to rising inflation or feel pressured to maintain supportive policies, it could exacerbate inflationary pressures over time.

These factors combined could create a complex economic environment where inflation persists or accelerates in the coming years, challenging policymakers and consumers alike.

How will your retirement savings hold up in the face of rising inflation? Are you in greater danger of outliving your money if prices continue to skyrocket?

We have good news! Owning physical gold can help preserve your purchasing power in several ways:

1. Inflation Hedge: Gold is often viewed as a hedge against inflation. As the cost of living rises and currency values decline due to inflation, gold typically retains its value. Historically, gold prices tend to increase during inflationary periods, helping investors maintain their purchasing power.

2. Intrinsic Value: Unlike fiat currencies, which can be printed in unlimited quantities, gold has a finite supply. This intrinsic value can make it a more stable store of wealth over time. When economic uncertainty arises, people often turn to gold as a safe haven, driving its value up.

3. Diversification: Including physical gold in an investment portfolio can provide diversification. Gold often has a low correlation with other assets like stocks and bonds, meaning that when these markets are volatile, gold may hold or increase its value, thereby helping to stabilize overall portfolio performance.

4. Crisis Resilience: In times of economic or geopolitical instability, gold is considered a reliable asset. During financial crises or when trust in currency systems wanes, gold can serve as a refuge for preserving wealth, as people turn to tangible assets.

5. Global Acceptance: Gold is recognized and valued worldwide, making it a liquid asset that can be easily bought, sold, or traded. This universal acceptance enhances its potential as a means to preserve purchasing power, as it can be converted into currency in various markets, regardless of local economic conditions.

By providing a safeguard against inflation, economic instability, and currency fluctuations, physical gold can be an effective tool for preserving purchasing power over time. Don’t wait! Add gold to your portfolio and protect your purchasing power against the ravages of inflation today! Call us!

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Top 10 Reasons to Invest in Gold No Matter What Happens on Election Night

With less than 2 weeks to go before Election Day, investors are on edge, nervous about which way things will go and how the next 4 years will look. Early voting has begun in many states, pollsters are burning up the phone lines every waking minute. Bets are even being placed on the outcome.

Let us take a moment to remind you that no matter what happens on Election Night – and after, there are many timeless reasons to start a precious metals backed IRA or buy some gold for your home safe.

Don’t have a safe at home? Read to the end of this post for a code to get one on us with a qualifying gold purchase!
Here are the top 10 reasons why people may consider converting a traditional IRA into a precious metals-backed IRA:

1. Hedge Against Inflation
Precious metals, especially gold and silver, tend to retain value over time. They can act as a hedge against inflation when paper currencies lose purchasing power.

2. Diversification of Portfolio
Holding physical gold, silver, platinum, or palladium in an IRA adds diversification to a retirement portfolio, which can help mitigate risk associated with market fluctuations in stocks and bonds.

3. Protection Against Economic Uncertainty
Precious metals often perform well during periods of economic uncertainty or market volatility, offering a safeguard during times of crisis.

4. Tax Advantages
Just like a traditional IRA, a precious metals IRA offers tax-deferred growth. The conversion process does not trigger immediate taxation, allowing for potential growth without taxes until withdrawal.

5. Tangible Asset
Unlike stocks and bonds, precious metals are physical assets with intrinsic value. They are not subject to default or bankruptcy risks associated with companies or governments.

6. Potential for Long-Term Growth
Over the long term, precious metals have historically increased in value. Some investors view this growth as a stable means to build wealth in retirement.

7. Global Demand for Precious Metals
Gold, silver, and other metals are in demand worldwide, both for industrial uses and as financial instruments. This global demand can enhance their value and liquidity over time.

8. No Counterparty Risk
Owning precious metals directly eliminates counterparty risk, which exists when an investment relies on the solvency of another party, such as a company or financial institution.

9. Protection from Currency Devaluation
If a nation’s currency weakens, precious metals can act as a store of value since their worth is not tied to any specific currency. This is especially appealing for those worried about future currency devaluation.

10. Control Over Investment
With a self-directed IRA, the investor has more control over their investment choices, including deciding to invest in precious metals, which provides more personalized and targeted asset protection.
These reasons appeal to investors looking for security and stability as part of their retirement strategy. If these make sense to you, or you still have questions, call us today? And mention code HOMESAFE24 and we will send you a safe with a qualifying purchase! Call now for details.

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Post-Election Inflation Risks: Who would be worse?

The 2024 U.S. presidential election brings significant economic uncertainty, and many economists warn that inflation is likely to rise regardless of who wins. Both candidates face challenges that could fuel inflation, including increased government spending, geopolitical instability, and labor market pressures.

Betting Markets Favor Trump, but Risks Remain

Ever since the ban on betting on elections was lifted, betting markets have slightly favored Donald Trump. Still, many economists believe his policies could create economic instability. During his previous term, Trump’s tax cuts, trade tariffs, and deregulation stimulated short-term growth but widened deficits and created volatility. If re-elected, renewed trade wars, increased deficits, and unpredictable policies could improve the economy, or could accelerate inflation. It remains to be seen.

However, no matter who wins, the next administration will likely face persistent inflation risks due to spending programs and global economic disruptions.

Precious Metals: A Hedge Against Inflation

In uncertain economic times, gold and silver provide a reliable hedge against inflation by maintaining their value when fiat currencies lose purchasing power. Here’s why these metals are effective in an inflationary environment:

Intrinsic Value: Gold and silver have held their worth across centuries.

Limited Supply: Unlike printed money, their supply is finite.

Inverse Relationship with the Dollar: Precious metals tend to rise in value when the dollar weakens.

Industrial Demand for Silver: Silver benefits from both investment and industrial applications, adding to its long-term potential.

A Smart Investment Strategy

With inflation likely to remain a challenge no matter who wins the election, adding 5-10% of your portfolio to gold and silver is a wise move. These metals provide insurance during economic instability and serve as a buffer against rising prices.

Which should you choose? Gold or Silver?

It depends on which you value more:

Gold: A stable, long-term hedge during market downturns.

Silver: More volatile but with higher growth potential due to industrial demand.

Why not get some of both? And remember – you can invest in precious metals through physical bullion or IRAs!

Call us for more information!

The post-election economy is expected to be turbulent, with inflation risks looming regardless of who takes office. Betting markets favor Trump, but many experts believe his policies could exacerbate economic challenges. But does Kamala Harris have all the answers? What do you think?

In this climate, precious metals offer a safe haven to protect your wealth. By adding gold and silver to your portfolio, you can hedge against inflation and build financial resilience no matter what the future holds.

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