When thinking about your retirement, the investment decisions you must make are going to be some of the toughest. In today’s market, things seem to be going incredibly well, but you can’t always judge a book by its cover. Looking into economic, geopolitical, and market conditions around the world, we’re seeing quite a few red flags. This leads many to ask “Is a 401k in gold a good option?” Today, we’ll discuss how gold could help protect your retirement investments and why you might want to consider moving into that direction soon.
How Gold Helps Protect Retirement Investments
The reason gold helps to protect investments in down market times really boils down to supply and demand. When market conditions seem grim, investors start to sell their traditional investments and look for safe haven investments. One of the most common safe havens…you guessed it…gold! Because thousands of investors now have an interest in purchasing gold, demand for the precious metal goes up. As more and more investors buy gold, the gold supply on the open market goes down. As the basic laws of supply and demand tell us, when demand rises and supply falls, the price must go up to keep an even balance.
In down market times, you may lose money in the stock market through your traditional retirement investments. However, if you hedge against losses with gold, the earnings you make from the increase in gold’s price offsets the losses you experience in the market. In some cases, gold earnings can far surpass market losses, leading to overall gains; even in the most trying market conditions.
Why You Might Want To Consider Gold?
Looking at the market from the outside in, things look great. Unfortunately, when you take a more detailed look, it becomes apparent that things aren’t always as they seem. There are quite a few red flags that people have been watching, which could be warnings of an unavoidable market correction.
One of those signs is the recent decision by OPEC to keep oil production where it’s at; ultimately increasing supply and reducing the price further. As a result, the price of oil is so low that in many countries, it’s cheaper to buy oil than drill for it. In the United States, Canada, and Brazil, this move puts major pain on Shale production companies; many of which could have to close. If this was to happen, unemployment data would increase and it could spark a sell off.
Aside from the oil issue, people have also been watching the poor economic conditions all over the Eurozone, as well as geopolitical concerns. The bottom line is, there are several factors that could be a real danger to the market.
While the market may be a bull market for now, smart investors know that it can’t last. By taking advantage of gold as a hedge to protect your retirement, you could minimalize your losses if and when a market correction does happen. In some cases, you could even realize gains!