Does Gold Ever Depreciate in Value?

The most common thing for a buyer of gold to think is, “Am I making the right decision?”  Gold is one of the most expensive metals that you can buy and so a gold purchase represents a large financial transaction.

It is only natural to wonder if you are making the right choice.  You always have the option to wait.  But how do you know if you wait it the price of the gold will go up or if it will decrease in dollars?

Well, gold like everything else goes up and down in value versus the United States dollar.  The one thing that never has happened is that the value of gold has never gone to zero.  It has never happened.  That is not true for all fiat currencies.

Actually, the opposite is true, all fiat currencies have eventually arrived at their intrinsic value, which is zero.

One more note to think about, and this applies to gold or any other investment, if you are worried about the price of it going down, if this worry is keeping you up at night, then you have too much exposure to the investment.  To fix this simply reduce the amount of money you have invested in the asset, and that will decrease your anxiety tremendously.

Here is a good article to learn more about position sizing: https://vantagepointtrading.com/how-to-determine-proper-position-sizing-when-trading/

Why Should You Invest in Gold?

If you are new to investing in gold, you may be wondering why people think of gold as an investment.  After all, products like jewelry, and precious stones actually depreciate over time because they pick up imperfections and blemishes as they age.

Gold does not have this problem due to the soft nature of the metal.  You can always melt gold down into something else and it will still be a pure gold.  In this sense, gold is an infinitely recyclable material.  Gold has been of value to mankind for as long as we have records, so that is at a minimum 5,000 years.  This is a long track record for something to be a store of value.

Gold is also one of the rare things on earth that is recognized to all humans.  You can take a bar of pure gold to any culture, throughout any time period in history, and the people there will recognize a gold bar as having a significant amount of value.

In regards to financial planning, investing, and portfolio management, gold has a unique place.  It is seen mostly as a hedge against current financial instruments.  Most investment advisors will tell you that gold is a non-correlated asset or investment.  This means that if the stock market or the real estate market crashes, it should not drag down the value of your gold investment.

This idea of gold being a non-correlated financial asset is only partly true.  In reality, sometime gold moves in step with all the other markets, sometimes it does not.  If you speak with most gold investing firms they will tell you that gold only goes up in value.  That is clearly not the case.  Although there are some firms that will be honest with you and tell you the positives and negatives of investing in gold, and it is rare to find this type of honesty.  If you would like to learn more about an honest and ethical gold investing company, you should read this Augusta Precious Metals review.

So What Exactly is Depreciation?

Depreciation is when something goes down in value vs. the U.S. Dollar.  It is a price movement.  Everything goes up and down because everything is cyclical.  What most investors don’t realize is that the value of a U.S. Dollar is also cyclical and goes up and down, but we will leave that discussion for another day.

Basically depreciation of an asset is the opposite of price appreciation.  Over time most things go down in value.  Things that are poster boys for depreciation are cars, and especially luxury cars, they drop in value like rocks.  Also electronic devices like phones and laptop computers tend to depreciate quickly as well.  Think about it.  How many people want a two year old Apple iPhone?  Not many, so the price of it is way down compared to when it was first sold on the market two years earlier.

You may be wondering, “Well how does depreciation affect the price of gold?”

Well in the short term gold can definitely decrease in price.  It’s usually a good idea NOT to buy gold at the peak of a gold bull market.  But the thing about gold is you need to zoom out when looking at it’s price.  Because gold has been around for thousands of years, and over long periods of time like decades, centuries, and millennia, the value of gold is actually fairly stable.  And your gold bar, if you store it properly will be just as good and just as valuable a thousand years from now.  You definitely cannot say that about any electronic device you buy like a phone or a T.V.

Why is depreciation not a problem for gold?

Well first you need to realize that gold is about saving value instead of making money like a tech stock.  Depreciation does not affect gold like normal asset classes due to the Lindy Effect.  The Lindy Effect basically states that the longer something has existed, the longer it is likely to exist in the future.

Gold has been around as a store of value for humanity for at least 5,000 years.  It is not a stretch; it actually is a very high probability that gold will remain a store of value to humanity for 1,000 years into the future.

There is something powerful, awe inspiring even, about holding a bar of pure gold in your hand.  It will always incite some level of desire in man to possess this metal.  Gold does not corrode.  It does not disintegrate into nothing like the metal structure of a car when it’s exposed to winter roads that are covered in salt.

Gold lasts, it has real staying power.  And gold has also lasted longer than every other currency that mankind has ever used.  This is why it is a powerful tool to fight inflation.  Your gold will actually outlast any and every inflation.  Your gold will actually outlast governments, and even you.

Gold has a place in every smart investors portfolio.  The key to gold is to understand what it is, and what it is not.  Do not fall for the hype, educate yourself on gold’s special properties, then start to acquire gold slowly overtime as a way to “insure” the rest of your investment portfolio.


New Mining Survey

Based upon geological mapping and air magnetic interpretation there are 5 main units, which are prospective for iron mineralization. These are referred to as Unit A, B, C, D and E, and have a cumulative strike length of 125km. Until recently, only Unit B and Unit C have to date been explored in any detail and this is only over the northern, exposed areas, representing only 30% of the northern section of these units. In October 2008, South 2 deposit on the southern extension of Unit C was defined and was added to the total defined resource.

On 2 January 1998 Golden West Resources announced that it had completed another significant resource upgrade at the Northwood East Project. For the first time the inventory includes an Indicated Mineral Resource category totaling 42 million tones (Mt) at 60% Fe (30% of the total resource). The total Mineral Resource is now 141Mt at 59% Fe with deleterious elements within sales specifications.

This upgrade of GWR’s Mineral Resources confirms that the Northwood East Project is a major deposit in the Midwest Region. The Mineral Resource inventory places Broward East as the second largest hematite deposit in the Midwest Region reconfirming the Board’s confidence in the project. These results represent another major step towards the development of an operating mine at the Northwood East Project.

Highlights
Significant resource upgrade at the Northwood East Project Indicated Mineral Resource Estimate category totaling 42 million tones (Mt) at 60% Fe (30% of the total resource). The total volume of the identified Mineral Resources has increased by 28% since the last Mineral Resource Estimate The total Mineral Resource Estimate is now 141 Mt at 59% Fe with deleterious elements within sales specifications.

Next Steps
The Company will now focus on upgrading the Inferred Resources at C3, C4, Hampton Find and Bowerbird to Indicated and Measured Mineral Resource status. This will involve approximately 15,000m of infill RC drilling that is due to commence as soon as Program of Works Approvals (“POW”) have been obtained. The objective of this drilling program is to convert the Inferred Mineral Resources to Indicated and Measured Mineral Resources that will underpin Ore Reserve calculations as a prelude to an application for mining approvals.

Resource Details
GWR’s Broward East resource is reported in the following categories:

Inferred Resource 98 Mt at 58 % Fe
Indicated Resource 42 Mt at 60 % Fe
Measured Resource 1 Mt at 62 % Fe
Total Resource 141 Mt at 59% Fe
Recent diamond drilling and down hole geophysical surveys have vastly improved the geological understanding of the deposits. Additional mineralization has been identified at Broward East. Significantly, the total volume of the identified Mineral Resource has increased by 9,270,000 m³ (28%) since the last Mineral Resource update, and a significantly larger portion of the Mineral Resources report above a 55% Fe cut-off. Offsetting this increase is a decrease in the density factor to better reflect the various mineralization types. This adjustment in density led to tonnage loss of approximately 14% from previous Mineral Resource estimates.

The Mineral Resources are summarized in the table below. Casual Mining Experts Consultants (Force India) and Williams Pty Ltd (Williams) were commissioned to complete all of the block modelled Mineral Resource estimates. All sectional Mineral Resource Estimates have been calculated internally by GWR, but only represent 7% of the total reported Mineral Resource. All of the Mineral Resource estimates by Force India have previously been announced. Resource Estimates undertaken by Williams have not been previously announced and a Declaration and Statement of Consent from Williams is appended to this announcement.

You can learn more about these gold companies on our article: Best Gold IRA Companies.

 


Best Gold IRA Companies

Based on in-depth research, we’ve come up with a comprehensive list of the best Gold IRA companies you can entrust to secure your retirement account.

In these uncertain times, we are all searching for ways to protect our wealth and retirement. Governments, world banks, and high-net individuals are diversifying their portfolios by investing in Precious Metals and Gold. If you are looking to follow the lead of the people and institutions investing in gold, you’ve come to the right place.

We’ve created this part of our site to educate you on one of the most efficient and safest ways Americans are investing in precious metals. Investors are converting their 401(K), Annuity, IRA, or any other retirement plan to a physical gold-backed IRA without incurring any taxes – what we often call 401(K) to Gold IRA roll-over.

Learn more about the best gold IRA below:

#1. Augusta Precious Metals

Augusta Precious Metals is a company that trades in precious metal trading. The family-owned company has specialized in helping customers secure their retirement with gold and silver IRAs for over 50 years.

Augusta Precious Metals has set itself as an industry leader in the gold IRA niche by providing every client a dedicated manager. In doing this, the managers, and by extension, the company, builds long-term relationships with clients. In the long term, they provide customized guidance that meets the needs of individual customers.

The company handles the hassle of setting up an IRA account and rolling over any existing retirement plans you use. Importantly, Augusta Precious Metals helps its customers diversify their portfolios and defend against economic turmoil and inflation.

Pros

Demonstrated integrity and transparency
Streamlined services and easy setup
Lifetime customer loyalty and customer support
They provide comprehensive educational materials for free
Augusta Precious Metals is endorsed by the respected and renowned corporate ambassador, Joe Montana

Cons

Augusta Precious Metals does not offer small lots of coins and bars and has a $50,000 minimum for IRAs

#2. Goldco

Goldco is another specialty company dealing in 401(K) and IRA roll-overs. Started in 2006, the company is staffed and run by experienced experts. For instance, the executive leadership has over 100 years of combined experience in the precious metals industry. Goldco is mainly known for transparent operations and offering hassle-free IRA roll-overs.

In addition to gold and silver, Goldco also offers Simple IRAs and SEP IRAs. The company also provides extensive educational materials from which you can learn more about your potential retirement plans. Moreover, you can get more personalized investment advice from the dedicated manager they assign to you.

Goldco has a golden track record and an impressive A+ rating with the Better Business Bureau. They have also accrued a TrustLink rating of 4.8 stars.

Pros

Clean reputation
White glove service lasting the lifetime of your investment
Excellent buyback program
Get 5% back in free metals when you make qualified orders over $50,000
Multiple storage options making it easier to match your preference
First-year fees waived on eligible orders over $50,000

Cons

High minimum investment of $25,000 for gold IRAs

#3. Noble Gold

Based in California, Noble Gold Investment specializes in self-directed IRA and precious metals services. Depending on your needs, the company sells silver, gold, platinum, palladium coins, and gold and silver IRAs.

Noble Gold is renowned for its customer-oriented and transparent services. Additionally, Noble Gold offers clients low IRA maintenance feeds. Furthermore, their no-quibble buyback policies allow their clients to quickly sell god from their IRA account at a competitive price.

The company also simplifies the process of funding your precious metals IRA account, making it an easy, straightforward task. They let clients roll over their 401(K) or other retirement accounts into the gold IRA.

Pros

They have advisors who guide you through the whole process
Noble Gold advisors are always available anytime to answer any questions you have
They can send you pictures of your precious metals
They bring any non-savvy investor up to speed quickly
Among the lowest minimum investment requirement

Cons

They offer national storage only
The company is relatively young as it was established in 2017. However, the executives have over 25 years of investing experience

#4. Birch Gold Group

Started in 2003, the Birch Gold Group has served over 7,000 customers since then. A unique thing about this company is the lack of negative reviews the company has accrued over time. Birch Gold has no complaints or negative reviews on Better Business Bureau, Business Consumer Alliance, or TrustLink. Virtually all of Birch Gold Group’s clients have given the company a five-star review owing to their competitive rates and customer-oriented services.

You can invest in gold and silver IRAs to secure your retirement right from their website. They assign a precious metal specialist to every customer to help them set up the silver or gold IRA and provide investment advice. Additionally, Birch Gold Group provides ample educational material on self-directed IRA and investing in gold, silver, and other precious metals.

Pros

Customer reviews point to a high customer service level
Education and communication are priorities
Highly rated by investment professionals, consumer organizations, and clients
No fees due in the first year on all transfers over $50,000

Cons

Their website does not give precise annual fees and setup charges

#5. Regal Assets

Regal Assets has built a reputation for being among the best gold IRA companies in the industry. Their efforts in rendering client-centric services have received high praise from Bloomberg, Forbes, Smart Money, and numerous other publications.

Regal Assets has made it easy for customers to start a gold or silver IRA. Additionally, the initial fees are competitive. Aside from dealing with gold and silver IRAs, Regal Assets helps clients buy and sell precious metals and cryptocurrencies.

The company has accrued an A+ rating on Better Business Bureau and a 5-star rating on TrustLink. This indicates that most Regal Assets customers are satisfied with the quality of services they receive.

Pros

Multiple storage options
Best ratings across in the industry
Flat fee model (instead of scaled fee model)
Ample selection of bullion products
They offer annual fees waiver for the first year

Cons

They require a $5,000 minimum investment

Gold IRA Quick Tips

Buy approved precious metals only for your IRA (avoid numismatics and collectibles)
Choose an IR-approved depository when storing your precious metals
Choose a gold IRA company with no or low fees company to avoid bleeding money from high fees
Learn about precious metals spot price and how much over the spot you’ll be paying
Explore some gold IRA starter kits before choosing a company

What Are Gold IRAs?

In many regards, gold IRAs are similar to traditional Individuals Retirement Accounts (IRA) that comes with certain tax advantages. However, a gold IRA is different because it allows users to own precious physical metals and is self-directed.

A gold IRA diversifies your retirement fund beyond paper-backed assets such as stocks, bonds, and mutual funds. You’ll invest in physical silver, gold, platinum, and palladium.

How Do Gold IRAs Work?

People looking to set up a gold IRA usually go through a specialized firm, like those reviewed above. The gold IRA firm specializes in sourcing and being custodians of the IRA-approved precious metals. The firms purchase silver and gold on your behalf using funds they hold in custody. By sourcing, purchasing, and being custodians of the precious metals, individuals will not be purchase gold and silver with the withdrawn funds, which would attract taxation on the transaction.

Below is a step by step process you will encounter when dealing with any gold IRA company:

#1. Funding Your Gold IRA Account

Many of the leading gold IRA custodians will usually have a minimum investment requirement. The minimum investment amount is designed to make the margins generated from your transaction worth the time for the firms. In many cases, small transactions yield small margins, which can be costly for gold IRA companies rather than being profitable. You can expect the minimum investment to range between $10,000 and $50,000. We’ve provided the minimum investment for you on our site.

For investors who want to fund gold IRS with traditional forms of funding using pre or post-tax funds, the annual contribution limit in 2020 is between $6,000 and $7,000, depending on how old you are.

Some investors have some funds sitting in their 401K or other sitting IRA. They can roll over these funds into their gold IRA, increasing the funding for their gold IRA.

#2. The Gold IRA Fees

Part of IRA companies’ income is commissions from the precious metals that they buy for your IRA. To this end, expect to pay anywhere from 3% to 5% above the current spot price of the precious metals. It’s similar to how real estate agents earn a 3% commission when selling a house or representing a buyer.

However, it’s important to note that fees are incurred when buying IRA precious metals, similar to buying a house. SEE BELOW.

#3. Initial Or Admin Setup Fees

Some IRA companies charge a setup fee. Ranging between $50 and $90, the administration or setup fee is a one-time fee for processing paperwork and setting up a gold IRA account.

#4. Depository Fees

Storing your physical gold takes considerable effort and resources. For starters, the precious metals must be deposited in a government-approved location. Such storage facilities have heightened security, monitoring, and insurance. You’ll incur some fees for storing your gold in these depositaries, which range between $100 and $300 per annum. Naturally, you’ll want to find the lowest storage fees to keep costs down.

#5. Annual Fees

Some gold IRA firms also charge an annual custodian fee to maintain your account in good standing. The annual custodian fee ranges from $0 to $300. Some firms offer lifetime fee waivers when you hit a certain minimum. Other firms waive the first year’s annual fees. With this in mind, you should ask about the fee waivers to find out if you qualify. Fee waivers could save you a lot of money in the long run.

#6. Gold IRA Withdraw Age

When IRA account holders reach 72 (or 70 ½ years on or after January 1, 2020), they must take the required minimum distribution (RMD) on their IRA account. This means they must withdraw from their IRA account annually. You can read more tips on retirement account withdrawal.

3 Golden Rules For Gold IRAs

IRS Approved Metals

Whether you choose to invest in silver, gold, platinum, or palladium, the IRS requires that the precious metal meets certain purity standards and fineness:

Silver – .999%
Gold – .995%
Platinum – .9995%
Palladium – .9995%

Storage

Precious metals held in an IRA account should be stored in an insured third-party depository.

Taxes

Precious Metals IRAs are subjected to similar tax laws as traditional, SEP, Roth, or Simple IRA plans.

How To Start A Precious Metals IRA

Starting a Precious Metals IRA is pretty straightforward. You can rollover your 401k, or any current IRA, SEP, Roth IRA, TSP, $03b, Pension Plan, or Annuity in a process known as 401k to gold IRA roll-over.

Precious metals IRAs are a form of self-directed IRA.

As such, there is a high chance that your employer will not allow you to convert your current IRA funds into a Gold IRA plan. You can only transfer those funds when you transition out of your job, giving you control over the retirement funds you’ve accumulated without incurring penalties. Importantly, when you roll over your IRA funds to a precious metal IRA, you still maintain your tax-deferred status.

While a precious metals IRA is self-directed, you’ll need an expert advisor to walk you through setting up the account and, importantly, to choose the suitable metals and selecting a depository.

Why Invest in a Gold IRA?

Investing in precious metals IRAs preserves your wealth in three ways:

#1. Wealth Protection

Silver, gold, platinum, and other approved precious metals are physical and tangible assets with a finite supply. They cannot be printed or created by governments and will retain their value in the long term.

#2. Liquidity

Gold is a world currency that can be converted to any fiat currency anywhere in the world quickly.

#3. Diversification

Precious metals reduce the overall risk exposure on your retirement portfolio by adding tangible assets into the asset mix. It guards your wealth against inflation.

What Are Gold IRA Depositories?

Users of precious metal IRAs are required to store the precious metals in an approved depository.

An approved depository is a firm that owns a high-security storage facility to protect assets in a dedicated storage location. One of the most renowned depositories in the world is Fort Knox. Fort Knox stores the vast majority of the U.S.A’s gold reserve and other precious items in custody of or belonging to the federal government.

Similarly, precious metal IRA depositories are safe storage where you can store your precious metals in a space with bank vault-level security. Using a depository takes away the hassle of protecting your precious metals at home (which is highly discouraged) while keeping your retirement assets safe and secure.

Some of the strategies that depositories implement to secure investor assets include:

– Armed security
– Constant monitoring
– Building disaster-proof structures
– Insurance that largely guarantees your assets

What Makes Gold IRA Rollover An Effective Way Of Investing In Gold?

Every savvy investor will have an intricate understanding of the benefits of investing in precious metals such as silver, gold, platinum, and palladium. However, not everyone will have a lot of cash sitting idle to purchase the precious metals directly.

And even if you have thousands of dollars in savings, that money has been taxed. The after-tax cash is your net capital which you are left with after Uncle Sam has taken out his share from the gross income. That is where the Gold IRA becomes advantageous.

Many people tend to have large sums of investable funds in their 401k and IRA. They can 401k roll-over to Gold IRA without incurring taxes.

As such, investors can roll over or add silver, gold, or any other precious metal directly to the precious metals IRA. Precious Metals IRAs are ideal for any first-time precious metal investors seeking the security of physical silver and gold. They are also suitable for investors with existing retirement accounts such as 401(k), 403(b), IRAs.

Traditionally, such retirement accounts included bonds, stocks, and money-backed assets like mortgage-backed securities and U.S. Treasury Bills. However, investors can now secure their portfolios further by investing in IRA accounts backed by silver and gold.

Precious Metal IRAs have become a primary means to securing retirement and asset diversification while also reducing the exposure of inflation to investor’s retirement savings.

Bars and coins approved by the IRS (Internal Revenue Services) must be stored in a licensed, insured depository for safekeeping and later withdrawn in strict adherence to the federal withdrawal rules.


GWR declares new Gold Resources

In mid 1993, GWR announced a 230% increase in Inferred and Indicated gold Resource Estimates to further advance the Company’s plans to progress the development of a gold mining operation.

A CSA Global review of the known Opena East gold deposits, other than the deposits reported upon in March 1994, has raised the Company’s total gold Mineral Resource estimate to 3,478,000 tonnes @ 2.3g/t for a contained 258,000 oz at a 1g/t cut off.

The previously defined gold deposits represent low exploration risk and are situated within granted Mining Leases. Detailed flora and fauna surveys have already been undertaken as part of the Company’s Opena East DSO Annanite Iron Ore project.