With the economy in such turmoil, there are many investors looking at new options for securing their future and wealth. Uncertainty has become a certainty of finances over the last decade and the devaluation of the dollar is leaving countless people scrambling to find a solution. At the rate of inflation, simply putting money away for a low interest return is just not a wise action anymore. One possible solution that has been considered by many working Americans recently is the idea of rolling over your 401k into gold. But is this a real solution? Will this ensure your financial future and that of your children? At least one thing is for certain: the US dollar cannot be relied on to keep its value.
Gold’s Skyrocketing Value
Gold reached a record high commodity value between 2005 and 2006 and has since soared to previously unimagined levels. You can get access to gold’s historical performance here. 1980 saw a similar rise, reaching about $590 an ounce from a previous $100 to $200 between 1973 and 1978. Before that it sat at around $20 to $40 an ounce for nearly 150 years. Although the surge in value of 1980 did not retain its height for long, after it hit the peak of $590, it never again dropped below $270 at the close of a year. From 2006 onward, the surge has only increased bringing it to an absolute record closing value of over $1,600 at the end of 2012, over 2.5 times its value in 2006 and 26 times its value in 1972. With any speculation, the unanswerable question is whether or not the value of gold will remain somewhat constant, continue to rise, or fall off in the future. Looking at the many different factors that affect the rise or fall of a commodities price will help you make an educated guess so that you never make a blind investment.
Gold Thailand by @Doug88888, on Flickr. This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
The Truth Behind the Value
There are a variety of factors to look at when determining the reasons why gold prices have risen and whether or not they will continue to rise. First we will look at the economy that people have been talking about so much over the last decade. As a result of the boom in overseas manufacturing and outsourcing, much of our money, and jobs, have found their way out of the country. The government’s attempts at bailing out companies and banks have only increased their own mountainous deficit and further devalued the dollar. With unemployment at a frightening high and financial uncertainty dominating the marketplace, many Americans are looking to alternate ways to invest. This brings us to the next major factor involved: demand. As Americans frantically look for a better place to keep their earnings, the demand for gold is continuously on the rise. Obviously, it has nothing to do with jewelry, but with gold as a raw commodity. Intelligent investors in gold are storing up as much as they can purchase, removing much from the market which inevitably leads to scarcity. The last factor we will discuss is the US dollar itself. As the economy sits in shambles and the government struggles with mounting debt, actions such as stimulus packages and bail-outs greatly diminish the value of the dollar. As the value of the dollar goes down, the value of gold rises by the dollar. This type of raise in value does not necessarily an inherent rise in the value of gold, instead demonstrating the loss of value in our currency. However, pay rates have not risen at even close to the rate that the dollar has devalued in recent years. If you cash your paycheck and set that money in your sock drawer, you are losing money every day that you do not invest it. It’s prudent to find the best companies first, you can find reviews on gold IRA companies or even check out this short video about it.
Going by these factors, it seems plainly clear that gold will not just retain its record high value but continue to rise in price dramatically in the future. Educating yourself further on the value of gold and the benefits of turning your 401k into the valuable commodity can ensure you and your family’s future. Get more information and protect the fruits of your hard work.
