Gold: A Sustainable Investment

Introduction

In 2023, the demand for gold reached its highest level ever recorded at 4,899t. The growing interest in owning gold is not surprising, as gold has proven to be a reliable asset for preserving portfolios during times of economic, geopolitical, and financial turmoil. In today's uncertain times, this attribute of gold is particularly valuable.

The Environmental Concern

However, we are also facing environmental challenges that cannot be ignored. It is our responsibility to consider the impact of our investments on the broader environment. Gold, being a long-standing asset, continues to meet investors' needs and concerns in terms of both portfolio preservation and sustainable investing.

Sustainability in the Gold Industry

The gold industry takes sustainability seriously throughout the entire supply chain. The Responsible Gold Mining Principles address all the material environmental, social, and governance (ESG) risks associated with gold mining. Furthermore, all LBMA accredited refiners adhere to the Responsible Gold Guidance to ensure responsible sourcing procedures are in place.

Responsible Sourcing

When purchasing gold bullion, it is essential to ensure that the bullion dealer sources newly refined bars or coins from LBMA accredited refiners or mints. However, it is worth noting that "grandfathered gold," which refers to gold refined before 2012 and held in bullion bank vaults, central bank vaults, and exchanges, is not required to have a determination of origin.

Sustainability of Gold

Gold requires very little energy for storage or trading. Unlike consumable assets, gold retains its value and existence even after being traded. For example, the American Eagle gold coin bought last week may contain gold that was mined hundreds of years ago or even be one of the first coins minted in 1986. This durability and longevity make gold a sustainable investment.

Recycled Gold

Gold has always been recycled, and in the modern age, the importance of recycled gold is increasing. In 2023, the demand for gold was so high that recycled gold supply increased by 9%. Over 25% of gold purchased that year came from recycled sources, which is significant considering that recycled gold is over 90% less carbon intensive than mined gold.

A Sustainable Asset

Gold's sustainability lies in its ability to endure for thousands of years. Very few assets can claim such longevity. Gold is rarely destroyed, and all the gold ever mined still exists today in its original form. This makes gold as investable and practical as when it was first mined.

Conclusion

Gold is not only a reliable asset for portfolio preservation but also a sustainable investment. The gold industry's commitment to sustainability across the supply chain and the increasing importance of recycled gold contribute to its sustainability. Investing in gold allows individuals to preserve their wealth while minimizing their impact on the environment.

This article was recently featured in Phoenix Magazine's Sustainable Investing section, sponsored by GoldCore.

GOLD PRICES ( AM/ PM LBMA FIX– USD, GBP & EUR )

07-02-2024 2033.20 2041.60 1609.28 1616.33 1888.03 1895.83
06-02-2024 2025.05 2030.80 1614.57 1615.70 1887.14 1891.49
05-02-2024 2024.50 2018.00 1608.06 1609.96 1882.99 1881.18
02-02-2024 2054.20 2034.15 1609.67 1606.98 1886.78 1883.01
01-02-2024 2037.55 2045.85 1611.29 1615.61 1886.98 1890.77
31-01-2024 2037.90 2053.25 1608.31 1610.77 1882.00 1886.73
30-01-2024 2036.80 2043.05 1606.22 1613.81 1880.78 1885.33
29-01-2024 2027.35 2022.50 1596.54 1595.55 1874.29 1871.82
26-01-2024 2021.10 2018.45 1587.57 1585.09 1861.03 1857.78
25-01-2024 2018.15 2023.75 1584.65 1590.67 1852.46 1863.67

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Frequently Asked Questions

How much do gold IRA fees cost?

The average annual fee for an individual retirement account (IRA) is $1,000. There are many types available: SIMPLE IRAs (SEP-IRAs), Roth IRAs, Traditional IRAs and Roth IRAs. Each type comes with its own set rules and requirements. If the earnings are not tax-deferred you could be subject to taxes. Also, consider how long the money will be kept. You will save money if you intend to keep your funds longer than a Roth IRA.

You can contribute up to $5500 per year to a traditional IRA (or $6500 if you are 50 or older). The Roth IRA allows unlimited contributions each year. The difference between them? With a traditional IRA, the money can be withdrawn at your retirement without tax. However, Roth IRA withdrawals are subject to tax.

What is the best way to make money with a gold IRA?

The answer is yes, but not as much as you think. It all depends on how risky you are willing to take. You could have $1 million if you're willing to invest $10,000 each year for 20 years. You'll end up losing everything if you place all your eggs in the same basket.

Diversifying investments is crucial. Inflation is a problem for gold. You should invest in an asset that increases with inflation. Stocks do this well because they rise when companies increase profits. Bonds also do this well. They pay interest each year. They're very useful during periods of economic growth.

What happens if there is no inflation? During deflationary periods, bonds fall in value while stocks fall further. This is why investors should avoid putting all their savings into one investment, such as a bond or stock mutual fund.

Instead, they should combine different types funds. They could, for example, invest in stocks and bonds. They could also invest both in bonds and cash.

By doing so, they are exposed to both the positive and negative sides of the coin. Inflation or deflation? They will still see a return in time.

Are precious metals allowed in an IRA?

The answer to that question will depend on whether the IRA owner plans to diversify his holdings to gold and/or keep them safekeeping.

He can choose to diversify if he so desires. He could either buy bars of physical gold and/or sterling from a dealer or simply sell these items back at the end. He doesn't wish to sell any of his precious metal investments. He should keep them, as they are perfectly safe to be stored in an IRA account.

How to Open a Precious Metal IRA

You can open an IRA in precious metals by opening a Roth Individual Retirement Account (IRA), which you can self-direct.

This account is more advantageous than other types of IRAs, because you don’t have to pay taxes on any interest earned from your investments until they are withdrawn.

This makes it attractive to those who want a tax break but still want to save some money.

There are many other options than investing in gold and silver. You can put your money in almost any item that meets the IRS guidelines.

Many people think only of silver and gold when they hear the word “precious metallic” but there are other types.

These include palladium, platinum, rhodium,osmium,iridium, andruthenium.

There are several ways you can invest in precious metals. The two most popular options include buying bullion coins and bars and purchasing shares of mining companies.

Bullion Coins or Bars

One of the best ways to invest in precious metals is by buying bullion bars and coins. Bullion is a general term that refers to physical ounces of gold and silver.

Bullion bars and coins can be purchased to receive actual pieces.

While you might not feel any change when you buy bullion coin bars or coins from a retailer, you will experience some benefits over time.

For example, you'll get a piece of history in a tangible form. Each coin and bar has its own unique story behind it.

You'll often find that the face value of a coin is far lower than its nominal value. In 1986, the American Eagle Silver Coin was $1.00 per ounce. However, today, an American Eagle Silver Coin is more than $40.00 per Ounce.

Bullion has seen a dramatic rise in value since its introduction. Many investors would rather buy bullion coins or bullion bars than futures contracts.

Mining Companies

If you are looking to invest in precious metals, there is another option: investing in mining shares. You're investing in the company’s ability to produce precious metals.

You will then be entitled to dividends which are based upon the company’s profit. These dividends are then used to pay shareholders.

The company's growth potential will also be of benefit to you. The company's share prices should also increase as demand increases for the product.

Because these stocks fluctuate in price, it's important to diversify your portfolio. This allows you to spread your risk among multiple companies.

It is important to keep in mind that mining companies can lose their financial investments just as stock markets investors.

If gold prices plummet significantly, ownership of your shares could be worthless.

The Bottom Line

Precious metals such silver and gold provide an economic refuge from uncertainty.

But, silver and gold can be subject to price swings. A precious metals IRA account is a good option for long-term investment.

This allows you to benefit from tax advantages and physical assets.

Statistics

If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
Silver must be 99.9% pure • (forbes.com)
The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (forbes.com)
The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (monex.com)

External Links

How To

How to Determine if a Gold IRA is Right for You

Individual Retirement Accounts (IRA) are the most popular type. IRAs can be obtained through banks, financial advisors, mutual funds, employers and banks. The IRS allows individuals to contribute up $5,000 annually without worrying about tax consequences. This amount can be contributed to any IRA, regardless of your age. There are limits to how much money you may put into certain IRAs. A Roth IRA is only available to those who are at least 59 1/2. For those who are younger than 50, contributions can only be made after you turn 70 1/2. Individuals who work for their employer could be eligible for matching employer contributions.

There are two types: Roth and Traditional IRAs. The traditional IRA allows you the opportunity to invest in stocks and bonds as well as other investments. However, the Roth IRA only allows you to invest after-tax dollars. Roth IRA contributions can be made without tax, but they will still be subject to taxes if you withdraw from it. A combination of both accounts may be preferred by some people. Each type is different. There are pros and con's to each. What should you look at before deciding which type is best for you? Below are three important things to keep your mind on:

Traditional IRA Pros:

Each company has its own contribution options
Employer match possible
More than $5,000 in savings per person
Tax-deferred growth up to withdrawal
There may be restrictions based upon income level
Maximum annual contribution is $5,500 ($6,500 for married couples filing jointly).
Minimum investment is $1,000
After you turn 70 1/2, you can begin receiving mandatory distributions
You must be at the least five years of age to open an IRA
Cannot transfer assets between IRAs

Roth IRA pros

Contributions are free of taxes
Earnings can grow tax-free
Minimum distribution not required
The only options for investing are stocks, bonds, or mutual funds
No maximum contribution limit
No limitations on transferring assets between IRAs
Open an IRA if you are 55 years or older

It is important to understand that not all companies offer the exact same IRAs when opening a new IRA. Some companies provide the choice of a Roth IRA as well as a traditional IRA. Others allow you to combine them. You should also note that different types of IRAs may have different requirements. Roth IRAs do not require a minimum amount of investment, while traditional IRAs are limited to a maximum investment of $1,000.

The bottom line

The key factor in choosing an IRA account is whether you wish to pay taxes now, or later. A traditional IRA is a good choice if you expect to retire within ten. A Roth IRA may be a better choice for you. Either way, it's always a good idea to consult a professional about your retirement plans. A professional can help you determine the best option for your situation and keep track of what's going on in the market.

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By: Dave Russell
Title: Gold: A Sustainable Investment
Sourced From: news.goldcore.com/gold-a-sustainable-investment/
Published Date: Thu, 08 Feb 2024 15:19:21 +0000