Why invest in gold for retirement?


According to reports, the average retirement-age investor’s portfolio in the United States lost 25% of its value in 2008. Some contend that the figures are even higher, particularly for investors with extensive stock exposure who don’t hold any alternative assets or commodities in their portfolio. History has demonstrated that when such hope and optimism inevitably wane from time to time, the price of gold increases. Due to this, gold is a great financial tool for diversifying and balancing an existing retirement or investment portfolio. It acts as a safeguard against market volatility, a hedge against inflation, and insurance against the potential of an unanticipated market crash.

According to a Johns Hopkins University study in 2012, there have been 56 instances of hyper-inflation globally over the past century. Gold maintains its strength when monetary systems fail. When monetary systems fail under less extreme situations, the price of gold increases.

Gold was once the world’s reserve currency, but recently, the American dollar and the Euro have taken its role.Central banks switched from net gold sellers to net gold buyers after the failure of Lehman Brothers. This reveals that they have little faith in their foreign exchange reserves. Even if you don’t anticipate a significant economic downturn and think it’s extremely unlikely that Canada would experience hyperinflation, which it won’t, gold is still a potent hedge against stock market volatility.

Till 1971, the price of gold was mostly determined by American exchange rates and set by the American government. Since  then, gold investments have generated nearly 3500% in returns while the Dow Jones Industrial Average has grown by about 1500%. However, you should include gold in your RRSP for protection and diversification purposes rather than because you anticipate a rise in price.

The investment portfolios of Canadians ought to include some gold. Kevin O’Leary discusses how he always keeps 5% of his net worth in gold in the video below.

Adding Gold to Your RRSP is a good idea: 

The addition of gold to retirement savings accounts is a practical approach for Canadians to develop a position in the metal. Canadians are encouraged to establish retirement portfolios by the tax benefits provided by RRSPs (registered retirement savings plans) and self-directed RRSPs. The maximum contribution amount to your RRSP is listed on your notice of assessment. Income earned and capital gains on assets held in an RRSP are not taxed until you turn 71. 

Adding gold to your RRSP is probably the best course of action to protect your long-term investments from the economy’s inevitable cyclical downturns. You can invest in a variety of ways to include gold in your RRSP, including: 

-Silver and gold bullion bars.

-Shares of gold mining businesses.

-Exchange-traded funds (ETFs) that are correlated with the price of gold.

-ETFs tied to stock indices that track gold mutual funds that judiciously invest in gold.