Portfolio Diversifier

Since the start of the new millennium, tangible commodities, including precious metals and valuable collectibles far surpassed the earnings of intangible investments, such as CDs, stocks & bonds. Savvy investors have discovered that the purchase of gold can greatly reduce volatility in their personal portfolios. In fact, financial advisors recommend the inclusion of 10-30% assets in precious metals to offset fluctuations in the economy. The majority of investors’ portfolios are over-burdened with stock and bond investments. That is taking quite a risk in today’s inflationary economy.

Why is this? To begin with, gold tends to flourish during hard economic periods when stocks and bonds depreciate the most. In 2005, gold bullion rose 20.18% (Kitco), keeping pace with booming real estate at 21% and far outperforming its intangible counterparts. The DOW lost .6%, the NASDAQ gained only 1.4%, the S& P raised just 3% and 10 year treasury bonds went up a mere 4.37% (USA Today). Silver bullion soared up to 37%(Kitco), even higher than crude oil at 35%(USA Today)!

2005 was also a year that made rare coin history with the sale of an Andrew Jackson King of Siam coin for $8.5M! Though this exceptional example of appreciation is not standard, the value of rare coins can increase greatly, even when the price of gold is falling.

In order to have a balanced portfolio, financial advisers recommend adding hard assets and precious metals to your investments. Are you aware that you can legally purchase non-traditional investments, such as gold, silver and platinum through your retirement plans (IRAs: Individual Retirement Plans)? The Taxpayer Relief Act of 1997 approved gold and silver bullion for IRAs effective January 1, 1998.

Specific precious metals permitted are: silver, gold, and platinum American Eagle coins, coins issued under the law of any State. Also permitted is gold, silver, platinum or palladium bullion that are of fineness equal to or exceeding the minimum fineness related to certain regulated futures contracts and that the bullion be in the physical possession of a trustee qualified to serve as an IRA trustee.

The main reason this information has been withheld from the public is due to the fact that most IRA Custodians (by policy, but not by law) only allow investments that produce commission for themselves. That typically only includes trades in public stocks and funds. A brokerage firm subsisting on commissions does not sustain itself by allowing long term private investments. As a result, they may withhold the possibilities of non-traditional investments from their clients, or they may not be informed enough about such investments to educate their clients in the first place.