By Susan Wade

When it comes to planning your retirement, there are tons of decisions you’re going to have to make. One of the biggest decisions for many is when and how to hedge against losses. Today, we’re going to talk about whether or not it’s a good idea to start looking at gold backed IRAs as a way to hedge against losses and why. So, let’s get right to it.

How Gold Acts As A Hedge

Before we get into whether or not it’s time to start looking into gold as a hedge, let’s chat a bit about how gold can help protect you against losses. If you’re like most people with a traditional IRA, your money is nested in traditional investments. However, in tough economic times or during a market correction, you could lose a large portion of your investment. That’s where gold comes in.

When the market doesn’t perform well, major investors start to look for safe haven investments as a nest for their money. One of the most common safe havens is gold. So, when markets start to fall, more and more investors start investing in gold; reducing the supply and increasing the demand of the metal. All in all, this causes the price of gold to go up; offsetting any losses you may experience in traditional investments.

Why Are We Talking About This Now?

The market is doing great right? Well, at least from the outside looking in, that seems to be the case. However, there are several red flags surrounding the market’s ability to sustain the upward growth we’ve seen.

The first issue plaguing the market is the fact that stocks are teetering at dangerously high valuations. Throughout the past several years, we’ve seen exponential growth. The only problem is that the value of stocks has grown at a much faster rate than corporate profits. As a result, investors who purchase stocks today are essentially overpaying for their ownership of shares. If a large amount of investors were to start to notice this, it could trigger a sell off; leading to a market correction.

Another major concern for many investors is the economic climate we’re seeing in the Eurozone. The simple reality is that the United States economy relies on the success of other economies around the globe; one of them being the Eurozone. Unfortunately, throughout the past several months, the only news we’ve seen out of the Eurozone with regard to their economy seems to be bad news; posing a real threat to the United States’ economy.

Finally, another concern that seems to be on the forefront of investors’ minds is geopolitical tensions. With Russia and the Ukraine still in disagreement and the terrorists becoming more active in the Middle East, the geopolitical climate is far from calm.

Final Thoughts

With all of the issues mentioned above, it’s hard to deny that a market correction could be on its way. By looking into precious metals backed retirement investments, you could create the perfect hedge for your retirement dollars and protect yourself against loss.

About the Author

Written by Susan Wade