10 Reasons Boomers Should Consider Investing in Gold
Written by
Jordan Rosenfeld
Edited by
Ashleigh Ray
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We humans have had a long fascination with the glittery yellow metal that drove the gold rush, comprises jewelry and embellishments, and which persists in holding its value across time. Gold is one of the few investments that is relatively immune to stock market fluctuations and which never loses its value.
Experts explain why it’s also an especially good investment for Baby Boomers, most of whom are either in retirement or approaching it.
A Hedge Against Economic Uncertainty
Investing in gold has been a time-tested strategy for wealth preservation, according to Brandon Aversano, the founder of Alloy.
“Gold has historically acted as a hedge against economic uncertainty and inflation,” he said, making it a great way for Boomers approaching retirement to safeguard their nest egg from “erosions in purchasing power.”
He continued, “Gold, with its intrinsic value and limited supply, serves as a reliable store of value.”
Additionally, in times of economic crisis or rising inflation, gold tends to perform well, helping to protect the purchasing power of Boomers’ savings.
Unique From Traditional Assets
Another reason Boomers should consider investing in gold is its low correlation with traditional assets like stocks and bonds, Aversano said.
“Diversification is crucial for risk management, and adding gold to one’s investment mix can help reduce overall portfolio volatility.”
Gold’s value doesn’t change with as much volatility as other assets, which he said can be a stabilizing force in a retirement portfolio.
“This characteristic is particularly valuable for Boomers who are seeking to balance their investments as they transition into retirement and want to mitigate the risk associated with market fluctuations,” said Aversano.
Simplicity and Liquidity
Gold provides a tangible asset that Boomers can physically possess, giving them a sense of security, Aversano said. “This precious metal is not subject to counterparty risk, unlike certain financial assets or currencies. It is highly liquid, making it easy to buy or sell when needed.”
Gold is an especially good investment for Boomers looking for an alternative to the complexity of today’s financial markets, offering a kind of simplicity, and even control over their wealth.
“While gold should not constitute the entirety of an investment portfolio, including a portion of it can provide Boomers with peace of mind and a valuable layer of financial protection in their retirement years,” Aversano concluded.
Potential as a Tax-Efficient Asset
Gold can offer tax advantages that many other investments do not, according to Alan Beard, managing director and CEO of Interlink Capital Strategies.
“In some cases, long-term capital gains on gold are taxed at a lower rate than other assets. Baby Boomers who strategically manage their gold investments can benefit from reduced tax liabilities and keep more of their investment gains.”
Global Portfolio Diversification
Gold’s value is also not tied to any specific country’s economy, making it an excellent asset for international diversification, Beard said.
“Baby Boomers who want to safeguard their wealth from geopolitical or economic instability can allocate a portion of their investments to gold. This helps mitigate risks associated with their home country’s economic conditions.”
Physical Gold for Emergency Preparedness
Gold coins or bars can serve a dual purpose as both an investment and a form of emergency preparedness. Beard pointed out, in these days of increasing climate change driven natural disasters, Baby Boomers can hold physical gold as part of their preparedness plan.
“In challenging situations, gold can be used for trade, barter, or even as a store of value if traditional financial systems falter,” said Beard.
Protects Purchasing Power
Percy Grunwald, finance expert and co-founder of Compare Banks, said many Baby Boomers are worried about the future purchasing power of their investments.
“Given the expansive monetary policies that central banks worldwide are implementing,” said Grunwald, “there is a genuine chance of inflationary pressures. In these situations, gold might act as a barrier.”
Gold Holds Its Worth Over Time
Perhaps the most important reason to invest in gold, according to Scott Bauer, CEO of Prosper Trading Academy LLC, a financial education firm, is that “it holds onto its worth even when inflation rears its ugly head. So, if you’re aiming to keep your nest egg safe over the long haul, gold has historically got your back.”
Gold Protects Against Inflation
Bauer also pointed out that with all the money printing going on, prices could start rising fast. “But gold has traditionally been a great hedge against inflation, helping shield savings from getting eaten up. So gold can provide some nice insurance for your accounts.”
There’s a Rising Global Demand
Growing countries like India and China are snapping up more and more gold these days for jewelry and investing, Bauer warned. “That rising global demand could push gold prices higher over time.” That makes now the best time to buy gold.
In a nutshell, Bauer said, gold boasts a long track record as a stable store of value, can hedge against inflation, provides portfolio diversification, has rising global demand, and shines during times of uncertainty.
“For the Boomer generation aiming to live comfortably in retirement, investing part of their savings in good old tangible gold seems like a smart strategic decision,” said Bauer.
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