Gold Now Fits Into Retirement Portfolio

Gold bars
Tom Grill | Iconica | Getty Images
Gold bars

Wear it. Collect it. Store it. Retire on it?

With gold prices soaring 20 percent this year, investors, like 59-year-old litigator Ed Rose, want to put more of the precious metal into their retirement portfolio.

“Absolutely, it’s the best hedge,” said Rose.

Rose has one-fifth of his IRA invested in gold, mostly through exchange-traded funds, a strategy that the San Diego attorney argues is the best way to protect his nest egg.

“Gold used to be a hedge against inflation,” he said. “Now gold is a hedge against a falling dollar.”

"With gold prices soaring 20 percent this year, investors are putting more of the precious metal into their retirement portfolio."

And due to some of recent actions of the Federal Reserve to stimulate the economy, “Cash is no longer the ‘safe haven’ it used to be,” said financial advisor Ivory Johnson.

“They’re [the Federal Reserve is] essentially diluting the currency in an effort to expand the economy by creating new liquidity in the market,” Johnson added. “That’s unsustainable. So as more quantitative easing goes forward, we’ll see gold go higher.”

As with most retirement investment decisions, investors should factor in their age and ultimate goals. Also, know that the booming price of gold bullion may not give your portfolio a boost unless you know where to invest.

Most traditional IRA plans won’t let you buy the physical gold. But if you want to go that route, you’ll need to set up a “self-directed” IRA with a custodian that works with reputable gold dealers. You can then transfer money from an existing IRA to a new gold account. Once you buy the coins or bars, the new IRA custodian will ship the gold to a depository to be held on behalf of your IRA.

Want an easier route? Follow the example of Ed Rose, by investing in gold stocks, mutual funds or exchange-traded funds [ETFs] in a regular IRA.

Investing that way can take some of the guesswork out of “mining” for gold.