Is It A Good Idea To Turn Your 401k Into Gold?
Tuesday, December 2, 2014, 1:00 AM | Leave Comment
Your retirement investments are the most important investments you will ever make. We’re talking about the investments that allow you to live your golden years without having to work a day job! So, if something was to happen that had a negative effect on your retirement investments, chances are that you’d be devastated.
While there’s no doubt in my mind that a market correction is on its way, there is a way to protect your retirement.
Today we’re going to talk about why protecting your retirement by turning your 401k into gold is such a good idea in today’s financial climate.
3 Reasons The Financial Climate Isn’t As Good As It Seems
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Reason #1: High Stock Valuations
One of the things that scare investors the most is high stock valuations. The simple fact is that no one wants to pay more money for stocks than they’re worth.
By doing so, you’re only setting yourself up for losses. Unfortunately, today’s stock market is displaying overvaluations just about everywhere.
As a matter of fact, the Schiller PE ratio that generally sits around 16 points in a sustainable market currently is at 26.5 points; showing that the stock market may be getting close to a tipping point.
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Reason #2: The Geopolitical Climate
Currently, the geopolitical climate isn’t what it should be. The reality is that times of war a generally a plague to world financial markets.
Currently, we’re seeing geopolitical issues in several areas. First we’ve got the terrorist threats like ISIS and Hamas that continue to grow stronger.
Also, there’s the Russia vs. Ukraine issue that’s already caused sanctions to be imposed on Russia from western countries like the United States, Canada, Europe, and more.
Finally, Saudi Arabia is creating an incredible political concern revolving around oil prices.
All in all, the geopolitical climate isn’t far off from what we saw in the beginning of the “War on terrorism”.
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Reason #3: World Economic Climate
While looking around in the United States things seem to be well; that’s not necessary the case for the rest of the world.
As a matter of fact, Germany continues to downgrade it’s predictions for growth throughout the rest of this year and next. Since Germany is the steam engine of the Eurozone, this drags an entire multi-country currency to the brink of a recession.
The bottom line is that the United States can only sustain growth with the help of its trading partners; that seems to be becoming more and more of a stretch.
Final Thoughts
When financial markets tend to be down, gold prices tend to rise. That’s because when investors start to lose money they start to sell their stocks and look into the safe haven investments like precious metals.
As a result, in down market times, those who invested in precious metals have the ability to realize a profit. So, by turning your 401k into gold before the market does go on a downward trend, you not only protect yourself against losses, but you give yourself the ability to realize gains!
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