In good times any financial analyst worth his salt would recommend 10% of his client's portfolio be invested in gold and silver. But there is just one caveat these are not good times. Wouldn’t you agree? So 10% is a good place to start.
Thanks to MKG Enterprises Corp. relationships with leading custodians, you can easily add precious metals to your IRA portfolio too*
You can also roll your 401K over into a precious metal IRA. Your IRA custodian can advise you about this.
Why You Need a Self-Directed IRA ?
Asset diversification is especially critical for your retirement savings. It helps your portfolio to weather volatile markets and turbulent times. The trouble is that while all IRAs offer great tax advantages, most don’t allow you any control over what your money is placed in. So you cannot really balance your portfolio appropriately.
But there is an alternative. With a self-directed IRA, you get to choose the asset classes that you want to place your money in. The makeup of your portfolio is determined by your own investment decisions and choices instead of those of your employer or fund manager.
Why Precious Metals?
Because they tend to retain their value more than other assets, precious metals have traditionally acted as a buffer against instability. Market upheavals usually have a lower impact on precious metals than on other assets. Financial experts have always recommended placing about 10% of your funds in precious metals as a prudent strategy.
You can place precious metals in traditional and Roth IRAs and even in some 401K plans. You can transfer your existing IRA to a precious metal IRA without incurring taxes or penalties. At the end of its term, you can cash out your IRA or take possession of your precious metals to sell later. Placing precious metals in your IRA thus gives you flexibility in addition to a better balanced portfolio.
Contact MKG Enterprises Corp. at 1-866-675-3766 to get started.
IRA-Eligible Precious Metal Products
For your IRA or 401K, you can choose from among the following:
Trading Of Precious Metals Is Risky And You May Lose More Than You Deposit: Trading Precious Metals over-the-counter ("OTC") is highly risky due to the speculative and volatile markets in these products and the leverage (margin) involved. Trading these products may result in loss of funds greater than you deposited in the account. You must carefully consider your financial circumstances and your risk tolerance before trading Precious Metals, and you should not trade Precious Metals unless you are an experienced investor with a high risk tolerance and the financial capability to sustain losses if they occur.
In times of economic uncertainty, many people want to buy and sell gold either to make quick cash or to purchase a stable investment. Either way, investors can make a good return on their investment as a gold membership interest in our prospectus to become a gold authorized precious metal and & gem dealer.
Precious Metal prices have been known to fluctuate significantly on a week-to-week or even a day-to-day basis. This means that gold and silver bullion dealers must be careful as to not end up on the wrong side of a large price swing. Hedging large inventories of gold, silver and platinum are not standard practice for many bullion dealers, and a lot of local coin shops and even online gold and silver retail stores don't fully hedge their positions. This can be problematic and could potentially lead to other issues like longer shipping times and large monetary losses on the part of the company.
Largest Gold and Silver Price Movements of the Past
In the past, gold and silver spot prices have had days that saw a move of 10% or more in either direction. Some days that are worth noting include September 15th and 16th 2011, where silver saw a 23% drop in price. Over those two days, silver fell from a high of around $39.75 to as low as $30.68 the following day. Another big day for precious metals was April 15th, 2014 when gold spot price fell $110 in one day of trading. On days like these, dealers who didn't hedge their inventory could have potentially experienced very large losses if they were not using proper hedging techniques. Situations like these have helped bullion dealers improve and master the hedging of large inventories. This has helped dealers protect themselves against risk and make their business safer and more predictable for both them and their customers.
What Exactly is Hedging?
In short, hedging is the process of playing both sides of the market to provide protection against fluctuations in precious metal prices. Bullion hedging means that the dealer has offset their long positions with their short positions and vice versa. By doing this, the dealer is ensuring that they never have an overall long or short position. This helps the company be somewhat immune to price movements that gold, silver and platinum see on a day to day basis. Below we will go into further detail on both long and short positions.
Long Positions vs Short Positions
A long position refers to any inventory that a bullion dealer has in their possession or that they have ordered from a supplier. This type of position is one that would benefit the company when prices move upwards. In contrast, a short position is one that would benefit the dealer if prices declined. A short position simply refers to any incoming orders that the dealer has yet to fulfill. When the long position is combined with the short position it is referred to as the "net house position." Based on their overall position, the dealer will then trade futures contracts to offset or hedge against the net house position. Standard futures contracts are traded in increments of 100 ounces of gold, 5,000 ounces of silver and 50 ounces of platinum.
Now that you understand the basic aspects of hedging precious metals, we will go over a sample situation. In our example, a dealer has 5,000 ounces of physical gold that was bought at a spot price of $1,200/oz with a wholesale markup. All in all, the dealer has 3,000 ounces of open orders from customers that were sold at a spot price of $1,200/oz plus a retail markup. In this scenario, the dealer would be left with a net long position of 2,000 ounces bought at $1,200/oz spot. In our example scenario, if the dealer did not hedge their inventory they would have a long position of 2,000 ounces. This would mean that if the gold spot price was to move up $200/oz the dealer would make a profit of $1,000,000 on their physical inventory while losing $600,000 on open orders leaving them with a net gain of $400,000. In the opposite situation where gold moved $200/oz downwards the dealer would then have lost $400,000. With a properly hedged inventory in this same scenario, the dealer would have shorted 20 gold futures of 100 ounces per for a total of 2,000 ounces. In this case, if spot price was to increase by $200 then the dealer would have made the same $1,000,000 on their inventory and lost the same $600,00 on open orders. The futures contracts would have then given them an additional $400,000 loss for a net profit of $0. In this way, the dealer is protecting their company from price movements while making money on the product's retail markup.
The United States Mint currently has 12 vendors authorized to purchase U.S. gold, silver and platinum bullion coins. None of the Mint's bullion issues are sold directly to the public, but are instead sold to authorized purchasers.