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Gold and Silver

Offering Gold and Silver to our Clients

Redhawk, through its strategic relationship with Ryan Long, President of National Gold Consultants, is offering our advisors and clients access to physical gold and silver coins in either non-qualified accounts or IRA accounts.

You might ask, are precious metals related more to retirement planning, speculation, and investing, or are the commodities better used as insurance for a person's retirement? Great questions that need to be answered. If the consumer, especially a retiree, plans to use gold and silver as a very short term speculative trade, that consumer will not be a good fit for us as we recommend staying away from physical commodities as speculative tools to begin with.

Gold and silver sometimes have negative connotations such as “ancient money” or non-dividend producing assets. While some media outlets may build the case, the majority do not understand what gold and silver actually does for people. Pundits are correct in saying gold and silver do not produce dividends, large amounts of coins may be tough to store, and perhaps less liquid than other assets, depending on the economic conditions at the time. What commentators fail to mention is physical gold and silver is a store of value, something like “Wealth Insurance”.

It is common to view health insurance and homeowner's insurance as worthless or un-necessary until you need it. The same principle applies to precious metals. We are pretty sure gold and silver coins will not be the way people conduct their Christmas shopping in 2017 and hopefully every year thereafter. We certainly hope a consumer isn't stuck in a position where all their worldly possessions are tied up in gold and silver coins and they literally have to go cash them in to buy food.

That said, today a US Silver Dollar will buy approximately 15 gallons of gasoline. That same example of purchasing power is tested throughout the last 100 years. In other words, this same amount of gas could have been purchased with that same silver dollar over the last 100 years. Are you getting the hint this asset class is really a hedge against inflation and devaluation of the dollar?

Upon passing the most important test of all, the liquidity test, we believe that individuals should have up to 10% of their investable assets in tangible gold and silver semi numismatic coins to be precise. More about this is covered below. Also, in some upcoming blog articles we will get more into why this specific form of the commodity is the most prudent.

How did we come up with the 10% ratio? The answer is through extensive comparisons over the last 100 years of our economic history. The average recession occurs every 7 years. While we are not in favor of a recession, nor do we believe one is imminent, we are well past the 7-year average. You know what happens in statistics over time: trends tend to snap back to their long term average.

Gold and silver will help smooth out the rough patches, allowing losses to generally be less during economic downturns and pullbacks. And on that point, wealth does not simply disappear. It merely transfers from one asset class to another. By holding 10% of investable assets in tangible gold and silver, this may prevent you from freaking out and selling all your stock such as might have been the case in March of 2009, right when you thought the stock market was going to zero!

The question regularly comes up concerning which types of metals to hold in a portfolio. Granted, there never is a one-size-fits-all approach, but there are some specific guidelines that are worth noting. When you are contemplating purchasing precious metals, the most conventional and sound way to hold them is in your non-qualified asset bucket, directly in your own physical possession. By purchasing circulated older American coins that are pre-1933, this insures the utmost privacy, liquidity, and authenticity. Non-qualified purchases allow you the physical possession option.

If liquidity does not allow for purchasing metals with non-qualified funds, many individuals are unaware that they can purchase tangible gold and silver inside qualified accounts that are rollover eligible. Storage and account maintenance fees tend to be less than .05% annually which allows for low-cost ownership. There are specific guidelines that only allow specific products to be held inside an IRA. The most popular products held inside IRA's are the newly minted government gold and silver coins that are extremely liquid when taking withdrawals like required minimum distributions.

There is so much more to cover on this subject but we wanted to give you a sense of how we address this asset class as a fiduciary on behalf of our advisors and clients. If you have questions at this time, please contact us. We can answer questions about this asset class here at Redhawk as well.


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