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Price of Gold Soars – Buffett Bets On It

price of gold soars
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UPDATED: Warren Buffett is famous for his investing prowess, and part of that has been a reluctance to invest in gold. But now, Berkshire Hathaway is putting its power behind Barrick Gold Corp., of Canada, betting on the price of gold soaring. The weakened U.S. dollar has benefited gold and many investors are taking advantage of that fact.

While investing in gold does not pay a dividend, investing in a miner, as Buffett and others are doing, does in fact pay one. And with world governments and central banks borrowing heavily and printing money likely to continue, gold is looking like a strong bet to make.

The change in Buffett’s view is most likely the economic upheaval caused by the COVID-19 pandemic covering the world. Fears of inflation and devaluing of paper money are causing many to invest in alternative assets beyond the stock markets. Gold hit an all time high this year although it has since receded a bit. The purchases by Berkshire Hathaway may push them back again as they bet fears will continue and the trade wars will not diminish.

A chart comparing the price of gold to the American Dollar for 2020:

dollar vs gold
Gold Prices and U.S. Dollar Correlation – 10 Year Chart

As you can see in the chart above, ever since the COVID-19 pandemic started back in March, the price of gold soars, while the value of the dollar decreases.

Key Points
  • The price of gold continues to soar
  • Warren Buffett is all in on goldl
  • Investing in gold with a Self-Directed IRA is tax efficient

The original article, as seen below, was back during the U.S./China trade war, which saw gold rise to over $1,300. Today, gold sits at over $2,000! As you can tell, it doesn’t matter the reason, gold and other precious metals tend to rise during global unrest. If Warren Buffett is betting on

The Price of Gold Soars

Investors are turning to gold as a “safe haven” as trade tensions continue to grow between U.S. and China.  Trade wars and real wars often give rise to uncertainty, so it may come as little surprise that the price of gold has risen over this past week to its highest in more than six years. As of now, the price of gold is U.S. $1,372.47 per ounce, and experts are hinting that gold will continue to soar as the trade war drags on. 

Long before the geopolitical conflict, gold and other precious metals have been seen as a profitable way to increase wealth as the value of the dollar decreased, with gold and silver being the two most popular metals. Precious metals provide many advantages, such as the ability to convert into cash easily.

The U.S.-China trade war is creating a new trend among alternative asset investments. Precious metals were dormant for the last three or so years and is now making a comeback. Increase in the price of gold is likely due to a number of factors, primarily the unrest between the U.S. and China which was demonstrated on Tuesday when the price of gold slipped 2% after U.S.-China tensions appeared to ease.

These are investment trends we are seeing at IRA Financial, and how it has impacted consumer behavior and how investors choose to put their retirement funds. IRA Financial does not offer investment advice and we are not encouraging investors to purchase gold or any other alternative investment. We are sharing recent trends and the types of assets you can hold in a Self-Directed IRA, such as gold.

Holding Gold in a Self-Directed IRA

Many IRA investors who do not realize they can use retirement funds to invest in precious metals, such as gold. This is because most Self-Directed IRA accounts are established through banks and traditional financial institutions. However, this type of IRA generally limits investors to the IRA investments offered by the financial institution, which typically include financial related investments, such as stock.

The IRA custodian at your bank or financial institution has no incentive to tell you about the benefits of gold investments or other alternative assets because they do not make money that way. As a result, investors do not realize they can purchase, hold and sell gold and other precious metals with an individual retirement account.

Rules for Holding Gold in a Self-Directed IRA

Purchasing gold with a Self-Directed allows the investment to grow unhindered because the tax is deferred until you take a qualified distribution. Even though you can buy and hold gold in a Self-Directed IRA, there are certain rules you must consider.

  • The Internal Revenue Code states that you cannot hold gold, silver or palladium bullion personally. Go through a trustee or approved trust company to possess precious metals.
  • Most tax practitioners believe precious metals, such as gold should be held by a trustee, as coins may also be bullion.
  • If you have a Self-Directed IRA LLC, as manager of the LLC you can purchase gold coins. If you have a Solo 401(k), the trustee will have to purchase the coins for the benefit of the plan and coins should be held in a depository.
  • If you have a Self-Directed IRA, you can hold gold coins in a safe deposit box, but it must be at a U.S. bank and in the name of the Self-Directed IRA LLC.

Stay IRS Compliant when Holding Gold in a Self-Directed Retirement Plan

At IRA Financial, we do not advise our clients to purchase gold or other precious metals. If you choose to purchase gold, we will work with you to ensure your Self-Directed retirement plan remains IRS compliant, as the rules on ownership and possession of precious metals are complex. Contact IRA Financial today.

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