After Brexit, the Great Britain pound (GBP) fell 11% and the gold price rose by 26% (when priced in the GBP). So what is going on? Did individuals start to buy gold bars and coins to serve two different functions: 1. Compensating for loss of currency value and 2. Wealth protection? Learn why you could do the same with your gold IRA rollover.
Gold Bars and Coins are Money
Macroeconomics teaches that there might be an inverted relationship to currencies and commodities. If currencies increase, then commodity prices might decrease. Thus, when the GBP fell after Brexit, it makes sense that the gold price would increase.
A portion of the increase in the demand in gold was simply due to the adjustment based on the GBP devaluation. The most dramatic element of this adjustment was that it happened over a couple of days. It can be difficult to predict such a tremendous wealth effect.
United States Gold Price
The American banks said they had branches in England in order to benefit from European Union links. Some experts predict that Brexit could lead to the loss of 100,000 banking jobs in the City of London. Thus, British investors might be purchasing even more gold.After Brexit, the gold price in terms of the United States dollar (USD) also increased 9%. Thus, we could argue that both Americans and British were buying gold as wealth protection due to the Brexit chaos. As stock exchanges fell, investors transferred their wealth into precious metals.
IRA Gold Rollover Benefits
Besides wealth protection, diversification is another key benefit of a Gold IRA Rollover. The Internal Revenue Service (IRS) has permitted owners of self managed accounts to add high-grade precious metals. The gold bars or silver must be of the finest bullion grade of .999 fine. You can look at the coin or bar and read its purity level.
Having a Gold IRA allows for you to hedge against currency devaluations. The United States dollar has remained very strong and increased in value against the Great Britain pound, but if you want to be careful – buy gold. A Gold IRA Rollover gives you peace of mind in case another one-day currency devaluation takes place.
Better Safe Than Sorry
After Brexit, the atmosphere remains quite charged. Many currencies continue to see modifications in their value. The United States dollar is presently worth less than the pound or euro, but that could change. Numerous financial contracts must be renegotiated between England and Europe. Some are very wary about the future of global trade.
When you are investing in gold in a climate of rising prices, your wealth portfolio will naturally rise. Now, might be one of the best times to buy gold because the uncertainty is so high and the case for gold is so good.
Some experts are even wondering if sellers will run out of gold. A Gold IRA is a nice little “rainy day fund.” When you buy gold bars, you are prepared for all exigencies.