When times are tough, some people's retirement planning glitters because they turn their nest eggs into gold.
If you think the Mayans are wrong and the world won't end Friday, but we may tumble off the "fiscal cliff" at the end of the year leaving the economy in a muddle, you might want to buy gold, too.
Edmund Moy, chief strategist for precious metals dealer Morgan Gold, was the director of the United States Mint, manufacturer of U.S. coins, from 2006 to 2011. He was on the job during the beginning of the Great Recession and watched demand for American gold bullion coins go from 327,522 ounces in 2007 to 1.8 million ounces in 2009, a 450 percent increase. When he resigned from his federal job in January 2011, he resolved to add gold to his own portfolio.
Moy's search for a company to manage that investment resulted in him becoming a spokesperson for Morgan Gold. He emphasizes that he was first a satisfied customer.
IRS allows the inclusion of gold in an IRA as long as it is 99.9 percent pure. Bullion and South African Krugerrands aren't pure enough. The three practical ways to buy gold are:
- Contemporary gold bullion coins. The likeliest choices are American Buffalo and Canadian Gold Maple Leaf coins.
- Collectible gold coins. The most collectible were minted before 1933.
- Shares. You can buy into a precious metal exchange-traded fund, or ETF, or you can buy shares in a gold-mining company.
The government won't let you keep your gold in the basement, which is why you need a government-approved depository as well as a self-directed individual retirement account administrator to manage the details. None of the major brokerage firms deal in gold, and none of the firms that do are really household names. So tread cautiously. Moy suggests calling the Better Business Bureau before you invest.
Why bother with gold? Moy says that the best reason to include gold in your retirement portfolio is "as an insurance policy. When stocks and bonds and cash and the value of the dollar go down, gold goes up," he says.
How much gold should you buy? Moy recommends starting with a modest 5 percent of your portfolio -- these days an American Buffalo with a $50 face value will cost you about $1,750. If that purchase gives you comfort, he suggests you increase your purchase to 15 percent of your portfolio.
If the world ends, none of this will matter, but otherwise, adding a little gold to the mix could make your retirement feel more secure.