The “Gold Standard” was dropped ages ago. But that doesn’t mean you shouldn’t consider one of your own.
We’re about to make a semi-crazy argument – even crazier, it might seem, for people living paycheck-to-paycheck, or working on a side hustle, or struggling to plan for things like college savings for the kids, or retirement planning for Mom and Dad. But we’re going there – we’re going to suggest you use your tax refund to buy gold.
Thanks to a fortuitous bounce of the financial football, we were able to file taxes and get our money back already. Woo hoo! Granted, it wasn’t like it used to be – we used to have much bigger refunds, but, well, the financial experts will tell you that you want to give Uncle Sam as little of your money to hold onto all year as you can. Maybe this year, instead of doing a celebratory dance with all that cash, we should pat ourselves on the back for our planning prowess.
This, then, runs the risk of being one of those “do as I say, not as I do” posts – I don’t think our refund would buy more than the gold dust you’d find in some high-end alcoholic beverages. However, running the numbers, and thinking long term, you might get some benefit from heading down this road.
Use Your Tax Refund to Buy Gold
Let’s start with a year-over-year price quote, from our friends at Kitco.com. Had you (or I) followed this advice a year ago, your “portfolio” would be down 5.75%. (While the S&P, over the same period of time, is up 14.1%.) But let me give you a few arguments why the tangible – gold, silver, platinum – are good things to look at.
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Let’s make a couple assumptions here. Assumption #1 – you’re somewhere in the middle of this range, from a cool site called Governing – and you get around $2000 back from the IRS. (That appears to be average; funny that these numbers differ from state-to-state, and sometimes rather wildly, too.) Assumption #2 – you’re not way up in the tax brackets, so opening up an IRA, or adding to one, won’t throw back more than a couple hundred bucks your way in further deductions. (*Either you file an amended return, or you do this for 2015 and wait to see the money until next year.)
Assumption #3 is our last one – you are taking advantage of all the tax-deferred accounts you can: the 401(k) or 403(b) at work, an IRA and/or a Roth IRA. See your tax advisor and/or your accountant – this site doesn’t provide investment advice, of course.
The point? $2,000 is not a bad amount to start with.
But, What Do I Do With All That Gold?
Calm down, smarty pants. You’re buying, after normal shipping, delivery, spot charges, etc., an ounce and a half. If that – you might opt for the mint coin route instead, meaning less gold, but more perceived value. (The US Mint and the Royal Canadian Mint are both good places to go, and Bullion Direct can help with those needs, too.)
The idea here, as we’ve mentioned before, is to have more than a little bit of diversification. On one side of the equation will be someone telling you that the “Full Faith and Credit” of the US Government will get us by. On the other side: the sky is falling, stockpile everything in your basement.
We’re not going to play the doom-and-gloom card, but, really, if there IS an emergency – let’s say you can’t access your bank or any other bank for 72 hours due to a natural disaster, for instance – what if you DO have to think creatively?
We’re not going to tell you exactly where to put this gold (or even silver or platinum). You could put it in your safe, you could store it in a safe deposit box at the bank (which would actually be a problem if the above-referenced natural disaster happened). Again, think semi-creatively.
What’s The Point?
The point, as with everything, is to think beyond the norm. Businesses are launching daily that are not making money the old fashioned way, so why should you…wait, gold IS old fashioned…never mind.
Still, this is about diversification, creativity, setting aside some money for later. And making sure that you’re ready for a variety of scenarios – not doomsday scenarios, but real world scenarios – that you might face financially.