Gold and Silver Performance Over the Years: A Look at the Numbers

When most people think of investing, they think of stocks and bonds. That’s almost all you ever hear about in financial media, and almost all you ever see available from many brokerages. So it’s understandable that most investors don’t think about investing in anything except for stocks and bonds. But if they ignore their options, their investment performance could suffer over the long term.

Investors who have done their research may realize that there are other options out there, such as gold and silver. But very often they think of investing in gold and silver only as a hedge against inflation and economic turmoil, as assets to be invested in when markets are in the middle of a downturn. They ignore the fact that gold and silver can also perform well over the long term in building up wealth, and can even outperform stocks.

Many investors also fail to realize that investing in gold and silver doesn’t have to be a one-time deal. They can roll over or transfer assets from an existing retirement account such as a 401(k), TSP, or IRA account into a gold IRA or silver IRA without tax consequences, and many do that. But then they leave those accounts alone and don’t continue to invest in gold and silver through their precious metals IRA. That can lead to missing out on significant gains.

What Do the Numbers Show?

To illustrate the kinds of gains investors are missing out on, let’s look at a few hypothetical examples of how investing in gold and silver on an annual basis can help investors build up their wealth.

It’s important to remember that contributions to IRAs are limited on an annual basis. Those limits generally increase every few years as inflation and the cost of living increases. Today the annual limit on IRA contributions is $6,000 per year, while those over age 50 can add an extra $1,000 catch-up contribution, for a total of $7,000 per year.

Let’s imagine a hypothetical investor who invested $50,000 in an IRA at the beginning of 2001 through a transfer or rollover from a 401(k), 403(b), or similar retirement account. That investor also made additional annual contributions up to the maximum amount at the beginning of each year through 2020. How much would that investor now have, and how would his assets have grown?

First, let’s look at an investor whose IRA assets were invested in a fund that matched the performance of the S&P 500. The total amount of assets invested over that period of time from 2001 to 2020 would have been $143,000, and the total value of those investments today would be around $380,000, for an average annualized return of about 5%. That’s a decent return, but not spectacular.

Next, let’s look at an investor whose IRA assets were invested in physical silver coins or bars through a silver IRA. Again, this investor is investing $50,000 at the beginning of 2001 in a transfer or 401(k) rollover, plus maximum annual IRA contributions. Looking just at the melt value of those investments, the $143,000 invested over those 20 years would be worth $472,000 today. That’s 24% better than the S&P 500 investment, and an average annualized return of 6.2%.

Then let’s look at an investor who invested in a gold IRA rather than a silver IRA. Those $143,000 of investments would be worth $558,000 today. That’s 47% better than the S&P 500 investment, and an average annualized return of 7%.

Now let’s look at investment performance if that initial transfer or rollover were $100,000 rather than $50,000. Each investor has now invested $193,000 over 20 years rather than $143,000.

The investor in the S&P 500 fund would see the value of his investments at $524,000 today, for an average annualized return of 5.1%. The investor in a silver IRA would see his investments worth $753,000 today, for an average annualized return of 7%, and 43% better performance than the S&P 500 investor. And the gold IRA investor’s assets would be worth $903,000 today, a 72% increase in performance over the S&P 500 investor, and an average annualized return of 8%.

What Lessons You Can Learn

While past performance is no guarantee of future performance, you can still learn a few lessons from these examples. The first is that higher initial investments can impact performance down the line. Just investing $100,000 versus $50,000, or a 35% increase in total investments over 20 years, resulted in a 60% increase in total investment gains. So the higher your initial investment, the better you could come out on the other end.

The second lesson is that periodic contributions to your gold IRA or silver IRA can help boost the gains made by your initial investment. Rather than a one-time, set it and forget it type of deal, investing in gold and silver should be viewed in much the same way as investing in stocks and bonds. If you give thought every year to adding stocks and bonds to your investment portfolio, why wouldn’t you do the same thing for gold and silver?

Thinking about protecting your wealth and growing your assets with gold and silver is particularly important in today’s investing climate, with stock market euphoria now at levels last seen during the dotcom bubble. Many stocks are insanely overvalued, and stock market investing today is increasingly risky with the amount of purely speculative, short-term investing that is going on right now.

Don’t let another day go by with your retirement savings at risk of major losses due to moves in the market. If you’re interested in investing in gold and silver for the long term, whether you’re in mid-career, nearing retirement, or already in retirement, talk to the experts at Goldco to learn more about how investing in gold and silver can benefit you.