New years are a time for new beginnings. It’s time to look back on the last year, assess performance, and figure out how we can do better this year. That’s especially true for savers and investors, particularly if you’re nearing a big milestone such as retirement.
The closer you get to retirement, the more concerned you’ll be with preserving the wealth you’ve accumulated. The risk of loss can be too severe for you to take, as there’s no guarantee that you’ll be able to recoup those losses in the short amount of time you remain in the workforce. That’s why many financial advisors recommend taking a more conservative approach to investing as you get closer to retirement.
Many people looking to protect their wealth look at alternative assets such as precious metals. Precious metals such as gold and silver often gain value when other financial assets perform poorly, and they’re often treated as a hedge against inflation.
Both gold and silver’s average annualized gains during the 1970s, for instance, were over 30%, when inflation peaked at 11%. Stock markets, by contrast, did almost nothing in the 1970s.
In the aftermath of the 2008 financial crisis, stock markets struggled to regain their footing. Meanwhile, gold nearly tripled in price while silver more than quintupled.
Another reason gold and silver have become popular investment assets is because they’re easier to invest in than ever. With a gold IRA or silver IRA you can even invest in physical gold and silver coins with existing retirement funds from your 401(k), 403(b), TSP, IRA or similar account. You can roll over or transfer funds from your existing account(s) into a precious metals IRA tax-free, allowing you to invest in physical precious metals while retaining all the same tax advantages of your existing retirement accounts. Or if you prefer to buy gold and silver coins directly, you can do so and have them delivered right to your door.
The popularity of gold and silver grew exponentially in 2021, and they’re poised to grow even more in 2022. If you’re looking at buying gold and silver, what kind of performance can you expect?
Looking Back at Gold and Silver in 2021
It’s safe to say that 2021 wasn’t anything like anyone expected. And that goes just as much for precious metals as it does for other assets.
How many people at the beginning of 2020 would have thought that stock markets would continue to climb to record highs in 2021? But they did, thanks to the trillions of dollars created out of thin air by the Federal Reserve to fund the federal government’s fiscal stimulus programs. Now that the Fed has begun tapering its asset purchases, the growth of stock markets could very well come to an end.
Many people had expected precious metals to continue climbing in 2021, but the year ended up being one of sitting around and waiting for the other shoe to drop. Gold lost around 3.6% for the year, at least in dollar terms. European investors saw the euro value of their gold holdings gain around 4% for the year. Silver saw bigger losses, around 12% for the year versus the dollar.
On the one hand, it can be tempting to look at that kind of performance as disappointing. But you have to remember that yearly performance isn’t really important unless you’re in the habit of only holding assets for a single calendar year. What’s far more important is whether gold or silver increase in price during the time frame in which you invest in them.
For one thing, gold and silver are still far more valuable than they were two years ago, with gold up 19% since the beginning of 2020 and silver up over 26%. That’s nothing to sneeze at.
But perhaps more importantly, this could be an opportunity to buy gold and silver while they’re still affordable, and before they take off in price. As many analysts have already said, this could be the year that gold and silver finally break out.
What Analysts Are Saying About Gold and Silver in 2022
While the performance of gold and silver in 2021 may not have been what some expected, other analysts are more sanguine. After all, gold rose so much from 2018 to 2020 that it was only natural that it would need to take a breather.
Recent reports indicate that some analysts expect gold to reach new record highs of $2,100 an ounce this year. And other more bullish analysts expect gold to reach $3,000 by next year. Similarly bullish forecasts for silver indicate that the white metal could end up pushing well above $30 in 2022.
Certainly all the parts are in place right now for precious metals to continue rising higher. Rising inflation is the number one driver right now, with prices continually climbing. That could help contribute to greater fear on the part of investors too, helping boost demand for gold and silver this year.
There’s also a great deal of economic uncertainty, with continued labor and parts shortages afflicting numerous sectors of the economy. And there’s a growing sense of unease about which way the economy will go, with many people expecting a nasty stock market correction and recession at some point in the near future. No one knows exactly when it will take place, but many people are trying to prepare for it.
Are You Prepared?
If you’re worried about your assets like many Americans are, now is the time to start thinking about protecting them. You don’t want to leave anything to chance, nor do you want to see a repeat of 2008.
Especially if you’re nearing retirement, you can ill afford to lose money in today’s market. When the economy does fall back into a recession, there’s no guarantee that it will be a short one, and there’s a growing possibility that it could be a long one. We could even be in for another stagflationary decade like the 1970s, which could really put a damper on your retirement plans.
Don’t leave your retirement savings exposed to the ravages of inflation and the ups and downs of financial markets. Contact the precious metals experts at Goldco today to learn more about how gold and silver can help you protect your savings and investments.