The Enduring Debate: Gold vs. Bitcoin
Bitcoin bull Cathie Wood, the CEO of Ark Invest, recently shared her views on the ongoing debate between gold and digital currency. During a Bloomberg UK podcast, Merryn Talks Money, Wood expressed her opinion on the matter.
Bitcoin: A Hedge Against Inflation and Deflation
When faced with a hypothetical scenario of choosing between gold, a cash deposit account, or Bitcoin for a decade, Wood made her stance clear. She passionately advocated for Bitcoin, stating that it serves as a hedge against both inflation and deflation. Additionally, she highlighted the digital nature of Bitcoin as a significant advantage.
The Time-Tested Appeal of Gold
While acknowledging the enduring appeal of gold, Wood emphasized a crucial difference between the two assets. According to her, gold has already reached its peak demand, whereas Bitcoin remains a fresh and evolving asset. Institutions are only beginning to scratch the surface of its potential.
The Rise of Bitcoin Among Younger Investors
Wood's perspective aligns with the sentiment of younger investors, particularly millennials and Gen Z. Bitcoin's technological novelty and the growing enthusiasm surrounding it have made it a more attractive store of value compared to gold. This shift in preference is evident among the younger generation.
Bitcoin Outshining Gold
Wood made an intriguing observation regarding the role of both gold and Bitcoin as hedges against deflation. However, she pointed out that recent performance suggests Bitcoin has been outshining its traditional counterpart. This further strengthens the case for Bitcoin as a promising investment.
The Evolving Landscape of Investments
Wood's perspective reflects the changing landscape of investments, with Bitcoin emerging as a powerful contender. As Bitcoin continues its recovery from the brutal bear market of 2022, it remains to be seen whether more investors will follow suit and recognize its potential.
Frequently Asked Questions
How does a gold IRA account work?
People who wish to invest in precious metals can use Gold Ira accounts as a tax-free investment vehicle.
Physical gold bullion coin can be purchased at any time. You don’t have to wait to begin investing in gold.
An IRA lets you keep your gold for life. You won't have to pay taxes on your gold investments when you die.
Your gold is passed to your heirs without capital gains tax. You don't need to include your gold in your final estate report, as it isn't part of the estate.
To open a IRA for gold, you must first create an individual retirement plan (IRA). After you have done this, an IRA custodian will be assigned to you. This company acts as a mediator between you, the IRS.
Your gold IRA custodian will handle the paperwork and submit the necessary forms to the IRS. This includes filing annual returns.
Once your gold IRA is established, you can purchase gold bullion coins. The minimum deposit required for gold bullion coins purchase is $1,000 However, you'll receive a higher interest rate if you put in more.
You'll have to pay taxes if you take your gold out of your IRA. You'll have to pay income taxes and a 10% penalty if you withdraw the entire amount.
Even if your contribution is small, you might not have to pay any taxes. There are exceptions. For example, taking out 30% or more of your total IRA assets, you'll owe federal income taxes plus a 20 percent penalty.
It is best to not take out more than 50% annually of your total IRA assets. A violation of this rule can lead to severe financial consequences.
How is gold taxed by Roth IRA?
Investment accounts are subject to tax based only on their current value and not the amount you originally paid. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
However, if the money is deposited into a traditional IRA/401(k), the tax on the withdrawal of the money is not applicable. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
These accounts are subject to different rules depending on where you live. In Maryland, for example, withdrawals must be made within 60 days of reaching the age of 59 1/2 in order to qualify. Massachusetts allows you up to April 1st. New York allows you to wait until age 70 1/2. To avoid penalty fees, it is important to plan and take distributions in time to pay all your retirement savings.
How much tax is gold subject to in an IRA
The tax on the sale of gold is based on its fair market value when sold. You don't pay taxes when you buy gold. It is not considered income. If you sell it after the purchase, you will get a tax-deductible gain if you increase the price.
As collateral for loans, gold is possible. Lenders try to maximize the return on loans that you take against your assets. This often means selling gold. However, there is no guarantee that the lender would do this. They may hold on to it. Or, they may decide to resell the item themselves. Either way you will lose potential profit.
So to avoid losing money, you should only lend against your gold if you plan to use it as collateral. It's better to keep it alone.
What Precious Metals Can You Invest in for Retirement?
Silver and gold are two of the most valuable precious metals. They are both simple to purchase and sell, and they have been around for a long time. If you want to diversify your portfolio, you should consider adding them to your list.
Gold: Gold is one of man's oldest forms of currency. It is stable and very secure. It is a good way for wealth preservation during uncertain times.
Silver: Investors have always loved silver. It's a great option for those who want stability. Silver is more volatile than gold. It tends to rise rather than fall.
Platinium: Platinum is another form of precious metal that's becoming increasingly popular. It's durable and resists corrosion, just like gold and silver. It's also more expensive than the other two.
Rhodium: Rhodium is used in catalytic converters. It is also used to make jewelry. It's also relatively inexpensive compared to other precious metals.
Palladium – Palladium is an alternative to platinum that's more common but less scarce. It's also less expensive. For these reasons, it's become a favorite among investors looking to add precious metals to their portfolios.
Should You Purchase Gold?
Gold was considered a safety net for investors during times of economic turmoil in the past. Today, many people are looking to precious metals like gold and avoiding traditional investments like bonds and stocks.
The trend for gold prices has been upward in recent years but they still remain low relative to other commodities like silver and oil.
Some experts believe that this could change very soon. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
They also note that gold is increasingly popular because of its perceived intrinsic value and potential return.
Here are some things to consider if you're considering investing in gold.
- Before you start saving money for retirement, think about whether you really need it. It's possible to save for retirement without putting your savings into gold. The added protection that gold provides when you retire is a good option.
- Second, make sure you understand what you're getting yourself into before you start buying gold.There are several different types of gold IRA accounts available. Each offer varying degrees of security and flexibility.
- Don't forget that gold does not offer the same safety level as a bank accounts. Your gold coins may be lost and you might never get them back.
If you are thinking of buying gold, do your research. And if you already own gold, ensure you're doing everything possible to protect it.
Statistics
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
External Links
investopedia.com
law.cornell.edu
- 7 U.S. Code SS7 – Designation board of trade as contract marketplaces
- 26 U.S. Code SS 408 – Individual retirement plans
forbes.com
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
bbb.org
How To
How to hold physical gold in an IRA
The best way of investing in gold is to purchase shares from companies that produce gold. But this investment method has many risks as there is no guarantee of survival. If they survive, there's still the risk of losing money due to fluctuations in the price of gold.
The alternative is to buy physical gold. This requires you to either open up your account at a bank or an online bullion dealer or simply purchase gold from a reputable seller. These options offer the convenience of easy access, as you don't need stock exchanges to do so. You can also make purchases at lower prices. It is easier to view how much gold has been stored. You'll get a receipt showing exactly what you paid, so you'll know if any taxes were missed. You have less risk of theft when investing in stocks.
However, there are disadvantages. Bank interest rates and investment funds won't help you. You can't diversify your holdings, and you are stuck with the items you have bought. Finally, tax man may want to ask where you put your gold.
BullionVault.com has more information about how to buy gold in an IRA.
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By: Reed Macdonald
Title: Bitcoin Bull Cathie Wood Believes Gold's Time Has Passed
Sourced From: bitcoinmagazine.com/business/ark-ceo-cathie-wood-bitcoin-gold-10-years
Published Date: Mon, 06 Nov 2023 12:51:26 GMT
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