Question 1

What is a gold IRA?

Accepted Answer

A gold IRA is a self-directed Individual Retirement Account that allows you to hold physical gold bullion and coins as retirement assets. Unlike traditional IRAs that hold paper assets like stocks and bonds, a gold IRA provides portfolio diversification with tangible precious metals that can serve as an inflation hedge.

Question 2

How do I open a gold IRA?

Accepted Answer

Opening a gold IRA involves four steps: 1) Choose an IRS-approved custodian who specializes in precious metals IRAs, 2) Complete the account application and fund your account via transfer, rollover, or contribution, 3) Select IRS-approved gold products (minimum .995 fineness for gold bars, certain coins approved), and 4) Arrange secure storage at an IRS-approved depository. The entire process typically takes 2-3 weeks.

Question 3

What types of gold can I hold in a gold IRA?

Accepted Answer

IRS regulations require gold held in IRAs to meet minimum fineness standards of .995 (99.5% pure). Approved gold includes: American Gold Eagle coins (any size), Canadian Gold Maple Leaf coins, Austrian Gold Philharmonic coins, gold bars and rounds from approved refiners (PAMP Suisse, Credit Suisse, Johnson Matthey, etc.), and certain other government-minted coins. Collectible coins and jewelry are not permitted.

Question 4

Can I roll over my 401(k) into a gold IRA?

Accepted Answer

Yes, you can roll over funds from a 401(k), 403(b), TSP, or traditional IRA into a gold IRA without tax penalties if done correctly. For current employer 401(k)s, you typically need to leave your job first. Former employer 401(k)s can be rolled over at any time. The rollover must be completed within 60 days for indirect rollovers, or you can use a direct trustee-to-trustee transfer to avoid this restriction.

Question 5

What are the fees associated with a gold IRA?

Accepted Answer

Gold IRAs typically have three main fee categories: 1) Setup fees ($50-$300 one-time), 2) Annual custodian fees ($75-$300 per year for account maintenance), and 3) Storage fees ($100-$300 per year for segregated storage at an IRS-approved depository). Some custodians also charge transaction fees for buying or selling metals. Total annual costs typically range from $200-$600 depending on account size and custodian.

Question 6

Where is my gold stored in a gold IRA?

Accepted Answer

Gold held in an IRA must be stored at an IRS-approved depository, not at home or in a personal safe. These depositories are highly secure facilities with insurance, 24/7 monitoring, and vault security. You can choose between segregated storage (your metals stored separately) or commingled storage (your metals stored with others but still individually accounted for). Most investors prefer segregated storage for peace of mind.

Question 7

Can I take physical possession of my gold IRA assets?

Accepted Answer

While your gold must remain in IRS-approved storage during your working years, you can take physical possession when you take a distribution from your IRA (typically after age 59½). You can choose to receive your distribution as physical gold delivery or sell the gold and receive cash. Taking possession before age 59½ is considered an early distribution and subject to taxes and 10% penalty.

Question 8

What are the contribution limits for a gold IRA?

Accepted Answer

Gold IRAs follow the same IRS contribution limits as traditional and Roth IRAs. For 2024-2025, you can contribute up to $7,000 per year if under age 50, or $8,000 if age 50 or older (with $1,000 catch-up contribution). These limits apply to your total IRA contributions across all accounts, not per account. Rollovers from 401(k)s or other retirement accounts are not subject to these annual limits.

Question 9

Are gold IRA gains taxable?

Accepted Answer

Traditional gold IRAs grow tax-deferred, meaning you don't pay taxes on gains while the assets remain in the account. You pay ordinary income tax on distributions in retirement. Roth gold IRAs are funded with after-tax dollars, but qualified distributions (after age 59½ and account open 5+ years) are completely tax-free. Gold held in IRAs is not subject to the higher collectibles tax rate that applies to physical gold held outside retirement accounts.

Question 10

What is a self-directed IRA custodian?

Accepted Answer

A self-directed IRA custodian is an IRS-approved financial institution that specializes in holding alternative assets like precious metals, real estate, or private equity within retirement accounts. Unlike traditional custodians that only offer stocks and bonds, self-directed custodians handle the paperwork, IRS reporting, and regulatory compliance for holding physical gold in your IRA. They ensure your gold IRA remains compliant with all IRS rules.

Question 11

Can I add gold to my existing IRA?

Accepted Answer

You cannot add physical gold to a traditional IRA held at a standard brokerage. You must first establish a self-directed IRA with a custodian that permits precious metals. You can then either: 1) Transfer funds from your existing IRA to the new self-directed gold IRA, or 2) Roll over funds from your existing IRA. The transfer or rollover can be done without tax consequences if handled correctly through direct trustee-to-trustee transfer.

Question 12

What are the required minimum distributions (RMDs) for gold IRAs?

Accepted Answer

Traditional gold IRAs are subject to required minimum distributions starting at age 73 (for those born 1951-1959) or age 75 (for those born 1960 or later). You can satisfy your RMD by taking a distribution in physical gold or selling the gold and taking cash. The IRS values your gold at fair market value on December 31st of the prior year. Roth gold IRAs are not subject to RMDs during the owner's lifetime.

Question 13

What is the difference between a gold IRA and gold ETF in an IRA?

Accepted Answer

A gold IRA holds physical gold bullion and coins stored in an IRS-approved depository. Gold ETFs (like GLD or IAU) are paper securities that track gold prices but don't give you ownership of physical metal. Physical gold provides direct ownership, no counterparty risk, and tangible asset protection. Gold ETFs offer easier liquidity and lower fees but carry counterparty risk and don't provide the same inflation protection benefits as physical ownership.

Question 14

Can I hold gold and other assets in the same IRA?

Accepted Answer

Yes, a self-directed IRA can hold multiple asset types simultaneously. You can have physical gold, traditional investments (stocks, bonds, mutual funds), and other alternative assets in the same account. However, each asset type may have different fee structures and storage requirements. Many investors maintain separate IRAs for simplicity - one for traditional investments and one specifically for precious metals.

Question 15

What happens to my gold IRA when I die?

Accepted Answer

Your gold IRA passes to your designated beneficiaries according to your beneficiary designation form (not your will). Beneficiaries can either: 1) Take distributions over their lifetime (stretch IRA), 2) Take distributions within 10 years, or 3) Cash out immediately. Spousal beneficiaries have additional options including treating the inherited IRA as their own. The physical gold can be distributed to beneficiaries or sold for cash at their choice.

Question 16

Are there any prohibited transactions with gold IRAs?

Accepted Answer

IRS rules prohibit certain transactions that would constitute "self-dealing." You cannot: 1) Store IRA gold at home or in a personal safe deposit box, 2) Use IRA gold as collateral for a loan, 3) Buy gold from or sell gold to yourself or family members (disqualified persons), or 4) Personally handle or take temporary possession of your IRA gold. Violating these rules results in the entire IRA being treated as distributed, triggering taxes and penalties.

Question 17

How liquid is a gold IRA?

Accepted Answer

Gold IRAs are reasonably liquid but less so than traditional IRAs holding stocks and bonds. You can typically sell your gold and receive cash in 3-7 business days. The process involves contacting your custodian, authorizing the sale, and receiving proceeds via wire transfer or check. While not as instant as selling stocks online, gold IRAs provide much better liquidity than real estate or other alternative IRA investments.

Question 18

Can I convert my traditional gold IRA to a Roth gold IRA?

Accepted Answer

Yes, you can convert a traditional gold IRA to a Roth gold IRA through a Roth conversion. You'll owe income taxes on the converted amount in the year of conversion (based on the fair market value of your gold), but future qualified distributions will be tax-free. This strategy works well when gold prices are temporarily depressed (lower tax bill) or if you expect to be in a higher tax bracket in retirement.

Question 19

What due diligence should I do before choosing a gold IRA custodian?

Accepted Answer

Before selecting a gold IRA custodian, verify: 1) IRS approval and proper licensing, 2) Years in business and industry reputation (check BBB ratings, customer reviews), 3) Fee structure transparency (setup, annual, storage, transaction fees), 4) Storage options and depository locations, 5) Buyback policies and pricing, 6) Customer service quality and educational resources, and 7) Any regulatory complaints or legal issues. Request fee schedules in writing and compare at least 3-4 custodians.

Question 20

How does inflation protection work with gold IRAs?

Accepted Answer

Gold has historically maintained purchasing power during inflationary periods because its supply is limited while fiat currency can be printed without limit. When inflation rises, gold prices typically increase to reflect the declining value of currency. A gold IRA provides inflation protection by allocating retirement savings to an asset with intrinsic value that has preserved wealth for thousands of years, unlike paper assets that can be devalued by monetary policy.

Question 21

What is segregated storage for precious metals?

Accepted Answer

Segregated storage means your specific gold and silver coins and bars are stored separately from other investors' metals in a designated area or vault. Your metals are individually identified, inventoried, and audited. This provides the highest level of accountability and ensures you receive your exact metals back when taking a distribution. Segregated storage typically costs $100-$200 more annually than commingled storage.

Question 22

What is allocated storage versus unallocated storage?

Accepted Answer

Allocated storage means you own specific, identifiable gold bars or coins that are segregated and assigned to you. Unallocated storage means you own a quantity of gold but not specific bars - similar to a bank account balance. Allocated storage provides ownership of physical metal, no counterparty risk, and your specific metals are always available. Unallocated storage is cheaper but carries counterparty risk and may not have your metals available during a crisis.

Question 23

Which depositories are IRS-approved for gold IRA storage?

Accepted Answer

Major IRS-approved depositories include: Delaware Depository (Wilmington, DE), Brink's Global Services (multiple locations), International Depository Services (IDS - Delaware), Texas Precious Metals Depository (Leander, TX), and CNT Depository (Bridgewater, MA). These facilities meet IRS requirements for security, insurance, and auditing. Your custodian will typically have relationships with multiple depositories, giving you choice of location and provider.

Question 24

How secure are precious metals depositories?

Accepted Answer

IRS-approved depositories employ bank-vault-level security including: 24/7 armed security and video surveillance, biometric access controls, motion sensors and alarms, reinforced concrete vaults with multiple barriers, Class III vault doors rated for extreme protection, insurance coverage (typically $1 billion+ per facility), and regular third-party audits. These facilities are more secure than bank safe deposit boxes and certainly more secure than home storage.

Question 25

Is my gold insured while stored at a depository?

Accepted Answer

Yes, IRS-approved depositories carry comprehensive insurance covering theft, damage, natural disasters, and other losses. Most facilities maintain $1 billion or more in insurance coverage through Lloyd's of London and other major insurers. Your gold is insured at full replacement value while in storage, during transport, and during any transfers. This insurance is included in your storage fees - you don't pay extra premiums.

Question 26

Can I store my IRA gold at home?

Accepted Answer

No, IRS regulations explicitly prohibit storing IRA gold at home or in a personal safe deposit box. This is considered "self-dealing" and would cause your entire IRA to be treated as distributed, triggering immediate taxes and penalties. Some companies promote "home storage IRAs" or "checkbook control IRAs" but these arrangements violate IRS rules and create significant legal and tax risks. Always use an IRS-approved depository.

Question 27

How do I verify my gold is actually at the depository?

Accepted Answer

Reputable depositories provide multiple verification methods: 1) Annual statements showing your specific holdings by serial number (for segregated storage), 2) Third-party audit reports (typically annual), 3) Online account access to view real-time holdings, and 4) The right to request physical inspection or audit (though rarely exercised). Your custodian is legally required to verify your holdings exist and are properly stored.

Question 28

What happens to my gold if the depository goes bankrupt?

Accepted Answer

Your gold is your property, not the depository's asset, so it's protected in bankruptcy. Precious metals held in segregated or allocated storage are not part of the depository's balance sheet and cannot be seized by creditors. Your metals would be transferred to another depository or returned to you. This is fundamentally different from bank deposits (which are the bank's liability) or unallocated storage where you're an unsecured creditor.

Question 29

Can I choose which depository stores my gold?

Accepted Answer

Yes, most gold IRA custodians work with multiple IRS-approved depositories and allow you to choose your preferred facility. Factors to consider include: geographic location (some prefer Texas or Delaware), storage fees, depository reputation and history, insurance coverage limits, and whether they offer segregated storage. You can also split your holdings across multiple depositories for additional diversification.

Question 30

What are the typical storage fees for gold IRAs?

Accepted Answer

Annual storage fees for gold IRAs typically range from $100-$300 per year depending on account value and storage type. Segregated storage (your metals stored separately) costs more than commingled storage (your metals stored with others). Some facilities charge flat fees ($150-$200/year regardless of value) while others use tiered pricing based on account size. Storage fees are usually billed annually and paid directly from your IRA.

Question 31

How is my gold transported to and from the depository?

Accepted Answer

Professional armored transport services (like Brink's or Loomis) handle all gold transfers between dealers, depositories, and distribution points. These services use armored vehicles, armed guards, GPS tracking, and comprehensive insurance. You never personally transport your IRA gold - all movements are handled by licensed, insured carriers. This ensures chain-of-custody documentation and maintains IRA compliance.

Question 32

Can I visit the depository to see my gold?

Accepted Answer

While most depositories don't offer routine public tours due to security protocols, you can typically arrange an inspection of your holdings with advance notice and proper identification. However, IRS rules limit your physical interaction with IRA assets. Visiting to verify existence is generally acceptable, but you cannot take possession or remove metals without processing a distribution, which would be a taxable event.

Question 33

What is commingled storage and is it safe?

Accepted Answer

Commingled (or allocated) storage means your gold is stored together with other investors' metals of the same type, but you own a specific quantity that's tracked and audited. It's like having money in a bank account - the bank doesn't keep your specific dollars separate, but you own a specific amount. Commingled storage is safe, IRS-approved, and costs less than segregated storage. You receive equivalent metals (same type, weight, fineness) when taking distributions, not necessarily your original pieces.

Question 34

How quickly can I access my gold from a depository?

Accepted Answer

For IRA distributions, the process typically takes 3-7 business days. You contact your custodian to request distribution, they process the paperwork, and either ship the physical metals to you or sell them and send proceeds. Emergency access is not available since IRA rules require custodian involvement in all distributions. For non-IRA storage (personal ownership), many depositories offer same-day or next-day access for local pickup.

Question 35

What documentation do I receive for stored gold?

Accepted Answer

You receive several key documents: 1) Initial inventory report confirming your metals are in storage, 2) Annual account statements showing holdings by weight and value, 3) For segregated storage: serial number listings for each bar or coin, 4) Periodic audit reports from third-party firms, and 5) Transaction confirmations for any additions or distributions. Keep these documents in a secure location separate from the depository for your records.

Question 36

Why invest in physical gold?

Accepted Answer

Physical gold provides portfolio diversification, inflation protection, currency hedging, and crisis insurance. Unlike paper assets, gold has intrinsic value and has preserved wealth for over 5,000 years. During economic uncertainty, stock market volatility, or currency devaluation, gold typically maintains or increases its purchasing power. Physical ownership eliminates counterparty risk present in gold ETFs, mining stocks, or gold certificates.

Question 37

How much of my portfolio should be in gold?

Accepted Answer

Financial experts typically recommend 5-15% of a diversified portfolio be allocated to precious metals, with gold as the primary holding. Conservative investors might hold 5-10%, while those seeking more protection against inflation or economic uncertainty might allocate 10-20%. The optimal allocation depends on your age, risk tolerance, investment timeline, and economic outlook. Gold serves as portfolio insurance, not a growth vehicle.

Question 38

What is the difference between gold bars and gold coins for investment?

Accepted Answer

Gold bars typically offer lower premiums over spot price (1-5% vs 3-8% for coins), making them more cost-effective for large investments. However, coins provide more flexibility for partial sales, are easier to authenticate, and certain government coins like American Eagles qualify for IRA inclusion. Bars are ideal for maximizing gold content per dollar, while coins offer liquidity and divisibility advantages. Many investors hold both.

Question 39

When is the best time to buy gold?

Accepted Answer

Rather than timing the market, most experts recommend dollar-cost averaging - investing fixed amounts regularly regardless of price. Gold performs best during: inflation periods, currency devaluation, stock market corrections, geopolitical uncertainty, and when real interest rates are negative. However, gold's role is portfolio protection, not speculation. Focus on long-term wealth preservation rather than short-term price movements.

Question 40

How does gold perform during economic downturns?

Accepted Answer

Gold historically performs well during economic downturns, serving as a "safe haven" asset. During the 2008 financial crisis, gold rose 25% while the S&P 500 fell 37%. During the 1970s stagflation, gold increased 1,400% while stocks stagnated. Gold tends to move inversely to stocks and the dollar, providing portfolio balance during market stress. However, gold doesn't pay dividends or interest, so it's best held as long-term portfolio insurance.

Question 41

What are the tax implications of selling gold?

Accepted Answer

Physical gold held for investment is classified as a "collectible" by the IRS and taxed at a maximum 28% long-term capital gains rate (vs 20% for stocks) when held over one year. Short-term gains (under one year) are taxed as ordinary income. Gold held in traditional IRAs grows tax-deferred and distributions are taxed as ordinary income. Roth IRA gold distributions can be completely tax-free if qualified. Timing sales strategically can minimize tax impact.

Question 42

Should I buy gold mining stocks instead of physical gold?

Accepted Answer

Gold mining stocks and physical gold serve different purposes. Mining stocks offer leverage to gold prices and can appreciate 2-3x more than gold during bull markets, plus they pay dividends. However, they carry business risks (management, costs, accidents), correlate more with stocks than gold, and can decline even when gold rises. Physical gold provides direct exposure, no counterparty risk, and pure portfolio insurance. Many investors hold both for balanced exposure.

Question 43

What is the spot price of gold?

Accepted Answer

The spot price is the current market price for immediate delivery of one troy ounce of pure gold (.9999 fine). It's determined by global trading on markets like COMEX and LBMA and fluctuates continuously during trading hours. When buying physical gold, you pay a premium above spot price (typically 2-8%) to cover minting, distribution, and dealer costs. The spot price serves as the base reference for all gold transactions worldwide.

Question 44

How liquid is physical gold?

Accepted Answer

Physical gold is highly liquid - you can sell recognized bars and coins to dealers, online platforms, or other investors at any time, typically receiving payment within 1-3 business days. American Eagles, Canadian Maple Leafs, and PAMP Suisse bars are the most liquid products with the tightest bid-ask spreads. Unusual coins or small bars may have lower liquidity. Gold is more liquid than real estate but less liquid than stocks or ETFs.

Question 45

What is the premium when buying gold?

Accepted Answer

The premium is the amount above spot price you pay for physical gold, covering minting, fabrication, distribution, and dealer markup. Typical premiums: gold bars (1-5%), American Gold Eagles (5-8%), Canadian Maple Leafs (3-6%), rare or collectible coins (10-30%). Premiums vary with market demand, supply constraints, and product type. Larger purchases generally receive lower percentage premiums. During supply shortages, premiums can spike significantly.

Question 46

Should I invest in gold during times of low inflation?

Accepted Answer

Yes, gold serves multiple purposes beyond inflation hedging. During low inflation periods, gold provides: portfolio diversification (low correlation with stocks), currency hedging (protection against dollar weakness), geopolitical risk insurance, and central bank policy hedge. Gold performed well 2001-2006 despite moderate inflation due to dollar weakness. Think of gold as comprehensive portfolio insurance, not just an inflation play.

Question 47

What is the historical return on gold investments?

Accepted Answer

Since 1971 (when the gold standard ended), gold has averaged 8-10% annual returns, outpacing inflation and matching stocks over the very long term. However, gold experiences long consolidation periods followed by explosive rallies. From 2001-2011, gold returned 500%. From 2011-2015, gold fell 45%. From 2015-2020, gold rose 50%. Gold's value comes from crisis protection and wealth preservation, not consistent growth like dividend stocks.

Question 48

How do I diversify within precious metals?

Accepted Answer

A diversified precious metals portfolio typically allocates: 60-80% gold (primary wealth preservation), 15-30% silver (industrial demand plus monetary value), 5-10% platinum (rarer than gold, industrial applications), and 0-5% palladium (specialized uses, higher volatility). This spread provides exposure to both monetary metals (gold/silver) and industrial metals (platinum/palladium). Adjust based on your goals - conservative investors favor gold, aggressive investors may increase silver allocation.

Question 49

What factors drive gold prices?

Accepted Answer

Gold prices respond to multiple factors: 1) Real interest rates (negative rates boost gold), 2) U.S. dollar strength (strong dollar pressures gold), 3) Inflation expectations (rising inflation supports gold), 4) Central bank policy (QE and low rates boost gold), 5) Geopolitical tension (uncertainty drives safe-haven demand), 6) Stock market performance (often inverse correlation), and 7) Physical demand from China, India, and central banks. No single factor dominates - gold responds to the complex interplay of all these drivers.

Question 50

Can I lose money investing in gold?

Accepted Answer

Yes, gold prices fluctuate and you can experience paper losses if you sell during a downturn. Gold fell 45% from 2011-2015. However, gold has never gone to zero and has maintained purchasing power over centuries. The risk of permanent capital loss is extremely low. The bigger risk is opportunity cost - gold doesn't pay dividends or interest, so it may underperform stocks during strong bull markets. Proper portfolio allocation (5-15%) manages this risk.

Question 51

How does the Federal Reserve affect gold prices?

Accepted Answer

The Federal Reserve influences gold through interest rate policy and quantitative easing. When the Fed lowers rates or engages in QE (money printing), gold typically rises because: 1) Lower rates reduce the opportunity cost of holding non-yielding gold, 2) QE increases money supply, potentially causing inflation, and 3) Aggressive Fed policy often weakens the dollar. Conversely, rate hikes and quantitative tightening can pressure gold prices short-term, though persistent inflation may override this effect.

Question 52

Why does gold often move opposite to the stock market?

Accepted Answer

Gold and stocks often show inverse correlation because they represent different investment philosophies. During economic optimism, investors favor growth assets (stocks) over safe-haven assets (gold). During uncertainty or market corrections, capital flows from risk assets into gold for protection. However, this relationship isn't perfect - both gold and stocks can rise together during inflationary periods or fall together during severe liquidity crises. The key is gold's low long-term correlation provides portfolio diversification benefits.

Question 53

What is the relationship between gold and the U.S. dollar?

Accepted Answer

Gold and the dollar typically move inversely because gold is priced in dollars globally. When the dollar weakens, gold becomes cheaper for foreign buyers, increasing demand and prices. When the dollar strengthens, gold becomes more expensive internationally, reducing demand. This relationship holds about 80% of the time. Dollar strength reflects confidence in the U.S. economy, while gold reflects concern about currency stability and economic uncertainty.

Question 54

How do geopolitical events impact gold prices?

Accepted Answer

Geopolitical tension drives gold as a "safe haven" asset. Events like wars, trade conflicts, political instability, or terrorist attacks create uncertainty that pushes investors toward gold's stability. Examples: Russia-Ukraine conflict drove gold up 15% in early 2022, Brexit uncertainty boosted gold in 2016, and Middle East tensions consistently support gold prices. However, gold often retraces gains once crises resolve or become "normalized." Sustained geopolitical risk creates lasting gold support.

Question 55

What are real interest rates and why do they matter for gold?

Accepted Answer

Real interest rates are nominal interest rates minus inflation. They represent the true return on savings after accounting for purchasing power erosion. Gold thrives when real rates are negative (inflation > interest rates) because: 1) Cash and bonds lose purchasing power, 2) Gold's lack of yield becomes less of a disadvantage, and 3) Gold historically preserves wealth during negative real rate periods. When real rates are positive (rates > inflation), gold faces headwinds as yield-bearing assets become more attractive.

Question 56

How does inflation affect gold prices?

Accepted Answer

Gold typically rises during inflation because it maintains purchasing power while fiat currency loses value. Historical evidence: During the 1970s stagflation, gold increased 1,400% while the dollar lost half its value. During 2020-2022 inflation surge, gold rose 30%. However, the relationship isn't immediate - gold can lag inflation initially but catches up over time. Gold is most effective as inflation protection when measured over multi-year periods, not month-to-month.

Question 57

What is the gold-to-silver ratio and what does it tell us?

Accepted Answer

The gold-to-silver ratio measures how many ounces of silver equal one ounce of gold. The historical average is 55-60:1. When the ratio exceeds 80:1, silver is historically cheap relative to gold (opportunity to buy silver). When the ratio drops below 40:1, gold is relatively cheap (opportunity to buy gold). In March 2020, the ratio hit 125:1, historically extreme. Investors use this ratio to time exchanges between gold and silver within their precious metals allocation.

Question 58

How do central bank gold purchases affect prices?

Accepted Answer

Central banks collectively hold 35,000+ tons of gold (20% of all above-ground gold). Since 2010, central banks have been net buyers, particularly China, Russia, Turkey, and India. Annual central bank purchases of 400-600 tons create significant support for gold prices because: 1) They remove supply from the market, 2) They signal official sector confidence in gold, and 3) They often reflect concerns about dollar dominance. Central bank buying provides a strong fundamental price floor.

Question 59

What drives gold demand besides investment?

Accepted Answer

Gold demand comes from four sectors: 1) Jewelry (45% of demand, particularly India and China), 2) Investment (bars, coins, ETFs - 30%), 3) Central banks (15%), and 4) Industrial/technology (10%, electronics, dentistry). Investment demand is most price-sensitive and cyclical. Jewelry demand provides steady baseline support. Central bank buying has been a major price driver since 2010. Industrial demand is stable but growing with technology advancement.

Question 60

How does gold perform during deflation?

Accepted Answer

Gold's performance during deflation is mixed and depends on the cause. During the 2008 deflationary crisis, gold rose 25% as investors sought safety despite falling prices. During the 1930s deflation, gold mining stocks thrived while the overall economy collapsed. In severe deflation, cash becomes king initially, but gold benefits from: 1) Safe-haven demand, 2) Banking system concerns, 3) Eventual policy response (money printing), and 4) Relative stability versus collapsing asset prices.

Question 61

What is gold's correlation with other assets?

Accepted Answer

Gold shows low to negative correlation with most assets, making it valuable for diversification. Typical correlations: Stocks (-0.1 to +0.1), Bonds (-0.2 to 0), Dollar (-0.7 to -0.9), Oil (+0.3 to +0.5), Real Estate (+0.1 to +0.3). This low correlation means gold often moves independently of other portfolio holdings, providing genuine diversification. The correlation can vary during extreme events but over long periods remains reliably low.

Question 62

How do mining costs affect gold prices?

Accepted Answer

All-in sustaining costs (AISC) for gold mining average $1,100-$1,300 per ounce globally. This creates a "production floor" - if gold falls much below mining costs, production cuts follow, reducing supply and supporting prices. When gold prices are high ($2,000+), miners increase production, adding supply. However, new mine development takes 5-10 years, so supply responds slowly. Mining costs have steadily risen due to declining ore grades, deeper deposits, and increased regulatory costs.

Question 63

What technical indicators are most important for gold?

Accepted Answer

Key technical indicators for gold include: 1) 200-day moving average (major support/resistance), 2) Relative Strength Index (overbought above 70, oversold below 30), 3) MACD for trend changes, 4) Gold/Silver ratio for relative value, 5) Commercial trader positioning (COT report), and 6) Key psychological levels ($1,700, $1,800, $2,000). However, fundamental factors (Fed policy, inflation, dollar) typically override technical signals for gold over the medium to long term.

Question 64

How does Chinese and Indian gold demand impact global prices?

Accepted Answer

China and India account for 50% of global physical gold demand (jewelry + investment). Indian demand spikes during wedding season and festivals (Diwali, Akshaya Tritiya). Chinese demand peaks around Lunar New Year. When either country experiences economic growth, gold demand rises significantly, supporting prices. Government policies also matter - Indian import restrictions can reduce demand, while Chinese capital controls can increase gold buying. These markets provide crucial physical demand supporting gold prices.

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