How to Use Gold And Silver As Inflation Hedges In Retirement

The price of gold has recently reached it’s previous all-time highs last seen in 2008 – 2011.  The run-up in price began at the beginning of 2020 and has been fueled by the ongoing economic disruption of the COVID19 pandemic.

From now on gold bullion will only grow as a store of value and ultimate extinguisher of debt.  Investors, mindful of potential hyper-inflation generated by unlimited government money printing, see the likely erosion of their money in the bank.  This could be especially disastrous for those who have already retired with static incomes and virtually zero interest being paid out by banks. 

With that said, to what degree should you as a current or future retiree diversify with gold and silver?


There is a school of thought that says precious metals should always be a part of every retirement portfolio.  Gold primarily, and silver are the most appropriate assets to offer significant inflation hedges over long periods of time.  While being pretty to look at these precious metals do not pay dividends.  However savings bond interest minus inflation is well below zero.  That trend is set to continue so the store of value you can create by owning gold and silver will keep you ahead in the long term.

With gold being rather stable over time, silver is a bit more volatile and can go through medium term periods of volatility.  The amount of each that you allocate in your portfolio will depend on your goals, risk tolerance, and time horizon.  If your objective is income then you may choose the low end of the scale at 5%.  If your goal is value growth and wealth preservation it could be 20% or more. 

Those seeking income should also consider a mix of guaranteed income like Treasuries and even more risky assets like dividend paying blue-chip stocks.  Especially if you have a long time horizon (or expect a long retirement).  These assets have also served as hedges against inflation.

Gold and silver have been stores of value and actual money for thousands of years.  In modern times however, they really shine when inflation starts to creep in. At the tipping point where inflation overtakes interest precious metals are the go-to asset to protect wealth and purchasing power.  In a very real sense we have been in that situation for some time with inflation varying from 2% to 10%, depending on the measurement, and interest rates at, or in some countries, below zero.

Recently one of our affiliate partners, Bullion Vault, announced a “holding fee” of 0.75% per year on Euro currency balances as of August 1st 2020.  This is because after 6 years of European Central Bank Negative rates, commercial banks will now be forced to pay interest to their banks to hold money for clients!  It’s an almost unbelievable situation that as a customer you would need to pay interest to the bank for holding your money.    

Negative interest rates are one of the reasons behind gold’s recent rise but also that last steady climb in price since 2011. Gold peaked at over $1,900 an ounce then and fell back as interest rates became positive again.  Now through this period of sustained negative interest rate gold has again touched $1,900 per ounce.

Silver, being more volatile, reached an all time high of about $50 an ounce in 2011 and followed a similar but more dramatic retreat than gold over the interim period.  However it has had the most dramatic rise since the beginning of 2020 doubling in price from $11 to over $22 an ounce as of July 22, 2020.

What does this mean for you?  Again, it depends on your risk tolerance and goals.  Gold is set for a steady increase with no end in sight to government money printing and very low interest rates.  Silver is still 50% off of its all time highs.  With increased industrial demand for clean energy, 5G technology, and antimicrobial products, silver has great potential to rise in value.  Although it probably will not be as steady as gold, silver will continue to serve as a store of wealth.

How Should You Invest

HT Bullion always and strongly suggests owning precious metals directly.  This means taking physical delivery of the metal and storing it outside of the banking system.  This can be done at an individual level or through a precious metals IRA  company such as GoldCo, Gold Broker, or Money Metals Exchange

While equities are more liquid than bullion, in most cases by using a bullion depository custodian your funds are available in 24-48 hours.  This is a great feature in case of sudden emergency cash needs. 

HT Bullion is not qualified to give direct financial advice.  The experience and personal opinion of the owners is that in order to avoid the downside risks of inflation and economic downturns every retirement strategy should have some exposure to Gold and Silver Bullion. Whether that is 5%, 10%, or more depends on your individual circumstances.  

Current and future retirees should rebalance their portfolios and precious metals holdings periodically to maintain their goal balances.  Using dollar-cost averaging into gold and silver bullion will yield steady results over time.  Regardless of your strategy, it pays to utilize the expert advice available from the HT Bullion affiliated partners who specialize in self-directed Precious Metals Retirement accounts.  You can review each company in our convenient Bullion Dealer Directory