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Jul 30, 2023 | Investment Management, Q&A

Is now a good time to buy gold?

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Gold bars sitting on top of stacks of U.S. dollars with rolled dollars on top of them

Gold has long been a popular choice for investors seeking stability and diversification in their portfolios as the commodity has historically been used to hedge against economic uncertainty and geopolitical risks. In addition to being a long-time symbol of wealth, it is also widely used in various industrial applications, especially in electronics, healthcare, and aerospace. While gold has historically performed well in these situations, there are other factors that can influence the price of the precious metal, leading to questions about when is a good time to buy gold.

THE CASE FOR GOLD

Economic Uncertainty & Market Turbulence:

Gold tends to perform well during times of economic uncertainty and market turbulence. When traditional investments like stocks and bonds face volatility or depreciate, investors often turn to gold as a safe-haven asset. This is because it acts as a hedge against inflation and currency devaluation; both preserving wealth and providing a measure of stability in times of economic downturns.

Global Instability:

Political instability, geopolitical tensions, and trade disputes can create uncertainties that impact global financial markets. In such scenarios, investors often turn to gold as a safe asset due to its universal acceptance and value across borders.

Monetary Policy:

Monetary policy, such as interest rate decisions and quantitative easing measures, can influence gold prices. During periods of loose monetary policy or excessive money supply, gold is perceived as a hedge against potential inflationary pressures. This often attracts investors seeking to preserve purchasing power.

THE CASE AGAINST GOLD

Real Interest Rates:

Far and away the most important predictor of gold prices are real interest rates. Gold tends to perform well when real interest rates (adjusted for inflation) are negative or low. In such environments, the opportunity cost of holding gold (the forgone interest income) decreases, making gold comparatively more attractive to investors. With today’s higher interest rates and moderating inflation, gold is unlikely to emerge from the state of torpor it has found itself in over the past several years.

IN CONCLUSION – IS NOW A GOOD TIME TO BUY GOLD

When economic uncertainty looms, geopolitical risks heighten, or real interest rates begin to fall, gold can act as a safe-haven asset and a hedge against potential risks. However, gold does not produce income and exclusively relies on positive price movement for its returns. While the current economic environment ticks most of the positive circumstances listed above, the attractiveness of other safe, income-producing assets due to real interest rates keeps us from considering gold as a good choice today.

To determine whether or not gold is a good investment for your specific financial situation, we recommend reaching out to your wealth advisor.

Author: Michael Gibb | President & CEO
Written: July 30, 2023

How Retirement Accounts and Taxes Affect How Much You Need

A retirement nest egg of $1,000,000 in a traditional 401 k is not the same as $1,000,000 in a Roth account or taxable brokerage account. Taxes can significantly change how much retirement income you actually get to spend.

Account types and taxation:

  • Pre-tax accounts (traditional 401(k), traditional IRA): Withdrawals from 401(k)s and traditional IRAs are typically taxable as ordinary income
  • Tax-free accounts (Roth IRA, Roth 401(k)): Qualified withdrawals are generally tax-free
  • Taxable accounts (joint brokerage, trusts): Subject to capital gains taxes

Retirement income may still be taxable, including traditional 401(k)/IRA withdrawals and Social Security taxation. Required minimum distributions from an individual retirement account or employer sponsored retirement plan start at age 73 under current law, potentially forcing higher taxable income and affecting Medicare premiums.

State income taxes differ significantly. Virginia and South Carolina tax retirement income (though SC offers some exemptions), while Florida and Arizona have no state income tax. Relocating in retirement may affect your gross income needs after tax.

Tax-aware withdrawal strategies—such as blending withdrawals from traditional and Roth accounts, realizing capital gains strategically, or performing Roth conversions before RMD age—may help optimize your financial situation. However, tax laws and brackets can change. Working with a team that integrates investment management with ongoing tax strategy and preparation, like Godsey & Gibb’s in-house CPA team, can help keep your retirement plan and tax advice current. Consult your tax advisor for guidance on your particular investment and account structure.

Pitfalls of Popular On/Off-Track Benchmarks

Widely-referenced age-based retirement savings goals suggest you have: 1x your annual salary saved by age 30, 3x by 40, 6x by 50, 8x by 60, and 10x by age 67 to maintain your current lifestyle in retirement if you plan to retire at this traditional retirement age. A common guideline is to save between 10% and 15% of your annual pretax income for retirement, assuming a 40- to 45-year working career.

This framework was developed by Fidelity Investments internal research around 2014 and used in part as a marketing tool. Certain assumptions—such as social security accounting for 35% of one’s retirement income—are inapplicable to many affluent retirees. The framework was validated for incomes between $50,000 and $300,000, another indication it doesn’t apply to everyone.

Common pitfalls that distort how much money someone thinks they need:

  • Underestimating healthcare costs

  • Ignoring inflation’s impact on living expenses over 25+ years

  • Assuming very high future results from investment strategies

  • Not planning for long-term care or surviving spouse needs

A retirement calculator can help gauge whether current retirement savings and asset allocation align roughly with targets, but complex situations—business owners, large concentrated stock positions, potential inheritance—usually benefit from professional modeling. Investing involves risk, and actual investment results will vary.

At Godsey & Gibb, we frequently review progress towards retirement with clients and adjust their savings plan as markets, tax law, and personal financial goals evolve.

A retired couple strolls hand in hand through a serene park, surrounded by lush greenery and blooming flowers, enjoying their time together in nature. Their relaxed demeanor reflects the joys of retirement, a time when they may also be considering aspects of their healthcare, such as Medicare premiums and the impact of modified adjusted gross income on their medical insurance costs.

Why a Personalized Retirement Plan and Ongoing Professional Guidance Matter

How much retirement income you need is not a one-time calculation. It’s a moving target influenced by markets, inflation, health, tax legislation, family needs, and personal goals. To start saving effectively for retirement, you may benefit from a plan that adapts.

A personalized retirement plan typically includes:

  • A detailed retirement budget and spending map

  • Investment strategy aligned with investment objectives

  • Tax strategy coordinated with distributions

  • Estate and legacy planning (wills, trusts)

  • Risk management (insurance, long-term care planning, survivor income planning)

Developing the plan is only half the work. Executing the plan—making investment changes, tax decisions, and distribution adjustments year by year—is equally complex. Many retirees find that working with financial advisors who can delay retirement decisions strategically, coordinate employer match optimization while still working, and manage the transition is valuable.

Godsey & Gibb’s model brings financial planners, portfolio managers, and CPAs under one roof so that tax strategy, investment management, retirement income planning, and estate considerations can be coordinated. We focus on helping clients understand how much retirement savings they may need given their current age and goals, leveraging expertise in all the necessary areas of complexity.

If you’re in the Richmond, Greenville, Jacksonville, or Phoenix areas, consider a conversation with a fiduciary financial planner to refine your own directional retirement number. With thoughtful planning, periodic review, and the right advisory team, we strive to help clients approach their retirement years with greater clarity and confidence about how much income their savings may support.

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Information contained herein is for general educational purposes only and is not intended to be substituted for personalized investment, financial, tax, or legal advice as individual situations can vary. The use of charts, graphs, formulas, and other illustrations are not intended to be used independently to guide investment decisions or to determine which securities to buy or sell, or when to buy or sell them. Information was obtained from sources considered reliable, but no representations or warranties are made to its accuracy, timeliness, suitability, or completeness. Statements expressed are opinions of certain Godsey & Gibb Wealth Management personnel and are subject to change without notice. Forward-looking statements expressed herein are subject to change due to shifts in the market and economic conditions. Full disclosure: https://www.godseyandgibb.com/disclosure/

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