Lear Capital’s Role in the Precious Metals Industry
The growing interest in gold, silver and platinum investments is no surprise to Lear Capital, which has helped investors add physical precious metal assets for home delivery and IRA accounts since Kevin DeMeritt founded the company in 1997.
The current economic conditions in the U.S., DeMeritt says, could cause even more investors to consider adding precious metals to their portfolio.
In the past, the value of assets like gold has generally remained steady or risen, even during times when the stock market fluctuated due to factors such as elevated inflation — an ongoing situation the U.S. has been battling since 2021.
Although inflation has retreated somewhat from the 9.1% high it reached in June 2022, the current level — 4.9%, according to the latest data — is notably above the 2% goal the Federal Reserve is targeting.
“Gold and silver have historically performed very well in times of inflation,” Kevin DeMeritt says. “With historically high inflation and [a] recession looming, people should at least consider precious metals as a hedge against some of that economic uncertainty. It may be a great time to add at least some portion of their portfolio into that asset category.”
Find out what you need to know about investing in physical precious metal assets like gold and silver below.
Why Do People Choose Coins as an Investment?
Investors are sometimes drawn to gold’s investment record, which has included periods of profitability and a generally opposite correlation to other assets.
The ability to counteract downturns that other types of investments experience can be critical during times when severe economic conditions result in significant losses.
Since 1919, for instance, throughout the 15 recessions that have occurred in the U.S., premium gold and silver coins have performed well during each recessionary period, according to a Lear Capital analysis.
In the first year of the 2009 recession, gold prices grew by nearly 13%. During the 1980s — an era that encompassed both a recession and the 1987 stock market crash — the CU 3000 Rare Coin index, a price performance guide compiled by appraisal and certification provider Professional Coin Grading Service, showed an overall increase of 660%.
As Lear Capital notes, according to PCGS index data, a $1,000 investment in generic gold coins made in 1970 would have risen in value to $39,500 by 2012. A $1,000 investment in mint state gold coins over the same time frame could have grown to $105,996 — whereas $1,000 invested in the Dow Jones Industrial Average stock market index would be worth $18,300.
“People want some durability in their portfolio,” Kevin DeMeritt states. “Physical gold has an inverse relationship to other types of assets. In times of war or terrorism, usually you’re going to find that the markets become extremely volatile; nobody is certain about what’s going on from day to day. Gold can help give you peace of mind.”
How Do Physical Precious Metal Asset-Based IRA Investments Work?
Investors can hold precious metal coins or bars that have a certain purity level — at least 0.995 fineness for gold items, for instance — in a self-directed IRA. The precious metal assets are kept remotely in an IRS-approved private storage facility, such as the Delaware Depository, where assets from transactions Lear Capital handles are stored.
“If you had a 401(k) or an IRA, and you’d like to take a portion or that and move it over to a self-directed gold-backed IRA, you can do that,” Kevin DeMeritt explains. “[It] takes you about five, 10 minutes to put the paperwork together, and then it’s just moved over to that physical gold or silver IRA.”
Investors can typically start taking distributions from a physical precious metal self-directed IRA without a penalty when they reach 59 and a half. They can opt to have the assets shipped directly to them or liquidate them and receive money for the items, which will be wired to a specific bank account or sent via check.
How Does Lear Capital Assist with Purchasing Coins?
Lear Capital’s coin-related services involve helping investors obtain bullion, a type of coin that can potentially serve as a hedge against inflation because its value is typically linked to spot gold and other prices — and premium coins or rare items that were minted before 1933 and can never be reproduced. Rare coins are considered to be valuable because of their precious metal content and limited availability.
As a founding member of the Precious Metals Association, Lear Capital cooperates with industry members regarding best practices and compliance procedures.
What Influence Will the Current Demand for Certain Precious Metals Have on Investing in the Coming Months?
While gold prices have been strong this year, hovering around $2,000 as of May 16 — an increase from January, when gold was priced at less than $1,900 — with an extensive amount of industrial uses, silver currently offers a number of benefits as an investment, according to Kevin DeMeritt.
The demand for the precious metal — which possesses unique properties that make substituting other materials for it challenging, according to the nonprofit Silver Institute — has reduced its availability and helped increase its price.
“Gold’s really not an industrial asset,” Kevin DeMeritt says. “It is used for some electronics, but the advantages of silver today are starting to outweigh gold. Batteries have silver in [them], solar [panels have] silver; the industrial uses are just going through the roof right now for silver.”
In addition to silver’s demand as an investment option, the asset’s many practical applications could, DeMeritt states, continue to increase interest in the precious metal.
“It’s very difficult for us, as dealers, to actually go out and get silver bars and silver coins in big quantities,” Kevin DeMeritt says. “You have this industrial demand that’s really pushing up silver [in a way] we really hadn’t seen over the past 20 or 30 years, and at the same time, it’s a pretty good hedge against higher inflation. Silver right now just has an incredibly distinct advantage — even over gold. There’s going to be demand for silver from industrial uses, regardless if the investor side of the market purchases it or not.”