From time to time on the ITM Trading website and blog a reader will leave a comment or ask a question that is keen and on point. I try to answer those questions regarding the decisions to buy gold and silver because I feel that if the reader took the time to search out an article on ITMTrading.com and then read the article and respond with a relevant question, that that person definitely deserves an answer. At ITM Trading we are here to be of service. So that being said, recently I received a question in the comment section of an article blog written by a very experienced ITM Trading senior manager, and it was a short question but one with a long answer.
So here is the actual posting:
I need to start by saying that ITM Trading is a precious metals firm that sells gold and silver bullion coins as well as rare American gold coins, and rare American silver coins, gold and silver bars, and junk silver. ITM Trading can even make it easy to rollover your 401(k) or IRA into an IRA that holds physical gold and silver such as American gold Eagles and American silver Eagles and certain gold bars and silver bars. ITM Trading is not an accounting or tax service, ITM Trading is not financial advisory service, and ITM Trading is neither a seller of gold ETF funds, gold-mining shares or gold-mining funds, nor gold futures.
ITM Trading deals strictly in the realm of delivering physical gold and silver directly to your door or authorized precious metals IRA vault. ITM Trading always suggests that you consult your tax person as well as any financial advisor you may have before you purchase physical gold and physical silver. That being said, there are 1 million things you should know before you enter the precious metals market or the rare American gold coin market, and an ITM Trading professional can answer any questions you may have.
In response to the question posted I can give you some general philosophy and analysis that while general, may be applied to specific situations, and you might find that you are in one of the specific situations. So please read on.
First I suppose we have to address the first crux of the question which is “pay off debt”. There are different kinds of debt, in fact there are several different kinds of debt, but we only need to talk about a couple of them here. Those types of debt would be long-term debt, and what I have come to refer to in my life as “foolish” debt.
Long-term debt would be considered either a first or second mortgage, or perhaps student loans or even a qualifying automobile loan. Foolish debt would consist of pitchers of beer and chicken wings financed through a student visa card or a high interest overdraft protection account. And when I say qualifying automobile loan, that means a preferred low rate on a quality automobile not a double-digit interest rate on an 11-year-old PT Cruiser.
Debts with the ridiculous interest rate and debts based on foolish purchases, should be dealt with first, eliminated, and never repeated. Learn to make your chicken wings at home with your own money, and skip the beer if you have to. Once you eliminate most of your frivolous debts, or all of your frivolous debts, then you can seriously begin to work on stacking gold coins and bars, and stacking gold and silver coins and bars right next to them.
But perhaps paying off high rate debt first is not a comprehensive answer to what seems to be a rather simple question. In reality, most people are forced to save at the same time that they are forced to incur new debt, and this may be an unusual situation but it is a common one and probably the reason that this question is being asked in the first place.
You May Already Be Saving Money You Can Use To Buy Gold And Silver.
Many Americans, and most professional Americans that work for a large corporation are enrolled in contributing every paycheck into some type of savings plan. And usually they can’t tell you anything about that plan other than they hope it works and a lot of money goes towards that little line in the paycheck. This is what I’m talking about when I say that people are forced to save.
Meanwhile as life goes on and you grow older there are new things that you must pay for such as a home, transportation, insurance and taxes, the never-ending expenses of raising children, and 1 million other expensive things, and a lot of these necessities of today’s modern life come with long-term loans. So in regards to these types of debt, while you may want to pay them off as soon as possible, waiting until they are paid off to begin saving is a plan that belongs in the nonstarter category, just don’t use it.
Now having brought up the point that many people save something out of every paycheck and invest it in theory in the stock and bond markets and mutual fund markets without the guarantee of returns and especially without the guarantee of any kind of capital preservation, I could make an argument that what these people are actually investing in is more debt. In fact, if you press the seller of any of these financial instruments hard enough they will have to tell you that these instruments are not guaranteed, because they are in fact debt-based financial instruments.
So the realization and the take away here is that even if you think that you are saving while you are trying to pay down the foolish debts that you incurred yourself, or the long-term debts that were necessary, in reality you are just purchasing or perhaps even paying someone else’s debts with what you are trying to save for yourself. If this makes you uncomfortable, then perhaps you may wish to stop contributing to your 401(k) or IRA, and begin to buy gold and silver with those funds every month.
If this idea appeals to you, ITMTrading.com is a website where you can buy gold and silver 24/7 and have that gold and silver shipped directly to your door. If you would prefer, and if this is an option that fits your particular situation, you can rollover your 401(k) or IRA into a precious metals IRA, and ITM Trading can help you with this, and then you can use these funds to buy gold and silver which will be held for you inside of an IRA.
If you wish after you buy gold and silver and have it shipped to the IRA, when you are eligible the physical gold and silver will be shipped directly to you. Keep this option in mind if you are one of the people that is being forced to save while you have debt to pay down.
So in summary, the general answer is to pay off what you can as soon as you can so that you can begin saving in a more earnest and efficient manner, but also realize that if you are already saving through a forced type of saving/investing account, you may already have funds that you can use to buy gold and silver.
In addition, because it is easy to buy gold and silver in relatively small amounts, if you can buy gold and silver coins with a few extra dollars in your pocket rather than make other more whimsical purchases such as a new large flat screen TV, or another Louis Vuitton purse, then you may find that you end up with more gold and silver than frivolous debt.