Relai's CEO raises important concerns about the possibility that the U.S. Dollar loses its status as a world reserve currency.
This transcript is an excerpt from the "Bitcoin Magazine podcast" hosted by P andQ. Julian Liniger joins them to discuss the fundamentals of Bitcoin, and why it is gaining widespread adoption in Europe even during bear markets.
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Julian Liniger: There are efforts to weaken the U.S. Dollar as a reserve currency, due to developments in Russia, China, and other countries. Are you concerned that the U.S. could lose its status as a dominant reserve currency? How important is Bitcoin in this scenario?
Q: Totally. You need to break down the responses into different groups. For simplicity sake, I'd say there are three groups, even though they're closer than 500. The first group I would say is the Bitcoiners. They see the writing on that wall and can see that the U.S. government's moves and those of foreign governments are all in direct line to making the U.S. dollars the global reserve currency.
There is a sentiment, and I believe it should be expressed. It doesn't have to be announced in writing. It doesn't have to be a formal announcement from OPEC, from the EU, or anywhere else stating, "Hey! The dollar's just not global reserve currency." For me, whatever global standard is to price oil in, will be, in an intermediate term, global reserve currency.
The secondary issue is the imminent collapse of Europe's bond market. This has been seen in more countries that are developing. We witness the Japanese yen falling. The collapse of the Japanese yen is now being seen by another group of people. These two are the Bitcoin community.
Then there's the vast majority of Americans who, according to me, don't really understand what it means for the global reserve currency to be our currency and the currency our government can print endlessly. The vast majority of these people can tell you all the things, but they prefer to just say it. "The U.S. Dollar has been there my entire life and it will continue," I believe. It's something I share with close friends who I'll be having these kinds of conversations with. Their response will be "Yeah but like the government will solve it." It's not going away, like the U.S. Dollar." I believe there will be a lot pain among that group of people. They will all be shocked by the unavoidable.
Next, I believe the last group is the decision makers. These are people in government that see some, but not all, of what the Bitcoiners consider the inevitable end of the dollar. They believe that if they do a few things right, everything will go back to normal. The U.S. dollar will continue to be the dominant currency.
It's the combination and combination of these ideas that I truly believe fuels our policy makers in this country. I don't care if they are right or wrong. Since a while, I have said that Jerome Powell's 2021 speech stating "Inflation will not be permanent" is the best example. It's not a problem. It's not a problem." In April or May, Congress will hear you testify under oath that you made a mistake. We didn't know as much about the subject as we thought. We are here because we didn't know as much as we thought.
There is no reason to believe that he has learned so much from that point in time that his decisions will bring the ship back to its rightful course. But I believe I am in the minority.
Frequently Asked Questions
What are the pros and cons of a gold IRA?
An Individual Retirement Plan (IRA) has a major advantage over regular savings accounts. It doesn't tax any interest earned. An IRA is a great way to save money and not have to pay taxes on the interest you earn. However, there are also disadvantages to this type of investment.
If you withdraw too many funds from your IRA at once, you may lose all your accumulated assets. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. A penalty fee will be charged if you decide to withdraw funds.
You will also need to pay fees for managing your IRA. Many banks charge between 0.5% and 2.0% per year. Other providers charge monthly management costs ranging from $10-50.
Insurance is necessary if you wish to keep your money safe from the banks. Insurance companies will usually require that you have at least $500,000. You might be required to buy insurance that covers losses up to $500,000.
If you choose to have a gold IRA you will need to establish how much gold to use. Some providers limit how many ounces you can keep. Some providers allow you to choose your weight.
You will also have to decide whether to purchase futures or physical gold. Gold futures contracts are more expensive than physical gold. However, futures contracts give you flexibility when buying gold. They enable you to establish a contract with an expiration date.
You'll also need to decide what kind of insurance coverage you want. Standard policies don't cover theft protection, loss due to fire, flood or earthquake. The policy does not cover natural disasters. If you live in a high-risk area, you may want to add additional coverage.
Insurance is not enough. You also need to think about the cost of gold storage. Storage costs are not covered by insurance. For safekeeping, banks typically charge $25-40 per month.
If you decide to open a gold IRA, you must first contact a qualified custodian. A custodian maintains track of all your investments and ensures you are in compliance with federal regulations. Custodians are not allowed to sell your assets. They must instead keep them for as long as you ask.
Once you've decided which type of IRA best suits your needs, you'll need to fill out paperwork specifying your goals. You must include information about what investments you would like to make (e.g. stocks, bonds and mutual funds). The plan should also include information about how much you are willing to invest each month.
Once you have completed the forms, you will need to mail them to your provider with a check and a small deposit. The company will then review your application and mail you a letter of confirmation.
A financial planner is a good idea when opening a gold IRA. A financial planner is an expert in investing and can help you choose the right type of IRA for you. They can also help you lower your expenses by finding cheaper alternatives to purchasing insurance.
What is a Precious Metal IRA (IRA)?
A precious metal IRA allows for you to diversify your retirement savings in gold, silver, palladium and iridium. These are “precious metals” because they are hard to find, and therefore very valuable. These are excellent investments that will protect your wealth from inflation and economic instability.
Bullion is often used to refer to precious metals. Bullion refers only to the actual metal.
Bullion can be bought via various channels, such as online retailers, large coin dealers and grocery stores.
You can invest directly in bullion with a precious metal IRA instead of buying shares of stock. You'll get dividends each year.
Unlike regular IRAs, precious metal IRAs don't require paperwork or annual fees. Instead, you pay a small percentage tax on the gains. Plus, you can access your funds whenever you like.
What does a gold IRA look like?
For people who are looking to invest in precious materials, Gold Ira account accounts provide tax-free investments.
You can buy physical gold bullion coins at any time. To invest in gold, you don't need to wait for retirement.
An IRA lets you keep your gold for life. When you die, your gold assets won't be subjected to taxes.
Your gold will be passed on to your heirs, without you having to pay capital gains taxes. Because your gold doesn't belong to the estate, it's not necessary to include it on your final estate plan.
To open a gold IRA, you will first need to create an individual retirement account (IRA). After you do this, you will be granted an IRA custodian. This company acts as an intermediary between you and IRS.
Your gold IRA custodian is responsible for handling all paperwork and submitting the required forms to the IRS. This includes filing annual reports.
Once your gold IRA is established, you can purchase gold bullion coins. The minimum deposit required to purchase gold bullion coins is $1,000 If you make more, however, you will get a higher interest rate.
Taxes will be charged on gold you have withdrawn from an IRA. You'll have to pay income taxes and a 10% penalty if you withdraw the entire amount.
However, if you only take out a small percentage, you may not have to pay taxes. There are some exceptions, though. There are some exceptions. For instance, if you take out 30% or more from your total IRA assets, federal income taxes will apply plus a 20 percent penalty.
You should avoid taking out more than 50% of your total IRA assets yearly. You'll be facing severe financial consequences if you do.
What is the Performance of Gold as an Investment?
The price of gold fluctuates based on supply and demand. It is also affected negatively by interest rates.
Due to the limited supply of gold, prices for gold are highly volatile. Physical gold is not always in stock.
How to Open a Precious Metal IRA
The first step in opening an Individual Retirement Account, (IRA), is to decide if it's something you want. Once you have decided to open an Individual Retirement Account (IRA), you will need to complete Form 806. Then you must fill out Form 5204 to determine what type of IRA you are eligible for. You must complete this form within 60 days of opening your account. Once this is done, you can start investing. You could also opt to make a contribution directly from your paycheck by using payroll deduction.
For a Roth IRA you will need to complete Form 8903. Otherwise, the process will look identical to an existing IRA.
You'll need to meet specific requirements to qualify for a precious metals IRA. The IRS requires that you are at least 18 years old and have earned an income. For any tax year, your earnings must not exceed $110,000 ($220,000 for married filing jointly). Contributions must be made on a regular basis. These rules apply regardless of whether you are contributing directly to your paychecks or through your employer.
You can invest in precious metals IRAs to buy gold, palladium and platinum. However, physical bullion will not be available for purchase. You won't have the ability to trade stocks or bonds.
Your precious metals IRA may also be used to invest in precious-metal companies. Some IRA providers offer this option.
An IRA is a great way to invest in precious metals. However, there are two important drawbacks. First, they don't have the same liquidity as stocks or bonds. They are therefore more difficult to sell when necessary. Second, they don't generate dividends like stocks and bonds. Therefore, you will lose money over time and not gain it.
What are the advantages of a IRA with a gold component?
There are many benefits to a gold IRA. You can diversify your portfolio with this investment vehicle. You can control how much money is deposited into each account as well as when it's withdrawn.
You also have the option to roll over funds from other retirement accounts into a gold IRA. This will allow you to transition easily if it is your decision to retire early.
The best thing about investing in gold IRAs is that you don’t need any special skills. They are offered by most banks and brokerage companies. Withdrawals are made automatically without having to worry about fees or penalties.
There are, however, some drawbacks. Gold is known for being volatile in the past. Understanding why you invest in gold is crucial. Are you seeking safety or growth? Do you want to use it as an insurance strategy or for long-term growth? Only once you know, that will you be able to make an informed decision.
If you plan to keep your gold IRA indefinitely, you'll probably want to consider buying more than one ounce of gold. A single ounce isn't enough to cover all of your needs. You could need several ounces depending on what you plan to do with your gold.
You don't have to buy a lot of gold if your goal is to sell it. Even a single ounce can suffice. These funds won't allow you to purchase anything else.
How much of your portfolio should you hold in precious metals
To answer this question, we must first understand what precious metals are. Precious metals have elements with an extremely high worth relative to other commodity. They are therefore very attractive for investment and trading. Gold is currently the most widely traded precious metal.
There are however many other types, including silver, and platinum. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It is also unaffected significantly by inflation and Deflation.
All precious metals prices tend to rise with the overall market. But they don't always move in tandem with one another. If the economy is struggling, the gold price tends to rise, while the prices for other precious metals tends to fall. This is because investors expect lower rates of interest, which makes bonds less attractive investments.
When the economy is healthy, however, the opposite effect occurs. Investors prefer safe assets such as Treasury Bonds and demand fewer precious metals. Because they are rare, they become more pricey and lose value.
It is important to diversify your portfolio across precious metals in order to maximize your profit from precious metals investments. Furthermore, because the price of precious Metals fluctuates, it is best not to focus on just one type of precious Metals.
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
Guidelines for Gold Roth IRA
Start saving as soon as possible to save for your retirement. It is best to start saving for retirement as soon you can (typically at age 50). It's vital to contribute enough money each year to ensure adequate growth on an ongoing basis.
Additionally, tax-free opportunities like a traditional 401k or SEP IRA are available. These savings vehicles permit you to make contributions, but not pay any tax until your earnings are withdrawn. These savings vehicles can be a great option for individuals who don't qualify for employer matching funds.
It's important to save regularly and over time. You will lose any potential tax advantages if you don't contribute enough.
By: Bitcoin Magazine
Title: What Happens If The U.S. Dollar Loses Reserve Currency Status?
Sourced From: bitcoinmagazine.com/markets/what-happens-if-the-dollar-loses-reserve-currency-status
Published Date: Thu, 22 Sep 2022 07:00:00 GMT