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Retirement Strategies Take a Shine to Gold

BOSTON (TheStreet) -- Worries over domestic debt, fear of a double-dip recession and a desire to hedge against inflation are among the issue that have heated up gold fever and spiked the price of the precious metal to roughly $1,800 an ounce.

Should the mindset of gold bugs -- despite some recent price declines -- play into a retirement strategy, especially given the corrosive effect on savings inflation can have?

The "golden years" live up to their name as annuities and other products turn to the precious metal.

In recent months, some annuity providers have been starting to index their products to commodities. Among them is Investors Insurance, a subsidiary of SCOR Global Life. Its PremierMark SE fixed-index annuities include a product that links credited interest to performance increases in the price of gold during the term.

By using the price of gold instead of the growth of an equity index to determine interest crediting, "this annual point-to-point strategy can turn a portion of your premium into a hedge against economic uncertainty," marketing materials claim, describing it as "the fallback position when Wall Street turns bearish."

Billed as "among the first of its kind offered on a fixed-index annuity," the strategy takes the closing price of gold on the last day of the term period and compares it with the price at the beginning of the term. The annuity contract is then credited with 100% of the gain in the price, up to a predetermined "cap" or maximum rate of interest. The interest credited is locked in annually, never less than 0%.

A key selling point is that money is protected, with opportunities for long-term growth, says Jay Tyner, president of North Carolina-based Semmax Financial Group, who finds merit in the approach.

"One of the things our clients have wanted to get away from was some of the risk and yet still have opportunities," he says.

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