Archive for July, 2012

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Q2 2012 GDP And Your Self Directed IRA

Monday, July 30th, 2012

The reported, headline, GDP numbers just came in at 1.5% in the second quarter. This is a major revision downward from 2% in the first quarter of 2012. This brings the overall annual growth rate in at 2.2% versus the previous 2.4% in Q1 2012.

Overall these numbers are not statistically significant. In fact, it could be argued that we’ve actually seen negative GDP given the governments margin of error. What is significant and important about these recent numbers is that the supposed recovery which occurred in Q3 2011 actually has now shifted to Q4 2011 — a full quarter later. The significance of this is that the figures being reported are not reliable, accurate and maybe even not credible. If this line of logic hold true, then the fact that we are seeing a continued degradation and and downward pattern in key economic indicators means that the economy is likely already in recession.

What does this mean for my self directed IRA

We will continue to maintain that a self directed IRA, invested in non-traditional assets such as real estate, private placements, precious metals, etc. is a critical part of everyone’s retirement portfolio. The overall economic picture is not improving as evidenced by the recent GDP numbers. We are still advocating that investors allocate portions of their self directed IRA portfolio to precious metals. We also encourage investors to look at other non-traditional investments in real estate, small businesses and other non-publicly traded assets.

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The Storm Is Coming – Check Your Self Directed IRA

Friday, July 27th, 2012

We wanted to show you a couple of simple graphs to tell a simple, but scary story. The first chart shows the federal debt since 1965. We would like to point out a simple inflection point of 1971. It was in 1971 that we moved off of the gold standard (thanks a lot President Nixon). Removal of a gold standard removed all constraints on government spending. Notice how in a few years passed 1971 that the debt starts increasing.

Chart 1 – Federal Debt Of The US Government

Graph of Federal Government Debt: Total Public Debt

The next chart we want to draw your attention to is the value of the US Dollar. Notice the interesting reverse or negative correlation between chart 1 and chart 2. As you can see as the government continues to tax and spend, our purchasing power has continued to degrade. You should take special note of the significant decline that starts – guess when? 1971!!

Chart 2 – Value of the US Dollar

What does this mean for self directed IRAs?

First lesson is that unrestrained government spending is hurting all Americans. We know that the government and the governments of the world are fully committed to printing their way out of any problem. In fact we saw more clear signaling of that commitment this week from the ECB and our own Fed.

These charts paint a picture of failed central planning. Central planning is the current economic system that we now live under and have so for some time now. Central planning is not going away. Because of this, we know that there will be a point at which there is too much money in circulation, planning cannot restore the basic free market mechanisms that are needed to create a healthy economy. This will ultimately lead to that storm arriving in the form of some significant economic events internationally and here at home.

Its our continued belief that you should be out of paper based assets as much as possible. You need to continue to look for and hold tangible, productive valued assets. Such assets are things like real estate, precious metals, your own business, patents, etc.

You need to be looking at your self directed IRA and position it to hold these tangible assets.

Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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June Housing Numbers (Corrected) and Your Self Directed IRA

Friday, July 27th, 2012

Monthly changes in June home sales showed a decline of 8.4% for new homes, a decline of 5.4% for existing homes. Though large on a monthly basis, in the big scheme of things there numbers were not meaningful.  Both numbers continue to show a developed and established pattern of low-level stagnation.

Weakness in homes sales has been blamed on too-low inventories of houses for sale.  The low inventories are part of the issue, but there is something a self-fulfilling cycle at play, due to low prices likely keeping some houses off the market.  Also throttling down activity for both purchasers and sellers is the continued consumer liquidity and credit issues.

Inventories of homes for sale are relatively low at 6.6 months supply in June for existing home sales was up by 3.1% from May and was at its highest since December 2011.  For new home sales, June inventories reflected a 4.9 months supply, up by 8.9% from May, and at the same levels seen in March and April, which last were exceeded in January 2012.

How does this effect your self directed IRA?

Its clear that home sales are not recovering and really have not improved significantly for the last 5 years. Home sales are a key driver of the economy in the form of consumer spending. Until home sales become less volatile with a significant pattern of improvement, the economy is not going to recover. This spells opportunity for holding investment property in your self directed IRA.

This also presents the case where the Fed and the government will continue to interfere in the inner workings of the economy which ultimately leads to printing. This will drive inflation and more instability. This means that you should be considering having a proper allocation of precious metals in your self directed IRA.

Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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Taxes, Spending, Politics And Your Self Directed IRA

Tuesday, July 24th, 2012

In prior postings we touched on what is referred to as the Fiscal Cliff. That so called cliff is a perfect storm of events coming together at years end.

What are these events:

1. Bush era tax cuts will be rolled back thereby increasing the effective tax rate on top earners from 36% to 39%

2. Estate tax exemptions will fall back from $5M to $1M

3. Obamacare will kick in thereby increasing the taxation or collection of taxes from US citizens

4. There are spending that will be coming in an effort to reduce the budget deficit

All of these events are coming to a head at years end. There are solutions to many of these problems, but we still have not seen any political will from anyone in Washington. You will also notice that you are not hearing anyone from the mainstream media talking about the problem or what efforts are being made in Washington.

What is likely to happen

Our prediction is that we won’t actually fall off a cliff per se. There will be last minute scrambling, proposals, bill passage that will address some of the issues and not others. There will be a lot of uncertainty and the markets will likely roil as a result. The overall confidence in government and the markets will go down, as if that were possible. In the end, the average person, consumer, business person, and investor will be hurt.

What to do with your self directed IRA

Firstly, we believe that precious metals will be a must have in your portfolio. We strongly advocate holding physical metal in your self directed IRA.

Secondly we encourage you to look for investment properties that can generate cash flow. Don’t worry about price appreciation. If the economy really tanks, at the end of the day people still need a place to live.

Third, look for other non-traditional investments that invest in real projects, real commodities provide real jobs. Get away from paper assets and anything directly controlled by the stock market or the government.

Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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What Dr. Copper Is Telling Us About Self Directed IRAs

Tuesday, July 24th, 2012

Background

Historically, copper foreshadows what is and will be happening in our economy. It is often stated that copper is the metal with a Ph.D. in economics, and the data for the most part bears this out. When copper is down, the US economy is in recession; when the indicator is up, the US economy is expanding. As can be appreciated, copper does better during economic expansions. The metal typically peaks during recessions before heading into a down trend. Its because of this correlation to economic activity that copper has earned the name Dr Copper – meaning how healthy is the economy.

Current Analysis Of Copper Prices

  • Copper generally peaks during recessions. At present copper is currently putting in a lower high and is trading below its 40 week moving average; copper peaked over 1 year ago.
  • Investor sentiment not only tracks price but it often precedes it by a couple of weeks. The current price structure for the Bullish Consensus is bearish.
  • Recent bearish patterns in the price structure of the Bullish Consensus have been bullish owing to central bank intervention. In essence, central banks have prevented a recession from unfolding.
  • It should noted that each central bank intervention has provided less and less benefit to the markets. When looking at copper, we see that Operation Twist did not produce gains that were seen during QE2. It’s as though the markets have become resistant to the effects of monetary stimulation.
  • The breakdown in the price structure of the Bullish Consensus for copper strongly suggests lower prices for copper, which in all likelihood implies a recession. Central bankers have been timely in their implementation of recent quantitative easing, and we could easily make the case that their interventions have thwarted the onset of a recession on more than one occasion. Copper will need to reverse from the current levels and investors will need to embrace that risk. This will be heralded by a reversal in the Bullish Consensus.

Self Directed IRA Action Plan

The current analysis and forecast for copper is that demand or consumption is dropping. Dropping demand suggest dropping prices. These trends are currently present and evident in copper prices. The forecast for demand and consumption is flat to down. This means recession.

Recessionary conditions would suggest that precious metals or real estate will be counter to the prices of copper. We are looking are hedging against uncertainty with hard, tangible and in-demand assets. We continue to support precious metals and real estate in self directed IRAs.

Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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Macroeconomic Gold Outlook And Your Self Directed IRA

Thursday, July 19th, 2012

In the recent World Gold Council report, they highlighted some important, forward looking, economic issues that will be in place for the second half of 2012:

  • Deflationary trends will continue raising the increased likelihood for more fiscal stimulus. This will debase the currency and increase the risks of inflation in the long run.
  • Despite some of the agreements and progress in Europe, there will continue to be an environment of uncertainty and market volatility.
  • Movement into the US Dollar will likely weaken and may even reverse.
  • The US is facing a debt ceiling debate in Q3
  • The US is facing a much contested, nasty presidential re-election in Q4
  • The US is facing a big debate over the fiscal cliff and no one in Washington has made any progress to reverse the pending massive tax increases.

What does this mean for your self directed IRA

These themes and issues are very significant and critical. They all paint a picture of uncertainty and instability. These are ideal conditions for holding gold, silver, and precious metals in your self directed IRA. So, its time to take action and check your self directed IRA portfolio and insure that your self directed IRA is properly balanced.

Disclaimer:
The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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Q2-2012 Macroeconomic Themes For Gold And Your Self Directed IRA

Thursday, July 19th, 2012

The World Gold Council recently published their quarterly update for gold. There are some clear macroeconomic themes that have become obvious:

  • Gold prices declined relative to most world currencies, but gold was up 4.4% during the first half of the year. Volatility remained elevated amidst a busy event-risk period. In general, gold outperformed what would be considered risk assets.
  • Global inflation appears to have eased, but the overall picture is still supportive for gold. There was a substantial decrease on commodity and agricultural prices which did put downside pressure on gold.
  • “Risk free” assets are under pressure. Traditional, safe haven, low risk investment are under pressure. This is helping to make gold look more attractive dues to its lack of credit risk, liquidity, and hedging characteristics.

Implications for your self directed IRA

What these macroeconomic trends and themes show is that despite the lack of recent price movement in gold, gold is still in favor and may be moving to a more favored position relative of to all other asset classes. This latest World Gold Council report clearly supports the case for holding precious metals in your self directed IRA. So, check you portfolio allocation in your self directed IRA and position is accordingly.

Disclaimer:
The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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Another Reason Why To Put Gold In Your Self Directed IRA

Wednesday, July 18th, 2012

There is a movement taking place with the major countries of the world that is going completely unreported and unnoticed. Many of the major countries are entering into transactions and relationships that will remove or greatly reduce the dependence on the US dollar as the world’s reserve currency. Here are a few examples:

  • China and Japan directly trade currency
  • Brazil and China agree on direct currency swaps
  • China and Russia drop the dollar in bilateral trade
  • China and Iran bypass, plan barter for oil
  • Iran and Russia replace dollar with rial and ruble in trade
  • India and Japan sign new $15 billion currency swap agreement
  • India joins Asian dollar exclusion zone, will transact with Iran in rupees

This show that there is a clear and deliberate pattern and attempt to move away from the US dollar. The impact of this is a weakening dollar, but more import is that all of those dollars out there will eventually end up back here in the US. This will drive up inflation and the price of gold.

There is also a growing trend for central banks to accumulate gold. an interesting statistic is that just this past year China accumulated more gold than Great Britain has in total. There are now cases where other countries are exchanging goods and services with gold. Here again there is a clear and deliberate pattern developing for moving away from the US dollar, but more importantly there is a pattern for using gold as a medium of exchange.

Our interpretation of these events is that at some point the world will hit a critical mass of of collective and common thinking. That critical point will be a water shed moment in which people begin to think of gold as the currency. That moment is approaching. There is research to support that when 10% of the population or a group start thinking a certain way, then events and changes start happening very quickly. We think that we are approaching that point. When that point is reached, gold will likely sky rocket.

What this means for your self directed IRA

If we are approaching or nearing the event horizon in which 10% of the world starts using or thinking of gold as currency and a valid medium of exchange, gold will not be available at any price. You need to be reviewing your allocation of gold, silver and precious metals in your self directed IRA and making certain that your allocations are properly balanced.

Disclaimer:
The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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June Housing Starts And Its Impact On Your Self Directed IRA

Wednesday, July 18th, 2012

The June 2012 housing starts are out and they show a month-to-month gain of 6.9%. We should note that although that seems a like its a significant number, one number does not make a trend. This means that even though there is an increase of in the number, there are not enough numbers, of any significance, to indicate that this increase is statistically significant. The housing market continues to be off by 67% from the high back in 2006. We are not advocating or suggesting that we should return to those levels, but what it does reflect is the devastation in the housing market.

Apartment Starts – the annualized pace of change in quarterly apartment starts was a contraction of 11.2% in the second-quarter, versus annualized growth of 70.6% in the first-quarter.  That tended to offset the annualized quarterly growth in single-unit structures of 29.0% in the second-quarter, versus annualized growth of 12.7% in the first-quarter.

What does this mean for your self directed IRA?

The housing starts continues to show bottom bouncing, meaning that there is not a clear recovery trend developing. The bad news is that until housing recovers the economy will not recover. The good news is that housing may be at a bottom, and prices do not seem to be going up much. This still appears to be a good buying opportunity to secure real estate in your self directed IRA.

The housing numbers also continue to help paint the picture of a recessionary status for the economy. This would suggest that you continue to make sure that you get an appropriate allocation of precious metals in your self directed IRA.

Disclaimer:
The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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Posted in Real Estate, Self Directed IRA and The Economy, checkbook control ira, precious metals ira, self directed 401k, self directed ira | 1 Comment »

Fed Actions And How To Position Your Self Directed IRA

Tuesday, July 17th, 2012

Mr. Bernanke just appeared in front of congress. What was very clear from his testimony is that the economy is weakening, jobs are not coming back, consumer spending is not materializing. This is clearly comforting. However, what’s ironic is that the markets actually rebounded because the implication is that the Fed will do more of what it does is print money out of thin air.

Additionally, it was clear from the line of questions is that the government is only interested in what new rules, regulations and programs that they can implement to punish the evil doers and help the helpless. In fact Mr Chuck Schumer a/k/a Mr Debt basically prodded Mr Bernanke to do more of what he does because the government clearly was not going to be able to do anything effective and substantial this year.

So, lets see if we understand this picture… the stock market likes it when they think our country and government will print and spend more and create more debt because that puts more fiat dollars into circulation. Additionally, our government tacitly admits that they are dysfunctional and ineffective and that the Fed, not under government control, should engage in more uncontrolled, unregulated printing and manipulation.

So how does this impact your self directed IRA

The fed now has the cover that it needs to engage in more manipulation. The economy is clearly tanking, and the government clearly endorses their actions. You absolutely have to be looking at the asset allocation in your self directed IRA and determining if your portfolio is properly hedged with precious metals and other counter cyclical assets that are way far away from Wall Street.

So, login  to your self directed IRA account now and start taking action. Time is of the essence.

Disclaimer:
The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

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