Posts Tagged ‘real estate ira’

US Trade Policy And Its Impact On Self Directed IRAs

Sunday, September 9th, 2012

As you listen to the political theater that came from both political party campaigns, these last two weeks, you can’t help but ask the question “where are your real solutions?”.

We hear both candidates talking about jobs. But really? You, the government can create jobs in the private sector? We never heard one single solution or set of tasks or activities that either candidate would implement that they could tangibly demonstrate could or would create jobs and prosperity. In fact, if we look to the current administrations track record, their attempts at creating jobs have failed miserably.

Now, lets consider US trade policy by this administration as well as those of Bush and Clinton. We now have what we consider a free trade policy. The argument put forth by the Clinton administration was that we need to have a policy that opens doors to foreign markets. This allows US manufacturers to sell their goods into those markets. This also provides cheaper goods back to the US consumer. The theory being that the US companies will hire more US workers to support their operations in foreign markets, as well as dropping the costs of goods in the US markets. Sounds like a win-win scenario.

However, the reality does not seem to support the theory. What we have actually seen happen is that the US has, since the Clinton era, ran massive trade deficits. The American worker’s wages have not kept pace with inflation. We saw a major economic bust right at the end of the Clinton administration. We’ve seen American manufacturing move offshore, and we have not created net new jobs.

Why is this happening?

We’re not here to beat the drum for American jobs, protectionism, or some socialistic economy. What we are pointing out is that what our government’s trade policy has accomplished or failed to accomplish. What we managed to accomplish is that we opened up our doors to cheap goods from from foreign countries. Foreign countries have the access to the same technology, education, information, and capital as we do in America. The only variable between us and the foreign country is the cost of labor. That clearly gives them a competitive advantage that we do not have here.

We hear the President proclaiming that we are going to bring back American manufacturing, and American jobs, but the reality is that those jobs are never going to come back with our current policies. We have deliberately implemented a trade policy that puts us on an unequal footing with 3rd world countries. How would you ever expect us to be competitive with someone that make less than 10% of what an American worker makes? the short answer is you won’t. My personal experience from a prior life in manufacturing management and consulting is that America has moved manufacturing offshore, closed US plants all in an effort to reduce cost. American companies were and are in a competitive dog fight with foreign goods. The US based companies more often than not have shareholders and are driven to earn a profit for their shareholders. That’s their reason for existing. So, its only natural that these companies look for lower labor costs in order to keep their goods price competitive with the foreign goods being imported.

The heart of the problem

The crux of the issue lies in how we define the purpose of an economy. Are we here to serve the economy, or does it serve our society? The second part of the issue is are economies suppose to serve their society or country or nation, or do nations, and societies not matter and its just one big global pot?

Let’s deal with the second question, first. If we value the concept of nations, countries, regions as being the highest level of our society or community, then the economy would be defined relative to that construct. If, however, you really say that we live in a global community, then the country is out the window, and there really is no economy or purpose for it. What we have is a free for all, and policy, borders, and countries do not matter. Therefore, you have to compete directly with the person making $2 per day living in a dirt floor hut.

The answer to the first question is that the economy is designed to deliver wealth and prosperity to its participants. Therefore, if you live in the US, then the US economy is designed to improve the lives and prosperity of Americans, not the Chinese, or Indians.

So, if you buy into the precept that the United States economy is here to serve the people of the United States and the objective is to improve the overall wealth and prosperity of American, then you have to have trade policies designed to do just that. Today, we do not have such policies and we are not going to see jobs and economic prosperity and improvement with the current policies of our government.

What does this mean for self directed IRAs

Ok, so we may have gone the long way around the barn, but the issue is clear. The political theater that you see come from the President or Mitt Romney are just that — theater. There are not any solutions being put forth, and there is no indication that either party or candidate will implement anything that will address our economic woes. This is why you have seen massive QE from the Fed and why the price of metals will continue to increase. The printing of money is the only way that the government can deal with our problems. Its because of this that we still recommend that people maintain a good, healthy position in precious metals held in their self directed IRA.

We are also advocating that you continue to look for self directed IRA investments that get you away from the markets and into hard tangible assets such as real estate or investing in small businesses that you know and understand or have some control over.

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.

Dr Copper Update And Your Self Directed IRA

Saturday, August 25th, 2012

As we have mentioned before copper prices reflects the future expectation of of consumer demand. Consumer demand comprises 2/3rd of the GDP. Copper is a major metal used in numerous consumer goods and related services.

The current price pattern for copper is showing a head and shoulders pattern. Without getting too technical, this basically is a critical juncture in which price support needs to be established or else, we are looking a a drop in demand. A drop in demand predicts more dire economic circumstances for our future. As you will see below, we are in a head and should pattern.

What does this mean for self directed IRAs

If the prices for copper fall through support levels, then demand is clearly going down. Decreased demand means lower GDP. Lower GDP means less hiring and stagnant or increased unemployment. Worse unemployment means more printing by the Fed.

At the end of the day this means that we are looking at inflation and security issues for our investments.

Actions for your self directed IRA

Our recommendations is to continue holding metals in your self directed IRA. We believe that we are not going to see an appreciable increases in demand in the next few quarters. Therefore metals accumulation is recommended.

Real estate should be considered for your self directed IRA portfolio.

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.

The ISM Report And Your Self Directed IRA

Wednesday, August 1st, 2012

The July 2012 ISM report just came out and the the number came in at 49.8 versus the June number of 49.7.

The ISM report is a general measure of manufacturing activity and specifically how much manufacturers are planning in procuring for the business. A number below 50 indicates negative or contractionary environments. The ISM numbers were below 50 for the last two months which is a very clear contractionary signal.

What does this mean for Self Directed IRAs?

The contraction of the ISM numbers supports a series of other economic values which shows that the economy is not only slowing, but may actually be entering or have entered into a recession.

Recession is the perfect cover for the Fed to engage in more stimulus via printing. These policies will lead to inflation, weak demand. This is the type of environment in which you need to be holding precious metals and other hard assets such as real estate 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.

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.

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

Us Dollar Value In Gold

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.