Posts Tagged ‘silver ira’

What We See For Self Directed IRAs in 2013

Sunday, January 6th, 2013

No one has a crystal ball and no one is 100% accurate in trying to predict the US economy. However, as wrong as people may be at a detailed level, its not too hard to see larger, more macro trends with some good level of predictability and accuracy. As such, we are seeing 2013 as a less than stellar year. Its not our desire to be a permabear and naysayer. We want to see the US grow and prosper as much or more than anyone. But, we have to look at the facts, figures, and trends and call them as we see them. What follows is our current view of how the economy is going to play out in 2013 and how these trends will likely impact your investment decisions with your self directed IRA.

What are the key drivers for our less than optimistic outlook for 2013

  • The two political parties (democrats and republicans) will continue to operate in a total dysfunctional manner.
  • The Fed will continue to print, debase, and artificially drive down interest rates
  • The government will continue to tax and spend
  • The president believes in taking from productive citizens and disincentivizing commerce and capitalism
  • The government and many Americans believe that the government actually is a creator or wealth and prosperity and therefore a positive driver in the economy

1. Government dysfunction

The two political parties see themselves as fundamentally different. However, the facts don’t support that perspective. We are now at a point where both parties are agreeing to increase taxes on Americans, despite the fact that the government has seen record revenues over the last years, and despite the fact that government spending is up over 70% over the last 10-15 years. yet, they claim they need more money, and both parties are agreeing. Yet, no one seems to be able to address the elephant in the room which is too much government and too much spending. The push is towards more government in  our lives, more rules and this ultimately leads to more spending (a/k/a more deficits).

At the end of the day the two parties are all about keeping their jobs, and not making any sacrifices. This just goes to prove how little difference there actually is in the two parties. the end result is not addressing our debts and deficits.


2. The Fed has committed to more printing until attitudes improve

The Fed just announced that it would continue providing fiscal stimulus for the foreseeable future. It has even increased its $40B per month treasury purchased to $80B per month. They have also announced that they will maintain low interest rates for the next 1-2 years.

The issue that we see is that this is extremely inflationary. First of all, the printing (purchases in the market), just continues to push more and more cash into the money supply. The cash in the system is at all time historically high levels. At some point, these excess funds will find their way back into the consumer’s hands. This will result in a lot of dollars chasing too few goods, which puts upward pressure on prices. We already have seen inflation rates in excess of 6% (our real number versus the governments artificially low number).

If we continue to see all of these excess dollars circulating in conjunction with very low interest rates, you are likely to compound the inflationary risk. the Feds only tools for tamping this down is to increase interest rates to really high levels. That only impacts the lending process and home prices. They still have the challenge of gracefully calling back all of these dollars.

The bottom line is that we see significant inflation risks, which will have the effect of pushing up costs, prices for goods, services, and homes.

3. The Government will continue to tax and spend

The government debt is at all time, historic highs. The government is committed to be at 25-27% of GDP – all time high versus historical levels of 20%. One in every six Americans is on some sort of government financial assistance. 47M Americans are using food stamp – up from 25M just 4 years ago (refer to the chart below courtesy of http://www.trivisonno.com/food-stamps-charts).

Food-Stamps-Monthly

Its clear that the government will continue to need more tax revenue which can only come from the producers in our economy. With more and more people on government assistance, the pool of tax payers continues to shrink. This places and enormous burden on the producers which at some point, which we believe we have reached, the government burdens dampen economic growth, and further act as a disincentive for producers to produce more and for those on government assistance to get off of the assistance. Its a double negative and the net result is reduced, slow or negative GDP and growth.

To further support the point, the President and Congress has just agreed to extract $1.4 trillion in tax revenue form Americans. We are already at $16T in debt and are now projected to hit $20T+ over the next few years.  Nowhere in the process did the powers that be drill down on any real spending cuts. The moral of the story is that bigger government is here to stay, and this monster needs more of our money for support and re-distribution to others.

Self Directed IRA Recommendations

Real Estate – We still advocate that real estate is  a good bet for 2013.

  • Real estate is a hard, tangible asset.
  • Its tough for the federal government to manipulate the real estate market
  • Even in bad times, people still need a place to live.
  • Government intervention will likely result in price inflation
  • Government intervention will likely continue to push people to be renters vs. owners

Given these factors, we see direct ownership of rental real estate to be positive. We also see great opportunities in private lending through deeds of trusts.

Precious Metals

We continue to be bullish on metals in 2013. We advocate holding physical metals in your self directed IRA. We recommend silver eagles and gold eagles. The market has not necessarily been kind to metals of late. Many are still calling for the fall in metals prices, but they ignore the fundamentals. the price of gold and especially silver, is still not in correct ratio to historic ratios when you look at the overall costs of key items such as oil and real estate. Secondly, the naysayers continue to discount and ignore the inflationary impacts of the government and Fed actions.

Given these drivers and conditions we are still recommending holding metals in your account in proper proportion to your specific situation and needs.

Private placement offering

This asset class is somewhat broad, but we need to address it. Certain specific industries can be interesting. In general, there are big movements towards crowd funding and the funding of small businesses. This is a hot area right now, but you need to use caution and perform due diligence and allocate funds in a direct proportion to your risk level. There are a number of private offerings that deal with real estate which can be interesting and can be good investments. However, the devil is in the detail of what the partners do and how they do it.

Oil and gas offerings are still attractive. Energy prices may fluctuate a bit, but the overall macro trend is towards higher energy costs. This makes the profitability of a venture more likely. Here again, due diligence is very key when looking to invest your self directed IRA.

Summary

We see great opportunities in 2013 for self directed IRA investors. We believe that most people should strongly consider allocation a portion of their portfolio to a self directed IRA so as to move away from the influences of the government and Wall Street, plus take advantage of some of the return opportunities that will present themselves.

Self Directed IRA Fundings Top $464 Million

Sunday, November 25th, 2012

We wanted to take a moment and provide some insight o what is happening with our self directed IRA account activity. As of November 2012 we have funded more than $464M in self directed IRA deals. Below is a graph that give you a good idea of what the activity level looks like.

The significance of this is that we continue to see a steady stream of people coming in from more traditional retirement accounts invested in stocks and bonds, and moving into more hard assets investments such as real estate, precious metals and deeds of trust.

It is our opinion that this trend will not reverse itself for a generation of two. Investors have made a fundamental shift in how they view the traditional markets that we refer to as Wall Street. Investors continue to look for hard assets, investments that they understand, and most importantly investments that are out of the direct control or manipulation of the Wall Street types.

So, for those of you who are still sitting on the sidelines regarding setting up your self directed IRA, then let the numbers help you. There is no better time than now to be setting up your self directed IRA.

How Quickly Our Perception Of Paper Currency Can Change

Saturday, November 24th, 2012

Recently my bank started issuing $50 and $100 bills from the ATM machine. Every time I go to a store or restaurant to spend one these crisp bills, the clerk or the waiter either holds the bills up and scrutinize them like they are analyzing a diamond, or they call over a manager who is more qualified to determine of I am passing good paper. In some cases, like McDonalds, I can’t even give then any bill larger than a $20.

When I was a kid or even a young adult, I would have viewed getting paid in a $50 or $100 dollar bill as very cool and prestigious. If I would have had the ability to pay for goods or services with those same bills I would have thought I had arrived and achieved real success. However, I now look upon these bills as troublesome, embarrassing, and a general pain. Therefore, I will not use the ATM options where I get $50 or $100 bills.

The point of this is that this is the first time in my life I can ever remember having any preference for how I got paid in terms of currency. Money used to be money. Now, not so much. The moral of the story is that it is not so far fetched to believe that we, Americans, could suddenly change our perception of the value of US currency. It is more than plausible to think that as our government continues to debase the US dollar through printing, and deficits, and the resulting inflation that we decrease our belief, reliance, and perceived value of the US dollar. Such changes in our mindset would ultimately result in shifting our ownership to alternate forms of currency such as gold or silver or other hard assets.

As I write, I realize that I am making the case for what is already happening in our country… people are started to shift into precious metals because of their lack of faith or belief in US Government policies and the overall economy.

So what does this mean for your and your self directed IRA?

Well I think the point is clear. The Government has and continues to engage in polices that debase the US Dollar, and create the perfect storm for hyperinflation. This drives the citizens of the USA to look for alternative assets and investments that are not based in US dollars or that will be a hedge against the US dollar. That investment/hedge/asset is physical gold and silver in your self directed IRA.

Holding Gold Is Better Than Paper – Self Directed IRA Update

Sunday, October 28th, 2012

There is another, pronounced trend taking place in the metals markets. There appears to be a significant shift to holding physical gold. As evidence of this trend, we refer you to the chart below which shows the yearly net change in demand for physical gold versus the amount of demand for holding paper gold via ETFs.

What this chart is showing is that the demand is increasing each year for physical gold holdings in the form of bars and coins (the Bar-Coin =, blue bars). The ETF demands have shown a marked decrease over the prior two years.

Why is this happening

The reasons for this shift in demand has more to do with awareness of the average citizen of the policies and practices of our governments and our economic situation and our trust in paper based investments.

Reason 1 – Government Printing: The average person is now more aware that our government has created massive debt that it cannot pay for and the only way it can pay for such debts is to either take more from us (i.e. tax us more) or print more money. The government is doing both and plans on continuing to do both. This printing is clearly inflationary and debases the dollar. This drives people to a safer currency and inflation hedge in the form of gold holdings.

Reason 2 – Trust: Many people have become concerned about the physical availability of their metals. Many people are now aware of situations like MF Global and the fact that banks do not have all of your money on hand. Additionally, there is the awareness of the reckless behavior of our government in terms of protecting our money held in social security. Its a well known fact that the government has been taking funds from our funds.

Reason 3 – Bogus Inflation Reporting: It has become self evident over the last 2-3 years that the inflation rates of 1.5% to 2% that the government reports does not comport with what the average consumer feels or perceives. The average consumer is seeing higher inflation than what the government is reporting. So, not only is this another nail in the trust coffin, but people need to hedge themselves due to their loss in purchasing power. Inflation by itself does not mean that people need to physically hold gold, but with the printing, trust, lack of believability people are losing confidence in paper based investments.

What does this mean for your self directed IRA

This shift towards physical metal holdings means that the actual metal will become more scarce to find, at least in some forms. This factor coupled with the current trends in gold prices will definitely lead to a scarcity situation.

Therefore, we recommend that if there are metals that you have not acquired in your self directed IRA portfolio, you need to strongly consider taking action now.

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.

Q3-2012 Precious Metals Self Directed IRA Update

Sunday, October 21st, 2012

The World Gold Council just released their Q3-2012 Gold update. We thought that we would review some of the highlights.

Q3 Summary

  • Gold (US$/oz) returned 11.1% in the third quarter as investors responded to further central bank measures aimed at stimulating the economy. Volatility decreased during the period, with gold prices experiencing little movement in the first half of the quarter; correlations to other assets, generally low, remained similar to those seen in Q2.
  • Central banks announced a continuation of their unconventional monetary policy1 programmes in Q3.
  • Central banks have numerous rationales for undertaking unconventional monetary policy, including lowering borrowing costs and supporting financial markets.
  • Financial assets have responded to central bank policy announcements, but gold’s reaction has been the strongest.
  • There is a consensus that these policies drive investment into gold purely due to inflation-risk impact. We believe that there is not one but four principal factors that provide further support to the investment case for gold:
    • Inflation risk
    • Medium-term tail-risk from imbalances
    • Currency debasement and uncertainty
    • Low real rates and emerging market real rate differential

Source: World Gold Council Q3 Report

If you want to see more of the details we recommend you click on this link World Gold Council Q3 Report to read more.

What this means for self directed IRAs

The report shows that if our recommendations for buying and holding gold over the last quarter, you would have realized a 11.1% return on investment. The report supports our commentaries regarding central banks, QE and inflation concerns. These trends are not reversing, but continuing and strengthening.

Those self directed IRA accounts with precious metals have been positioned well and have seen significant returns. For those self directed IRA investors not holding metals or not holding a balanced portfolio of metals, should take note.

Self Directed IRA recommendations for precious metals IRAs

We still recommend buying and accumulating metals in your self directed IRA. You should check your portfolio balance and exposure to precious metals to insure a proper allocation.

For those of you with the correct balance of metal, we recommend to continue holding your metals positions.

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.