Posts Tagged ‘gold 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.

Inflation Shows Its Taking Hold And What This Means For Self Directed IRAs

Sunday, October 14th, 2012

Wholesale inflation shows that prices increased by 4.7% for energy related goods and 0.2% for food. That is a total of 4.9% annual increase in the price of energy and foods. Core inflation (what the good ‘ol Fed and government uses) shows around 2.3%.

What does this mean?

What these numbers reflect is:

1. Inflation that the average Joe lunch bucket experiences is much higher than what the government tells us.

2. Inflation is quite large and significant

The Fed and the President continue to attempt to tell us that they are implementing policies that are going to fix the economy (a/k/a jobs, employment). Yet, they report false, misleading numbers that do not match what we see and experience when we engage in the economy (buying goods and services – getting stuff).

The numbers show that inflation is running at something like 6-7% per year when you factor energy and food. For some inexplicable reason, the government does not think those things count when measuring inflation. However, consumers are experiencing these levels of inflation. Additionally, incomes are not anywhere near these annual levels of increases. Compound this with the fact that savers (low risk investors, retired people,, etc) cannot even make 1/2% of interest in their savings due to the government’s low interest policies.

Self Directed IRA investment recommendations

Despite what many on Wall Street and the government tell you, precious metals continue to be a must have in your self directed IRA account. Metals are the ultimate inflation hedge.

Hard assets in your self directed IRA are also critical. We continue to recommend that people hold tangible investments such as loans, real estate, tax liens, deeds of trust, or small business ownership. These assets will be held away from the direct manipulation of Wall Street and the government. These are investments that you know and understand.

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 Sept Jobs Number – Self Directed IRA Update

Sunday, October 7th, 2012

The Sept 2012 jobs numbers came out and shows a decline in unemployment to 7.8% — down from 8.1%. Really? Does this seem plausible. The net number of new jobs created was 114,000. That is a very low, weak number and is not even enough to maintain steady state for the overall economy.

So what’s going on here?

There is much in the way of speculation, commentary, and conspiracy theory regarding this number. Seems politically convenient from a timing perspective as it relates to presidents re-election. However, we are not going to go so far as to say that there is a conspiracy here on the part of the president or the government. What we are going to say is that the BLS (Bureau of Labor Statistics) is using inconsistent and poor methods in their month to month reporting.

The BLS is altering assumptions and methods on a monthly basis. Because of these practices, and their associated adjustments, you can see significant swings in the numbers on any given month.

Our interpretation of the labor numbers

Bottom line, any one with common sense and who is a participant on our labor market and economy intuitively knows that we did not magically see some major improvement in labor or the economy last month. The reality is that labor participation is the lowest since WWII. Its is estimated that 25% of the labor force is no longer engaged in the work force .

What this means for your self directed IRA

Labor is weak. Economic growth is anemic (sub 2%). Inflation is taking hold – just ask people in California who are seeing $5-$6 gasoline. These latest jobs/unemployment figures are not true and accurate and will only mislead you. We do not see any statistically significant changes or improvements in the economic outlook.

We continue to recommend holding physical precious metals in your self directed IRA. We still believe that there are good, significant real estate investment opportunities developing in key markets and that these should be included 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.