401K Gold IRA Joke

The newest investment strategy is the gold 401k rollovers.  The first thing to remember about a 401k plan, is that the gold cannot be physically in your possession. 

The first rule of buying gold, is that you take possession of it. If you can’t touch it, you do not own it.  Gold is not a retirement plan; it is a hedge against a country ruining its currency.

 If your currency is stable, you can buy gold with no problem. If it is unstable, gold will not be available for purchase at any reasonably price.  

 The big thing about retirement as you age, is that it creeps up on you slowly. Your concepts have to change as you age.  Gold as a hedge against inflation at age 40 with a life expectancy of 80 is different than if you are 78 wondering if you’ll live to see 98. 

 If you are young, gold is probably a better investment than a 401k.  The problem is, most people cannot save for retirement at a young age, they will spend it.  The 401k keeps them from spending it; but that is what the government wants. They can borrow your hard dollars today for inflated dollars 40 years later.  50 years ago, cigarettes were 25 cents a pack, now they are $8.50.   So, to save for retirement if you are young, with this systemic inflation, get ahead of the curve and buy gold.

 I digress, a 401k gold IRA will have costs:  the gold purchase commission, insurance and storage fees.  On top of that, suppose you sell the gold at a higher price?  Get ready, you have a 1099 for appreciation, coming your way at tax time.

 Another thing not mentioned, is the integrity of the company offering the gold IRA.  In Europe a while back the gold depository couldn’t pay the depositors in gold, they didn’t have it.  They paid them in cash. Most of these investment firms can buy an amount of gold that covers withdrawals. The rest is invested for financial return.

 The thing you need to realize about a 401k fund is that they don’t have to invest your funds as designate. They do have to pay on your investment as it would have performed. If you have one, how do they deliver the gold bullion to you? Think about that!

 Figure that you have 400k in your 401k.  In the last 5 years, its buying power has dropped to 200k.  That is kind of upsetting. What I can buy cost twice as much and it is still locked into the 401K.  Technically you still have 400k to retire on.  If you had put it in gold 10 years ago, you’d still have the same amount of gold, but its price has doubled. You cannot walk out of a 401K you are stuck with it; you can’t sell it all at one time and get out of it, without horrendous tax consequences.

  We are not talking about investment here; we are talking about government-initiated inflation.  Inflation is a tax by government. The government cannot tax people who have no money, they can only tax people who have savings. They can directly tax your savings or indirectly print dollars that make your savings worth less. My 400K retirement now has the buying power of 200K today. Kind of sucks, doesn’t it?

 To preserve your savings, you need to liquidate your 401k in reasonable increments, and buy gold or platinum.

 Remember one thing when the government runs out of money, they have only one place to go to, the people that have saved money. If you have no money, the government doesn’t give a damn about you.

 Gold, Silver and Platinum maintain value. Right now, everyone is interested in a gold IRA.  Figure this though, an investment in platinum is just as good as gold and it is half its price, and four times rarer.  Hmmm ---of course the obvious escapes most of us, go figure!

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Supreme Court Trump Delima

The Supreme Court is discussing the legal parameters of whether Trump has immunity from prosecution for acts in office. I think that the court has to also consider another issue.

Can a federal office holder be arraigned in a state court for violations of state law? From my point of view, it would appear that all state violations would have to be presented in Federal Court.  This relieves the plaintiff from defending themselves in 50 individual state courts.

What we are discussing is not the fact of innocence, but rather the fact of the ability to finance a defense.

We need a supreme court ruling that allows for the defense on a federal level of all federally elected employees. The states would have no jurisdiction.

This somewhat prevents the states from ruining people with frivolous lawsuits.  Just maybe there is someone listening.  I hope so.

Why the Road to Hell is Paved with Good Intensions

Recently we saw a four dollar rise in the minimum wage in California. The consensus among the legislators was that no one could live on $16 dollars and hour.  The people in labor force rallied around that suggestion. The trouble is, the logic failed after it became law. The real assertion should have been, you need a roommate or two to live on $16 per hour.  Thousands were laid off. The door, for the people just looking for that first job, to get into the labor market has slammed shut.

[The next paragraph is from my memory; the dollar amounts may be wrong]

A while back, maybe 15 years ago the California legislators realized that the utility companies were buying natural gas at about $3 a therm on a 5-year contract. They noticed at the same time that the spot price for Natural gas was about $1 per therm.  The legislators decided to let the contracts expire and not to renew them.  They were going to buy natural gas on the spot market at the lower price.  Since there was no contract for the Utilities anymore, spot prices for natural gas shot up to $20 per therm. Heating bills went through the roof.  I don’t think that this summary of the events has ever seen print, rather, the gas companies were accused of gouging the consumer. Another case of pure stupidity on the part of legislators.

Here in San Diego in 2018, we were requested to use less water and we did.  Since we did such a great job, they had to raise our rates. The problem, the amount paid no longer covered the fixed rates of operating the utility. This is now happening all over again as I speak.

During the Great Depression of the 1930’s, many municipalities raised their property taxes because of the loss of income from foreclosures. They needed more money to fund their budgets. The net effect was less revenue generated and an increase in foreclosures. People barley holding on, threw in the towel and picked up and left. We are beginning to realize (for the first time- since everyone is dead that remembers the mistakes from before) that the legislatures’ have no concept of economics. Common sense suggests that if you double taxes you double revenue.  What you really get, are unintended consequences.

Right now, the national debt is over 31 trillion dollars.  I calculated it out a few years back, and if the interest rate hits 8 ½% we as a country cannot pay the interest on the national debt. The taxes collected will not cover the interest on the national debt.  Congress (collectively) has no idea how previous spending is related to the money already borrowed.  The mentality is, it has worked for the last 60 years, it can last forever.

You have to ask one question; was it obvious to the citizens in previous Banana Republics (Germany, Zimbabwe and Venezuela, that inflation would make the currency worthless? It happened very gradually.   Many lost their life savings. Scrounging through a garbage can for food was not what they envisioned for retirement.

We need to look at gold as a store of value and as an instrument that the government cannot monitor or manipulate the price of. Our congressmen are not going to willingly ruin our savings, their utter collective group ineptness will doom us to financial ruin.  Remember one thing about gold, if you cannot hold your gold, in your own hand, you don’t own it!