THE CONTINUED MOVEMENT TOWARDS GOVERNMENT INTERVENTION IN YOUR IRA
Obamacare for your IRA? The US Department of Labor is proposing a new “fiduciary rule” that will limit and ultimately eliminate your ability to decide how to invest your IRA and 401(K). This is the latest effort by the federal government to limit choice and place restrictions on your ability to choose what is an appropriate investment for your retirement account. It is another example of the federal camel’s nose inside the tent regulation to consolidate federal control over individual retirement accounts.
On the surface of it, the rule is being presented as a way to restrict fees that money managers may charge for managing retirement assets. Sounds good, right? The reality of this rule is that it will ultimately limit your choice of investments by limiting the advisor you may choose based on the advisor’s fee structure. This is part of the multi- pronged attack on individual retirement accounts that includes congressional proposals to require a minimum per cent of individual retirement assets be invested in “non-marketable” US Treasuries, a 2013 IMF recommendation that the US must impose a “one time” tax of 50% to 70% on IRA and 401(K) accounts and several versions of government guaranteed retirement accounts (GRA) pending before congress.
DEVELOPING SHORTAGES IN GOLD AND SILVER
Low gold and silver prices are starting to impact mine production in the US. The most recent data released by the US Geological Survey indicates that gold production declined by 14% in May. . Since the US is the fourth largest producer of gold in the world, this is significant. Overall, for the first five months of the year, Jan-May US gold production is down 10%. If this trend continues, US gold production will fall below 200 metric tonnes for 2015. This has not happened since gold was priced at an average of $446/oz in 1987! The US is a net exporter of gold and with the Chinese and Indians consuming nearly 100% of the world’s annual production, how long will it be before a significant shortage of gold develops in the west?
The fundamentals for Gold are setting up for a major long term bull market in gold prices as mines shut down. This is the beginning of a supply driven price move that will last for many years as shutting down and reopening a mining operation is an expensive and time consuming process. Astute investors are positioning themselves to take advantage of the developing bull market in metals. As we wrote last week, Goldman Sachs and HSBC (the largest bullion bank in the world) have taken delivery of over 10 metric tonnes of physical gold in the last three weeks for their house accounts.
Add to this names like George Soros and Warren Buffet, who despite their public pronouncements have been accumulating massive amounts of physical gold and silver. (Buffet has taken delivery of one hundred thirty million 130,000,000 ounces of silver since 1998.) If people like this are accumulating gold and silver shouldn’t we?
Here at RME, we also are seeing delays in delivery of some forms of silver as a result of increased demand both locally and internationally.
PROTECTING YOUR ASSETS
It is too easy and mostly unwise to allow your investment judgement to be ruled by emotion. The volatility that we have seen in the major stock indexes over the last few weeks fuels emotion and is in the short term, a distraction from a long term investment strategy. Since none of us can know the future with certainty, we must allocate our money to include exposure to various different investments to achieve future returns regardless of what may come. A well diversified portfolio holds investments that we want to perform well in changing times and to anticipate the unforeseen. This investment approach requires that we make adjustments to our portfolio based on changing market conditions.
August was the worst month for stocks in the last three years. The rout in stocks happened in all international markets with $5.7 trillion in investor value wiped out. The DJIA lost 6.6%, the S&P down 6.3% and the NASDAQ stocks ended the month 6.9% lower.
Conversely, gold rose 3.5% with silver 1% lower, acting as an effective hedge against falling markets worldwide. If you hold gold and silver in your portfolio, you had protection against stock losses. The question for investors now is, “Does my portfolio need re-balanced with more exposure to precious metals?” No other investment serves to protect your assets against uncertain economic times as well as gold and silver.
Contact RME today to find out more about how to best protect your portfolio and retirement accounts today. If you will be in the Phoenix area on September 15th, I encourage you to attend our gold seminar held at KFYI Studios. You must register in advance to attend, but can do that right now by clicking here or calling (602) 955-6500 during business hours.