Letter Re: Investing in Tangibles Through an IRA

Dear Jim: Per your suggestions, I have been doing a lot of research into the American Church Trust Precious-Metals IRA [offered through Swiss America]. However, I have several questions that I would like to ask. [JWR’s replies are in-line, in bold.] 1.) I noticed in a recent post of yours on this subject that you have your IRA backed by Gold American Eagles. Could you explain why you chose gold instead of silver? Because of the much higher “per ounce/per dollar” purchase premium on U.S. Mint Silver Eagles, I prefer U.S. Mint Gold Eagles, in this case.  (At the time those were my only two options. I’m not certain what they currently offer.) 2.) Are you concerned about the USG ability to confiscate gold as they did in 1933 since the law to do so is still on the books? IMO, the chance of another gold confiscation is fairly slim. (And almost nil for silver.)  I can’t predict how any confiscation executive order might be worded.  However, there is the chance that it would exempt both numismatics and U.S. Mint American Eagles. 3.) And if this did happen, what would be the effect, if any, on a gold-backed IRA? Anything that … Continue reading

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Letter Re: Argentina’s Lessons for the U.S. Debt

I read the first-hand accounts of Argentina’s decline from wealth and prosperity to near lawlessness that were linked to here a while back and they stuck with me. How could a prosperous nation with generally well-regarded policies sink so far so fast? Far more importantly, what caused it, could it happen in other places (i.e. here), and what indicators were missed? Luck would have it that I stumbled across the answers to two of those entirely serendipitously. The answer is actually rather simple: debt. The Argentinean economy was in good shape in the 1990s, it had good growth, good employment, and highly regarded economic policies. What it didn’t have was a good understanding of how much debt it was getting itself into. For various reasons, Argentina failed to turn the money it borrowed from foreigners into solid, growing tax revenues. This failure caused it to seek out more and more credit and this worried lenders into raising interest rates. Just like the in-debt-up-to-his-eyeballs suburbanite, Argentina was borrowing from Peter to pay Paul and financing its debt with more debt. The figures on this page ( http://www.frbsf.org/publications/economics/letter/2002/el2002-31.html ) illustrate the failure of the Argentine government to curtail its borrowing. What the … Continue reading

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Letter Re: Defensive Use of My IRA

Jim, I agree that nothing beats physical bullion and ammunition for real wealth, but there may be something to be said for keeping a store of digital wealth in tact for as long as possible also. My bank has an emergency plan. They mailed me a copy. So I figured I needed to incorporate a plan to keep them out of my life during an economic meltdown. The plan is very simple. I fully intend to eliminate my mortgage with what is left of my IRA on the day before doomsday (or thereabouts). My money will ride out the storm on metal based investments, hopefully holding value while my fixed rate mortgage devalues. The new metal and oil ETFs are going to provide a place of relative refuge for institutional investors in the near term future. I think GLD, OILB and probably the new SIL will attract a lot of capital in an inflationary emergency. I am prepared for a quick change. My checking, savings, IRA and brokerage accounts are all linked online and available 24/7. My IRA is currently about 1/5th of my Mortgage and neither is very big IMO. I’m set up to liquidate my positions and pay … Continue reading

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Letter Re: Investing in Tangibles Through an IRA

Hello James, Given the abundant information about the state of the economy, what would you recommend we, (the consumer and fellow American) do when making a decision about Individual Retirement Accounts (IRAs) come April 15th? I am concerned about putting money away and into “paper currency” when maybe it would be better to just pay down debt. What would you advise to someone in my situation? I am not necessarily looking for information about the tax benefits, simply your view about what would be a wise move. -The Wanderer JWR Replies: This is a bit repetitious to my previous recommendation, but I suppose it bears repeating: I recommend rolling over your existing IRA and/or 401(k) into a gold deposit IRA, through Swiss America.  I did so six years ago, and I’m glad that I did, since gold has nearly doubled since then.  The IRAs is in the form of U.S. Mint Gold Eagle bullion coins, held in vault storage by American Church Trust, in Texas. In a perfect world, we would be allowed to hold the coins in our personal possession and yet still have them qualify as an IRA–but sadly we live in world managed by bureaucrats and bean … Continue reading

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Letter from Michael Williamson Re: Accumulating Silver and Gold Bullion

Jim, I’ve been lucky on bullion recently and found some good info and a source. I found local coin dealers at a gun show, who were selling “junk silver” coins at barely over spot price. The price was about the same as from the best mass dealer I could find, but in per coin price, not in $1,000 face bags with 715 troy ounces. I’ll be hitting them as funds and silver price permit. NWTBullion does offer the best price I’ve seen, and will deal in bags as small as $100 face value–72 troy ounces, and in small coin quantities. Each purchase is in a large cointube (sold for this purpose and similar to a medicine bottle) with date, silver weight (not counting the base metal alloy), and price paid per ounce. I can build up a good stock cheaply without trying to draw capital on a loan or credit card (Which would cost more than I’d earn in any reasonable scenario) and without the hassle. Currently, the best bet for gold bullion on a budget seems to be British Sovereigns–10 coins at just under .25 oz comes to less than $1,400. This is far cheaper than the 5 coin … Continue reading

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America’s Economic Woes–Some Deep Schumer in the Near Future?

The U.S. housing bubble but has not yet popped, but it is starting to make funny noises. (See: http://biz.yahoo.com/ap/060306/housing_slowdown.html?.v=2) You have probably read that the Federal debt ceiling has been raised to nine trillion dollars. (See: http://www.foxnews.com/story/0,2933,138881,00.html) What is the point of calling it a “ceiling” if Congress keeps raising it every year? The U.S. Treasury is now technically bankrupt, but from a practical standpoint, how can you call the man with the printing press bankrupt? He just prints more, as needed. There are just more and more “fun tickets” in circulation, and their value gradually melts away. Ask anyone that has lived in South America. The same drama gets played out over and over again, in country after country. The biggest losers in an inflationary spiral will be bank depositors and pensioners. Is it any wonder that the savings rate in the U.S. is at an all-time low? Starting this week, the Federal Reserve will stop reporting the M3 aggregate money supply. This gives “Helicopter Ben” Bernanke carte blanche to monetize the Federal debt without public scrutiny. Meanwhile, both Iran and Norway are opening oil bourses that will transact their business in Euros rather than dollars. (See: http://www.europe2020.org/en/section_global/150306.htm) The … Continue reading

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Letter Re: Advice on Silver Investing?

Jim, I’m just curious to your thoughts on this. Like you, I believe silver is going to gain a lot of momentum in the near future. The wife and I are out of debt and sitting on some paper investments that I’m unable to move out of for various reasons. I’m thinking of taking a home equity loan (our house is paid off) out and purchasing approximately $30,000 in silver and turning around and selling throughout what I feel will be the climb in silver prices. Of course we would pay off the loan but hope to reap the profits and possibly purchasing retreat acreage. I understand land prices are bloated but see this an opportunity towards usable hard assets. I don’t have much in the way of free cash due to our lowly salaries but am thinking this might provide us some leverage. Of course I understand that your not liable for any advice I’d just like to bounce this off of someone else in the same mindset of what’s going on in the world. Thanks in advance, – JS JWR Replies: I think that what you suggest would be unwise. In a deep recession or a depression you … Continue reading

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Letter Re: Advice on When to Sell Silver?

Dear Mr. Rawles, I read on The Claire Files that you think silver will be going to $40 an ounce. My spouse and I can’t agree when we should sell our 8,000 ounces of silver. I think we should hang on to it all until it gets to $20 and ounce then sell. But my spouse thinks we should start selling now. What do you think? By the way, we purchased most of it at $5 an ounce in the form of 100 ounce bars. We also have about a bag and a half of “junk” silver dimes.- F.L. JWR Replies:  First, you need to distinguish between a core holding (for barter), and what you bought for investment purposes. My advice is to sell your family core holding–perhaps 800 to 1,500 ounces–only as a last resort. As for the rest, be dispassionate about selling it. Don’t try to time the top of the market. Since spot silver is currently at around $9.80/oz., (and it was recently $10.18) so it is has essentially doubled since you bought it. At present, you could sell half of it and recoup your original investment, and still be sitting on 4,000 ounces at essentially no … Continue reading

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Letter Re: A Second Silver Exchange Traded Fund

Mr. and Mrs. Rawles, I just read this article today and thought it would be of interest to the Survival Blog readers: http://www.resourceinvestor.com/pebble.asp?relid=17672 The gist of it is that a silver backed exchange traded fund (ETF) is quietly being opened in London within the next month. Note, this is NOT the silver ETF that Barclays’ is trying to get past the SEC right now. Upon reading closer one can note that the claim of being “backed” by silver is erroneous – “We buy a security from a third party…and supply the matching contract, and investors won’t have to worry” about the physical quantity, said Tuckwell. Therefore, the silver ETF in London will not be physically backed by the underlying commodity, while taking silver out of the market, but the performance of the fund would remain linked to the silver price. Either way, for good or ill, it seemed that this was relevant information to the blog readers. Sincerely, -LBTP

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Letter Re: Why “Invest” In Gold or Silver?

Jim: I came across some links that may help “clarify” why Gold/Silver for some readers. Keep up the good work! http://www.bambooweb.com/articles/h/y/Hyperinflation.html http://www.kitco.com/ind/Wiegand/feb142006.html http://www.gold-eagle.com/editorials_03/waltzek091003.html http://inflationdata.com/Inflation/Inflation_Rate/ConfederateInflation.asp

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Letter Re: Why “Invest” In Gold or Silver?

Mr. Rawles, I have been a reader of your blog for about a month now and as some one who believes in being prepared for any situation. I have found a lot of your comments very useful. I am confused though about your suggestions to invest in gold and silver. I am just learning about these things so hopefully you can help clear up my confusion. If you look at the track record for gold and silver over the long run these assets have just kept up with inflation. Over the same historical time period the stock market has been a much better investment. Most certified financial planners I have read and talked to recommend no more than 5% of this asset class in any investment portfolio and never hard assets such as coins, bars, etc. With the buy premium on hard assets the return is even less. If these assets are going to go up in the future any where near as much as you have stated then why would the anyone or any company holding these assets sell them now? Why would they not hold on until a higher peak? So why would I want to buy these … Continue reading

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Letter Re: Economic Survival on the Personal Level

Hi JWR, Keep up the good work as always. I thought I’d share a couple of ideas that I’ve had. A “money” emergency, ranging from losing your job temporarily to a full-scale depression is one of the most likely things to happen to all of us. I know you’ve talked about this before, but I’d like to share a few things. I would advise anyone to get at least one marketable backup skill or trade. The local community college is vast resource for learning practical skills. Here are some possibilities: -Auto Mechanics. Think of this for self-sufficiency and employment. People gotta get to work! A couple of semesters will prepare you for an entry level job, 1-2 years to be a full-fledged mechanic. I have saved probably $10,000 over the years by working on my own vehicles. -Welding. You can get the basics for repairs and maintenance work in one semester. Plan on 2 or 3 semesters if you want to get certified for structural or pipeline work. With our current energy situation, pipeline welders are in high demand, and can make $100K/year in some situations. -CAD/CAM. This is operating and programming the automated equipment that manufactures virtually all machined … Continue reading

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