We all want to be secure. Security in the form of a reliable car, mate, pet, or a hundred other ways that we want to be secure and safe from robbery or betrayal. We all want especially, to be secure economically, and that’s why more and more people are taking declining dollars, and converting them into silver and gold. Perhaps less than 1% of the populace does that, or even considers it. (Summer, when prices are usually low, is a wonderful time to buy metals, but few do). Historically, that figures. The majority is usually always wrong. The majority always seems to get caught when something goes radically wrong. The problem with gold and silver, some think, is where to store it. My answer is to store your metals, “Where no one would think of looking.” I had a client years ago, who stored 20 Krugerrands in a used Old Spice stick deodorant tube in his bathroom medicine cabinet. Many store metals underground, under a sewer pipe, and have a map to show where it is, with map copies given to their kids in case of death. Everyone should have a safe to store valuables in, including metals, and also an alarm system.
One place that many store their metals, is in an IRA, and that is the point of this column. I don’t have a crystal ball. No one does. What can happen tomorrow, no one knows, but based upon history, fact, and logic, it isn’t difficult to predict things long term, as opposed to short term. Long term, maybe a year from now, it isn’t too difficult to predict that metals will be much higher in dollar prices, simply because as Stott’s Law states, “The more of anything there is, the less they will be worth,” and that includes Model A Fords, water in the desert, agricultural crops, and of course dollars. As the dollar presses run night and day, dollar prices of tangible things will naturally go higher, unless there is a surplus of these items, such as real estate. There will never be a surplus of gold and silver, because both are imminently desirable, beautiful, are in demand throughout the world, and always have been. Currently, as usually happens in summer, prices may be a bit depressed, but that’s an opportunity, not a calamity.
To store one’s gold and silver in an IRA, one has to use an IRS approved company. We like Sterling Trust (1-800-955-3434), and dislike Gold Star, because of the difficulty in dealing with them, plus their continual mistakes. One can also store their gold and silver at Brinks, for a small fee, and we can give you particulars if you wish. We strongly advise you to not even consider storing your precious metals overseas anywhere. Laws could be passed prohibiting their return to you, and why would anyone want their gold and silver thousands of miles away in someone’s vault, when you have no proof of its existence? Never allow anyone in the precious metals field to “store” your gold and silver for you, even in America. If a firm gets itself into trouble, they’ll sell your gold and silver in an effort to survive. It has happened many times, and I know of one personally.
The U.S. government is broke. It is frantic to devise ways to pay its bills. It has already confiscated the Social Security fund, substituting worthless notes for the confiscated dollars. It has confiscated the Railway Retirement Fund also, and of late, has even confiscated its own employees’ retirement dollars, substituting worthless notes (backed by the full faith and credit of the United States Government!). For many months, rumors have circulated that the next way to confiscate people’s wealth, may be to raid the IRA’s, and naturally substitute more worthless notes. Suppose you have valuable gold and silver in your IRA, and you discovered that it had been taken, and worthless treasury notes substituted? It could happen, and it would be an interesting court case if government said that it substituted valuables for valuables, and nothing had been taken. This would be a blatant lie, but a court may side with government which pays its salary.
Further, even if there were no substitution-confiscation, consider another possibility, and that is the possible tax consequences of placing gold or silver in your IRA at current prices, and removing them years from now, if they’re still there, at prices of five times what you bought them for when you placed them in an IRA. The tax consequences would be enormous! Wouldn’t it make sense, (1) To take the gold and silver out now, pay the taxes, take it home with you, and be rid of government interference? (2) Rather than opening an IRA, pay the taxes now, buy the gold and silver and take them home with you, to be stored, “Where no one would think of looking?”
Few people trust government. Why believe that they wouldn’t take your IRA, since they have already taken just about everything else they can get their hands on, in a futile effort to pay their ill gotten bills? They won’t stop spending, and now are buying their own debt, which is similar to a fatally wounded animal, licking its own blood from its wound, thinking it will help its fatal condition. Government is interested in its own preservation, not yours. In 1920, John Maynard Keynes wrote, “Lenin was certainly right. There’s no subtler, no surer means of overturning the existing basis of society, than to debauch the currency. By a continuing process of inflation, governments can confiscate secretly and unobserved, an important part of the wealth of their citizens. By this means they not only confiscate, but confiscate arbitrarily, and while the process impoverishes many, it actually enriches some.” Protect yourself.
P/S. If you watched the Republican debates last night, I would say that without doubt Ron Paul won, with Michelle Bachman coming in a close second, with Newt at the bottom. It’s going to be an interesting election!