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Please email your question or comment to Independent Living editor Lee Bellinger ([email protected]). Please include your name and home state.You may also reach us via postal mail (P.O. Box 1240; Clover, SC 29710-4240).
What about Precious Metals Price Manipulation?
Anita R. writes: There is much evidence that large financial institutions artificially suppress the price of precious metals. I don’t understand all the intricacies, but among other things, this serves to conceal the decline in value of fiat currencies. I can’t foresee any reason this manipulation would end.
Given these institutions’ ability to keep the prices of precious metals artificially depressed, what does that say about metals as an investment?
No doubt, the big banks exert undue influence over the prices of precious metals on the futures exchanges. They exploit opportunities wherever they can. In December, JPMorgan, Citigroup, RBS, and others were slapped with a record $2.3 billion fine by the European Commission for manipulating the benchmark Libor interest rate.
Now, if the big banks are selling paper gold and paper silver into the market with the aim of keeping prices perpetually suppressed, they are doomed to fail! Not necessarily because they will be caught and punished, but because they can’t escape the laws of supply and demand for the actual, real assets behind their paper contracts.
Look, gold prices moved higher for 12 straight years before 2013. The engineered sell-offs along the way were short-lived. The recent decline has been longer and more severe. But if today’s prices are artificially low due to manipulation, it means that today’s prices cannot be sustained. Prices must eventually move higher in order to keep the market for physical metal supplied.
Let’s Talk About Heirloom Seeds
Gerald S. writes: In the November issue, you mentioned heirloom vegetables and the health benefits they offer. For us city folks who have difficulty telling the difference between a cow and a plow, do you have any suggested sources for seeds to grow the vegetables?
Hybrid, sterile (non-heirloom) seeds account for most seed sales in the U.S. The seed packages you find at your local garden store will typically be non-heirloom.
However, since seeds are easy to ship, plenty of Internet sources for heirloom seeds exist. You might want to check out Seed Savers Exchange (563-382-5990; www.seedsavers.org) – “a nonprofit organization dedicated to saving and sharing heirloom seeds.” Seed Savers Exchange also produces a printed catalog – handy for those who don’t like shopping on the Internet.
Would Bedrock Stocks Like Exxon-Mobil Survive a Currency Collapse?
Mike S. writes: With the continual printing of money by not only our government, but also by many others around the world, you and others strongly advise having a portion of assets in precious metals due to the inevitable collapse of the currency. But what will happen to shares of stock that a person might hold in any number of companies, like Microsoft or Exxon-Mobil? I would not think that those companies would cease to exist in the case of a government default. Wouldn’t the shares a person held still have value in whatever replaced the existing currency?
First of all, it’s important to distinguish an actual government default from a currency collapse. It’s my view that the Federal Reserve won’t allow the government to default on its debt in a formal sense – at least not with people like Ben Bernanke and Janet Yellen at the helm. The Fed can monetize debt in unlimited amounts. Quantitative Easing is just a warm up for what may lie ahead.
I expect that once the world wakes up to the fact that U.S government finances are essentially being put through a multi-trillion-dollar money laundering operation by the Fed and that trillions more digital dollars will have to be created in the years ahead to prevent Uncle Sam from defaulting, a precipitous fall in the value of the dollar will follow. The Fed now owns 40% of all Treasury notes over 5 years in maturity. It has cornered the market – because a functioning free market wouldn’t have absorbed all those IOUs at such low rates.
A free market would have forced the government to rein in its spending. But since it doesn’t have to, it won’t. It can just let the Fed engage in currency overproduction, which will cause the currency’s value to fall.
Now, as for your question on precious metals vs. shares of blue-chip stocks, both can offer protection from a declining currency. But since a currency crisis is likely to be associated with social and economic turmoil, precious metals would stand to perform much better than stocks. People buy stocks when they are confident and gold when they are scared.
When Government Spies On the People And Classifies Them as Terrorists
Randy H. writes (via Facebook.com/ IndependentLivingNewsletter): The fact is that many police view the public as antagonists more than as the point of their existence. I think we will see it get worse b4 [sic] it gets better.
I hate to say it, but I agree that it may get worse before improving. Thanks for your comment.
It isn’t so easy to mind your own business anymore. Secret federal courts. Mysterious government agencies. Warrantless wiretaps. Automatic license plate readers. GPS tracking. Unmanned aerial surveillance drones. TSA pat downs and body scanners.
Already, the government has identified pro-lifers, conservatives, libertarians, gun owners, survivalists, and even those who own precious metals or firearms as “potential terrorists.” Learning about edible plants, basic first aid, and paying with cash when you shop could also lead to your increased surveillance by local and federal law enforcement that see you as a threat.
Keeping up with new threats to your privacy and freedom is a full-time job nowadays, that’s why I am determined to keep my readers abreast of developing stories, newly realized threats, and real, implementable solutions for the times we live in.
Why Give the IRS an Interest Free Loan?
Patrick S. writes: The law (as currently written), only allows for the IRS to collect the penalty (tax), for failure to participate in Obamacare from your income tax refund. Today many, perhaps most, Americans get a tax refund each year from the IRS. So the bureaucrats took the easy way out… Lending money to the government at no interest has never made much sense to me. If one restructures one’s income tax situation (withholding which can be done any time during the year is the simplest), to one’s taxes at the end of each year; there is little to no refund from which an Obamacare penalty can be deducted. Of course, nothing would prevent the President from, via executive order, changing the penalty to allow the IRS to come after you with full force.
You raise a good point about tax refunds. Any readers who normally receive large tax refunds from the IRS should consider adjusting their withholding allowances on the W-4 Form (or reducing their quarterly estimated payments).
As for people who will be opting out of Obamacare and who will potentially owe a penalty to the government for doing so, it’s not yet clear exactly how the IRS will go after these healthcare rebels. As you suggest, our President seems to believe that he can tinker with the law at will through executive orders. And the IRS routinely writes its own regulations into law.
I suspect the agency will draw on other enforcement tools at its disposal besides dipping in to taxpayers’ refund checks. If millions of people end up refusing to buy overpriced insurance policies mandated by the law, the IRS will have a huge logistical problem on its hands. And so will the whole unworkable program!
Will Uncle Sam Revalue the Dollar?
Ken C. writes: What if the government calls for all paper money to be turned in because they are issuing new bills by a certain date? I believe this happened in Russia. Issue: If you have squirreled away cash in the closet for years for retirement, you will be quizzed by the powers that this is illegal or such, or pay a tax on monies over a certain amount.
Re-denominating or re-calibrating the currency – sort of like a stock split – is a measure some governments have taken in response to hyperinflation. Too many zeros on currency notes and accounting ledgers could get to be cumbersome! I don’t know if we’ll reach such a point in the U.S. in our lifetimes, but it’s possible that some kind of formal revaluation will occur.
In any event, I’d suggest against hoarding cash for retirement. A small stash for emergency use is really all you need. The Federal Reserve will not let your cash retain its value over time. The Fed is bent on depreciating it. Right now cash isn’t depreciating rapidly, but that can (and probably will) change in the future.
Hard assets such as gold, silver, colored diamonds, and gemstones are better stores of wealth to squirrel away. Yes, hard assets are more volatile than cash. But if you have a long-term time horizon you can expect the major trend to be up with inflation.
Can An Annuity Be Converted to Actual Gold or Silver?
Richard V. writes: With things changing every day, I am concerned about money as we know it in America. I have read everything on the internet that comes from others about our finances. (We still think you provide better information.)
I have an IRA with Prudential in the form of an annuity. My question for you. Can the annuity I have be changed to real physical gold/silver? My financial advisor for my Prudential account has indicated that I could change to silver and gold but could not tell me if it would be real gold and silver. If that is the case how do you get the real gold or silver in your hands when you need it?
There’s a lot of content on the Internet (too much, frankly) related to financial opportunities and strategies – some of it valuable, but much of it pedestrian regurgitations or unreliable opinions from far left field. So I appreciate your vote of confidence for the focused insights we offer specifically to our readers.
As for your question about owning precious metals inside an IRA annuity, your options would likely be confined to exchange-traded products (ETPs), unless your annuity provider allows some kind of linkage with a bullion storage account. Your other option would be to sell the annuity and use the proceeds to set up a bullion storage account that meets the requirements for IRAs with a different account custodian. The transaction costs imposed by Prudential for selling your annuity could be significant.
It’s true that some of the gold and silver ETPs have physical metal backing them – Sprott Physical Gold Trust (PHYS) and Sprott Physical Silver Trust (PSLV), for example. But you’re not going to be able to actually get your hands on the metal you own through these vehicles unless you meet minimum redemption requirements of around 10,000 ounces of silver or around 400 ounces of gold.