Ask Lee Now: Answering Reader’s Questions December 2014

Great Ammo Storage Tip

Max D. writes: A while back, I had a question about ammo storage. The steel army surplus boxes work great. I have some that have ammo in them for five years. Fired some recently. Worked great. These boxes have rubber seals, making them air and water tight.

Lee responds: Thanks for sharing the tip regarding steel army surplus boxes. Army ammo boxes are an inexpensive and effective method of storage.

How well you protect your ammo from moisture and temperature extremes will determine how long it stays in good condition for firing. Normally after a period of five years, ammunition will degrade somewhat. Firing power and/or accuracy may be compromised. Just as with canned foods, bullets have a shelf life. It’s important to rotate in fresh ammunition periodically as you use up older supplies in target practice.

Government Hones Its Censorship Expertise in Ferguson

Terry O. writes: It looks like you were right after all about why the government banned flights over Ferguson. Audio recordings now show that the police just didn’t want their actions to be filmed from the air!

Lee responds: My previously stated suspicions were confirmed by an Associated Press story that broke on November 2nd: “The U.S. government agreed to a police request to restrict more than 37 square miles of airspace surrounding Ferguson, Missouri, for 12 days in August for safety, but audio recordings show that local authorities privately acknowledged the purpose was to keep away news helicopters…”

A Federal Aviation Administration official said that the police “did not care if you ran commercial traffic through this TFR (temporary flight restriction) all day long. They didn’t want media in there.” The FAA knew that the main motivation behind the no-fly request was to restrict media coverage. Bureaucrats ordered the airspace restrictions anyway. In the name of “safety.”

Do Smart Credit Cards Track My Every Move?

David H. writes: I receive your monthly Independent Living. I have a question about my new Sears Citi Master card which has a chip in it. Will it allow all of my movements to be tracked by agencies? Will all future credit cards have chips in them?

Lee responds: Your movements can’t be tracked directly from such cards. However, your purchases can be. That has been the case with all credit and debit cards for some time.

The microchip-embedded credit and debit cards that are now being rolled out will increasingly become standard. Over the next year, most card issuers are expected to transition from magnetic swipe to chip cards. They say the new cards will boost security and reduce fraud. But they won’t
do anything to boost the security of Internet transactions. Some privacy analysts worry there could be an increase in online card fraud as identity thieves seek alternate ways of stealing credit card data.

Where is the Red Line on Impeachment Proceedings?

John T. writes: Since Obama’s incompetence resulted in ISIS’s growth, arming, aggression, stealing, killings, etc., [war] funding MUST come out of the Whitehouse, Air Force One, ObamaCare, and Executive Orders budgets.

…Since Obama’s supporters want implementation of his “strategy”, they MUST volunteer to put THEIR “boots” on the ground or be drafted.

Lee responds: Here’s hoping the new Republican-controlled Senate holds the Obama administration accountable for its foreign policy failures and Constitutional transgressions! Establishment Republicans want to take impeachment off the table for political reasons, regardless of whether BHO commits impeachable offenses. But if the President persists in grabbing power with Executive Orders that bypass the legislative process spelled out in our Constitution, then Congress has the right and duty to reassert its powers.

Future Dollar Pivots Can Affect Your Life Insurance

Alvin B. writes: With the coming demise of the Dollar, how will it affect my Life Insurance Policy which is payable in Fixed Dollars?

The insurance benefits you’re paying for might not be worth much in real terms if the value of the dollar takes a major hit. Too many people rely too heavily on life insurance for financial security.

Don’t get me wrong, life insurance still has a place in retirement and estate planning. You or a loved one might need the insurance before the dollar collapses, which I don’t expect to happen next week or next month. And probably not next year.

Where people go wrong with life insurance is when they think of it as a primary savings or investment vehicle. That’s how some insurance agents over-sell it. No surprise, the commissions on life insurance policies and annuities can be lucrative.

One way to build inflation protection into your life insurance is through a variable/universal policy. It lets you choose how the cash value of the policy is invested. You can invest it in nondollar assets such as mutual funds that hold foreign equities.

Another risk to consider is that many insurance companies are undercapitalized versus their long-term liabilities. These insurers will be able to make good on their promises only if their optimistic projections for the economy and financial markets come to pass.

Make absolutely sure that any insurance products you own are with a top-rated insurance company. A.M. Best (908-439-2200; publishes Best’s Rating Reference Guide, which evaluates insurers operating in the United States and Canada. A.M. Best’s insurance company ratings are also available online. Continued from previous page Continued

The Government Contradicts Itself on Silver

Alan R. writes: Has there been any positive feedback regarding the use of Colloidal Silver and it’s effects on the Ebola Virus?

Lee responds: Colloidal silver does have antiviral properties. Some studies suggest that silver may help the immune system fight off the Ebola virus. Some of this encouraging research has been conducted by our own government. The U.S. Air Force Research Laboratory confirms, “silver-containing nanoparticles have previously demonstrated antimicrobial efficacy against bacteria and viral particles.”

Yet the FDA has all but made colloidal silver taboo as an alternative or supplement to conventional treatments. The agency has sent out cease-and-desist letters to people who have claimed that medicinal silver products might be used to help cure Ebola. The World Health Organization has blocked shipments of nano-silver solution from entering West Africa, even though there is no demonstrated health risk associated with this natural mineral product.

That said, I wouldn’t rely on colloidal silver as my primary defense against Ebola. More research needs to be done. There’s still a lot about this virus that we don’t know, including what might happen if it mutates into a new strain. But having colloidal silver around for use in an emergency situation can’t hurt. There are virtually no side effects when taking it in recommended dosages.

Cashing in on the Healthier Food Trend

Jane K. writes: How can I invest in the trend toward healthier foods?

Seth Van Brocklin responds: Americans are indeed drinking less soda and demanding healthier menu options at restaurants. Fast food giant McDonald’s and other purveyors of salty and sugary edibles are struggling to adapt.

Whole Foods (WFM) is an obvious candidate for a stock investment. Lesser known players in the health foods space include United Natural Foods (UNFI) and Sprouts Farmers Market (SFM). Suppliers of high-quality foods cater to high-end shoppers. During a recession, their stocks may be more vulnerable to a downtick than the major food and grocery companies represented in the PowerShares Dynamic Food & Beverage ETF (PBJ).

Cash Detection Technologies a Top Government Priority

Dan A. writes: I have heard rumors for several years of “currency detectors” used by casinos and police to detect quantities of currency on a person or in their car. Is this true? I have not been able to find anywhere that such technology currently exists, although “they” are working on it.

Thanks for all your efforts! You and your staff are greatly appreciated!

Lee responds: Thanks for your message! In brief, yes, various methods of bulk currency detection have been and continue to be developed by government agencies. The Department of Homeland Security has funded the development of “a device that will search for and identify bulk quantities of currency – secreted on persons, in hand baggage and luggage, and/or in privately owned vehicles.”

It’s also possible to train certain breeds of dogs to sniff out wads of cash. Sniffer dogs have been employed at airports and border checkpoints (where carrying $10,000 or more in cash without reporting it is a crime).

Fund Company vs. Your Broker

Larry R. writes: Hi Lee, I’ve been a subscriber for years and I have a question. When a person buys stock, how is the best way to hold these shares? If a broker holds shares in Street Name, I understand the broker can use these shares to borrow money. I do not want anyone using my stock as collateral, for a loan. How would you suggest these shares be held?

Lee responds: Wall Street has made it much tougher in recent years for individual shareholders to obtain an actual stock certificate. Brokers strongly prefer that their clients hold shares only in their electronic representation. This, of course, makes it easier for a firm to manage accounts and deal with accounting and compliance issues. It also gives brokers who are so inclined greater ability to engage in shenanigans with clients’ funds.

One defensive step you can take is to not hold securities within a margin account. Your broker may have automatically put you in a margin account, even if you didn’t ask for it and never use margin. A margin account gives firms the ability (as spelled out in the fine print of the “margin
agreement”) to loan out your shares to short sellers.

If you invest in mutual funds, you might consider owning them directly through a fund company. That way, you’ll bypass a middle man and eliminate one layer of counter-party risk. For example, you can obtain low-cost index funds covering just about every area of the stock and bond markets through the Vanguard or Fidelity families of funds.

What 770 Accounts Can Mean to You

Chipper C. writes: I have received some info regarding a secret 770 account. They say that it is tax free. Grow your money at 5% and withdraw tax free. Sounds too good to be true. Do you have any information regarding this account?

Lee responds: Promoters of so-called 770 accounts make claims that stretch the truth. A 770 account is so named because of IRS code section 7702. It governs life insurance policies. So a “secret” 770 account is little more than a structured whole life insurance contract.

People have been using life insurance to legally shelter investment gains from taxation for decades. You fund a policy. Its growth isn’t taxed. Then, you take out loans against it tax-free to generate cash flow. The catch is that instead of owing taxes, you owe interest. In addition to the premiums and other fees associated with life insurance.

If you simply want tax-free income, then municipal bonds may be a better way to go – though they don’t yield much these days. Keep in mind also that gains on stocks, precious metals, real estate, and most other assets aren’t taxed until you sell. You don’t need to bundle investments or savings into high-cost life insurance structures. In most cases it’s not a wise financial move to do so.