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Guest Post: Capital Controls, $5,000/oz Gold And Self-Directed Retirement Accounts

Tyler Durden's picture


Submitted by Chalres Hgh-Smith of OfTwoMinds blog,

A wide-ranging conversation on capital controls, gold and self-directed retirement accounts.

Recent news stories about Federal plans to "help" manage private retirement accounts renewed my interest in the topic of capital controls. One example of capital control is to limit the amount of money that can be transferred out of the country. Another is limiting the amount of cash that can be withdrawn from accounts.

The article linked above suggested a third example, in which the government mandates private capital must be invested in government bonds. The way this might work is this: an agency of the Federal government might announce that to "protect" households' $19 trillion in retirement funds from the vagaries of the market, 50% of all retirement accounts must be invested in "safe" Treasury bonds.

Though presented as "helping" households, the real purpose of the power grab would be to enable the Federal government to borrow the nation's retirement accounts at near-zero rates of return.

As things fall apart, Central States pursue all sorts of politically expedient measures to protect the State's power and the wealth of the political and financial Elites. Precedent won't matter; survival of the State and its Elites will trump every other consideration.

To explore alternatives to conventional retirement accounts (IRAs and employer-funded 401Ks), I asked Michael Reps to join me in an email conversation on capital controls, gold and self-directed retirement accounts. Michael and I have a long history of correspondence, and his great respect for the audience led him to advertise his Expat Your Wallet service here.

I personally have what is known as a solo or self-directed 401k trust, an individually managed retirement account designed for sole proprietors. I am no tax expert, but self-directed 401ks have larger tax-deferred contribution limits than IRAs and at least some of them allow the owners to invest in real estate and other tangible assets, in stark contrast to IRAs and employer-managed 401Ks.

Very few people seem to have heard of self-directed retirement options, and so this conversation is an attempt to explore some of the issues related to capital controls and self-directed retirement accounts.

Please note that these accounts may not be for everyone, and not everyone may qualify to establish such an account. The following is not advice or a recommendation, it is an informal, broad-ranging discussion on a variety of topics. Please read the HUGE GIANT BIG FAT DISCLAIMER before reading on.

Here are Michael's Introductory comments:

Many if not most gold analysts will discuss at length and great detail the catalysts or conditions that could lead to gold's further bull run. These reasons are too detailed and varied to go over here. The purpose of this Q&A is not to refute their claims but rather to acknowledge them and to ask one question: What would America look like with gold at $5000 an ounce?

Does it mean that the gold bugs win and the rest of the population loses? Can you walk into an appliance store an buy a refrigerator, dishwasher and washer/dryer with a few ounces of the ancient barbaric relic? Does it represent the onset of hyperinflation where buying power is diminishing? Or does it mean that speculators have caught wind of the next best momentum investment? In other words, is the rise in the price of gold "Value Driven", "Event Driven" or "Price Action Driven"?

Instead of attempting to forecast how gold "should" rise in value and price, would it not be better to consider the world we live in based on "Why" gold has risen?

Consider what these three economic events could do to your retirement: rising interest rates, a falling US Dollar or major bank failures. All three can send gold to parabolic levels and wreak havoc on your nest egg. They represent either a loss of spending power, a loss of borrowing power, or an outright loss of capital.

Current thinking dictates that one is to grow, grow, grow savings until they retire and then spend, spend, spend, down a life's worth of savings, overlooking the fact that at the time of retirement the account statement may read 6 figures in nominal value but have only 5 figures of buying power. Many will consider gold and silver as a hedge against such an event and I wouldn't argue. The ability to freeze in place stores of value that cannot be degraded by reckless monetary policy may be the only hope for Boomers.

All this raises an interesting question: what would America look like at $5000 an ounce gold?

Just to be clear: do you think gold could go to $5000 an ounce over a relatively short period of time?

The Dow rose from 875 in 1981 to 14,000 just over three decades later. I can't see why gold could not do the same. I wouldn't rule out $10,000 either.

Why would anything be different with gold appreciating to these levels when the Dow stocks rose from 875 to 14,000 in the past? The world didn't come to an end and the wealth generated has had many positive affects on the economy.

Correct, that is why I think it is important to consider the reasons behind its rise and what they mean for the overall society we llive in. I believe if it is just a speculative bubble (Price Action Driven) then it's a clear "buyer beware" situation. However, if there is an major awakening from the public that gold is money, more so than greenbacks, then I suspect we will be living in much more challenging times.

A January 2011 Moody's report noted that the ratio of national debt to national tax revenue in the United States is the worst of all the AAA-rated countries in the world. The U.S. fiscal condition has deteriorated to the point where its debt to revenue ratio is nearly three times higher than the AAA median, and more than twice that of Germany, the U.K., the Netherlands, Switzerland and Canada.

Even the German Bundesbank is getting wobbly, as they request the return of their 300 tons of gold held at the NY Federal Reserve Bank, which came just three months after the Federal Reserve refused to submit to an audit of its holdings on Germany's behalf. The end result is that faith is running thin regarding the safety of US domiciled assets. Now we hear of the Netherlands, and others making overtures about the safety of their assets. We should take a clue from this.

Let’s say gold declines to $1,000 an ounce. Does that change anything we’re discussing?

This is a good question, and again it gets back to the reasons for the "deflation" or depreciation in gold's price. It could still maintain enormous value relative to other goods and services, or it could be deemed an albatross that is so highly regulated and taxed that it loses appeal. Its price could even be the result of government mandated "price controls" which again represents a picture of a much different America than the one at present. It really depends on "Why" it has declined in price.

A legitimate free market should always price things based on real supply and real demand and my contention is that there will always be a market somewhere that will recognize gold's real value. This goes for many other stores of value as well, but precious metals do have a very universal appeal. This may be one reason why there are services out there that help people store precious metals offshore.

In the broader context, what do you see as the primary challenges we will face?

I think the first thing to go is "Trust"; trust in the existing fiat structure, in fractional reserve banking, in how to value your work, your compensation, your long term plans. When trust is broken, all bets are off and the government will have free rein to impose even greater controlling measures in order to shore up the economy. These measures of control will likely manifest themselves in a myriad of changes to include "price controls", "capital controls", "trade wars", "currency wars" and possibly civil unrest.

In previous essays, you discussed opening up a foreign bank account to diversify sovereign and currency risk. In terms of holding funds outside of the existing system, what options are out there?

It seems that investing "outside" of the existing system has its merits. We have had some good success with this simple act of opening up a foreign bank account and since the start of that service some people have capitalised on the rising New Zealand Dollar as well as higher bond yields. What has also emerged from this has been a good deal of interest in getting an overseas incorporation. This incorporation has helped to establish business and trade accounts outside of the US and in compliance with US Tax laws.

It is when I started going down this path that I discovered something quite interesting that I think your readers may benefit from, and that is to not only self-direct their retirement accounts but to self-direct them overseas where they have a new set of opportunities not readily available at home.

In an era of such low yields, many investors are seeking some form of return or absent that, at least a store of value.

This is my point. Especially when you are close to retirement you just dont want to take too many chances, so greater fixed income exposure usually becomes the default choice of most aging boomers. Your readers are well aware of the overall issues facing investments in this zero interest rate climate. It may be a good idea to consider a strategy that opens them up to a whole world of investment opportunities. And by whole world, I mean just about anywhere on the planet.

Do individuals have to pay any penalties or take early distributions in these self-directed accounts?

No and No. There are no penalties for a self-directed retirement account that invests overseas and no distributions need to be taken.

For the increased number of boomers who are leaving the work force and considering an affordable retirement, living in another country may be their best option, at least for now, while the US Dollar is strong on a relative basis. Countless Americans don't just flock to the warm sands of Florida to escape cold winters and New York State's income tax, they retreat to Central and South America, the South Pacific, and other regions around the world where the cost of living may be more in line with their actual budget.

So ask yourself, "In US Dollar terms, do you believe you will be able to buy more or buy less in another country 10 years from now with your US Dollars?" For some answers to this it may be helpful to understand how the US Government views your individual retirement account or 401k in the first place.

In 1984, the Treasury Department proposed to eliminate Section 401(k) from the Internal Revenue Code. Although this proposal was never implemented, the Tax Reform Act of 1986 (TRA ’86) substantially tightened the rules governing 401(k) plans. Congress changed the rules because it thought that these plans did not provide adequately for rank-and-file employees and that these plans should be secondary, not primary, retirement plans. 

Retirement plans were intended to be a supplement, not a replacement for the role of the Social Security Administration. As a supplement, I believe if it came down to a choice between saving Social Security at the expense of individual retirement plans I'll side with the government winning this one. It is not a stretch to imagine a significant percentage of the $19 trillion in retirement savings pledged as a "fix it" for a "Social Security Crisis."

This is where self-directing your retirement plan into tangible assets such as real estate, agriculture, heavy equipment, or even a solid business, starts to shine. And don't think for a moment that these assets have to reside in the US. They don't.

Enter Treasury Regulation Sub-chapter A Sec.1.408-2 (b) This is simply the regulation that states that an individual retirement account must be a trust created or organized in the United States and that such trust must be maintained at all times as a domestic trust of the United States. It is not difficult to see that many will view this rule as also confining the assets invested in the retirement plan to inside the United States or US based financial institutions.

However, this is not so. Millions of Americans hold ownership stakes in foreign companies from BP to Sony inside their IRAs and while they may be traded as depository receipts or within international mutual funds, they are still foreign in origin.

Lost in the noise and confusion of the financial media is the important distinction between the "CUSTODIAN" of the retirement assets and the "INVESTOR" of those assets. These are two distinct and separate entities involved in your retirement plan, one dedicated to IRS Compliance while the other dedicated to investment opportunities. While you must adhere to the custodianship rules outlined in Sec. 1.408-2(b) in an IRA you can elect to be the "INVESTOR" of those assets, opening up a whole universe of choices outside of the US.

But don't expect the larger financial intermediaries to make you aware of this regulation. The more you believe that your investment choices are a privilege bestowed on you by the designated mutual fund company, the more you will avoid looking outside the NYSE or even US borders.

So by law you must use a US Based custodian who reports to the IRS, but the investments can exist outside of the US?

Correct. Once you select a custodian the next thing is to select an experienced lawyer who specialises in Company Incorporation. You will have to establish a Limited Liability Company (LLC); this is where the foreign or domestic incorporation comes in. It is this company that invests your funds on behalf of you.

Think of it as starting your own Fidelity Investments but you are the only client and you are the only employee. This is the simplest way to explain it. Your company has rights and the ability to invest but there are restrictions to what your business can own.

What are those restrictions?

There are restrictions such as you cannot live in any real estate you purchase, cannot buy antiques, and if you purchase a business, you cannot receive a salary from that business.

The following is a brief list of what you can invest in:

Real Estate
Most currencies
Stocks, bonds, mutual funds
Trust Deeds and Mortgage Notes
Limited Liability Corporations
Private Stock Offerings
Leases and Lease Options
Joint Ventures
U.S. Treasury Gold and Silver Coins
Gold Bullion
Heavy equipment
Private Loans/Notes
Collectibles and Life Insurance ARE PROHIBITED

And as I mentioned, if you incorporate outside of the US you then will have to pay corporate taxes in that country of incorporation. This may seem counter-productive, but paying 25% in taxes on 4% bond yields beats a tax free 1% CD yield any day, and many countries have low corporate or even no capital gains taxes.

Another thing you must be mindful of are "Prohibited Transactions." You need to be aware that any addition to the account in the form of labor must be viewed as a contribution. That is, everything, and to some degree, everyone who contributes to the accounts' existence and operation must be compensated by the plan and only the plan otherwise that contribution can be viewed as a deposit of funds for lack of a better description. Gaining compensation outside of the plan for the benefit of the plan can run you into trouble with the IRS.

For example, if you buy a rental and use a property manager, the property manager must be compensated by the plan and not by you. If the rental needs a roof, that roof must come from the plan and not outside of the plan as it would be deemed a contribution. This could also apply if you decide to put a coat of paint on the building or cut its lawn. Again, it is best to get acquainted with this program and the net is filled with people offering this service.

Since not everyone has migration to another country on their radar, what suggestions would you give to readers that are interested in learning more about self-directed retirement plans at home?

My first piece of advice is to Google "Self Directed Retirement". I would also like to suggest that if one of your readers is a lawyer that specialises in incorporations and corporate law, that they contribute their insights to this discussion. US corporate law has some additional complexity via interstate commerce, but nothing monumental as far as I know.

Another thing they could do is speak with a financial/tax professional that recognizes self-directed accounts.

Can you see other benefits to incorporating in another country?

An option that is gaining attention is to use the assets in your retirement account as proof of investment into another country thereby helping to qualify for residency in that country. Anyone who has considered emigrating from the US will see that many countries welcome Americans with open arms and free healthcare provided you invest and domicile your wealth locally. This could represent a very interesting form of capital flight as it is perfectly legal and at the end of the day, it is your money.

I'm currently liaising with Immigration NZ and a couple who plan to retire here and the process is very straightforward since the assets are treated as no different than a taxable account. As for other countries, it pays to get an answer direct from an official source to be certain.

In the end, if you have a long range plan for retirement that involves exposing yourself to as many options as possible, it may be best to start implementing that plan sooner rather than later.

Thank you, Michael, for a most interesting discussion.

For those interested in exploring options mentioned here, please consult a qualified financial/tax professional to learn more about your retirement account and retirement planning options.

Michael Reps resides in New Zealand and is Director of Expat Your Wallet. For more information email Mike at


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Fri, 03/01/2013 - 13:34 | 3290832 Robot Traders Mom
Robot Traders Mom's picture

Gold, as a store of value and of the relative relationship to the dollar, should already be trading at $5,000/oz.


Count your lucky stars that it is manipulated and we are able to accumulate as cheap as we've been able to and continue to...

Fri, 03/01/2013 - 13:52 | 3290894 Slash
Slash's picture

Can anyone here please explain why the market will fly up intraday on minimal volume but then only correct slightly on the same amount of volume? In other words, it appears to go up much more easily than down on the same amounts of volume...why is that? Don't say Benny/ppt etc,

Fri, 03/01/2013 - 14:25 | 3291005 BaBaBouy
BaBaBouy's picture

Manipulated ... Absolutely ...

That Scam Is Now Drawing To A Close, A Spectacular Close...


GOLD WILL Be (Is Now), The Currency PREMIER!


$50K Is A Resonable Target...

Fri, 03/01/2013 - 14:40 | 3291069 Cleve Meater
Cleve Meater's picture

Very informative article, and I've actually talked with this guy in the past. I also have a self-directed IRA/401K with the majority of the assets offshore in real estate, farmland and PM's. The only issue I quibble with is the author's suggestion that you can use foreign assets (say a $200K deposit in a CD in a foreign country) to qualify for residency. Yes, while many countries do have residency programs requiring prospective immigrants to invest a certain amount of money in-country in order to qualify, the IRS rules are very unclear on whether doing this would violate the restrictions on self-directed IRA/401K investments.

Here's why: The rules generally state that NO benefits can accrue to the owner of an IRA account until that time when the owner reaches retirement. Most of these rules are straightforward and mentioned in the piece above: You can't take a salary from a business that your IRA owns, you can't pocket rental income from real estate the IRA owns -- it has to flow back into the IRA account. The question is whether or not investing funds from your IRA in a foreign asset in order to receive the "benefit" of residency in that country would count as a violation of the rules.

I'll concede that I've received different opinions on this, and it requires careful consideration with a tax advisor, but it's important to point out. I happen to live overseas and have come across many expats that are considering this very strategy to obtain residency. With the FATCA regs, you can be sure that foreign banks will be turning over all sorts of info to U.S. tax authorities... possibly, and up to, whether foreigners have residency in the country, and exactly how they qualified.

Sorry to be long-winded, and maybe the author can shed some light on this, but be forewarned: the feds will use every means at their disposal to relieve you of your savings. Unfortunately, you really do need to have a granular understanding of all of the chicken-shit ways they will try to do it.

Fri, 03/01/2013 - 15:18 | 3291173 New World Chaos
New World Chaos's picture

I checked out his website and it is mostly about herding people into Westpac bank accounts.  Westpac is a Rothschild operation.  They will betray their customers to Uncle Scam when the time comes.  "Sorry, just following the law..."

If you get a self-directed IRA LLC, you can buy metals and take delivery legally.  At some point Uncle Scam may demand that all self-directed IRA's invest in government bonds, but since this would be a huge pain in the ass for people who bought real estate and few people actually have these IRAs, self-directed IRAs will probably be looted last.  By the time you have to give Uncle Scam the finger, the country will be in chaos.  You just have to delay, delay, and make sure you (and your assets) end up on the right side of the DMZ.

Fri, 03/01/2013 - 17:06 | 3291611 Cycling Fish
Cycling Fish's picture

Westpac is Not a "Rothschild operation" it's a publicly traded Australian bank. I know one or two directors.

Fri, 03/01/2013 - 17:14 | 3291641 Hacked Economy
Hacked Economy's picture

Self-directed IRA LLC?  Interesting.  I'll have to look into that.  I'd like to convert my standing 401(k) into something a bit more...reliable.  Thanks for the tip.

Fri, 03/01/2013 - 17:48 | 3291757 stevevan
stevevan's picture

I no expert on this subject, but I did sleep at a Holiday Inn Express last night.  


When you state that you can legally take delivery of your PMs.. this is true to a degree.  You can't hold them yourself... you can't put them under your bed, or even in a safe deposit box. You must store with an IRS approved despository.  There is a list the IRS provides. 


Also, be aware that as you are setting up an LLC, you may end up paying corporate tax of some kind.  It varies based upon state.  I am in PA, and I have to pay a nominal fee until the value of the LLC holdings go over a certain amount....which would then trigger a higher tax.  It is still well worth the small cost because of the freedom you have to invest.  The LLC can invest in equities, bonds, real estate, precious metals, private notes... opens up a world of possibilities.

Sat, 03/02/2013 - 00:05 | 3292669 CPL
CPL's picture

It's self directed by the IRS obviously, until they don't get paid or what they are paid isn't worth putting on socks for.

Fri, 03/01/2013 - 18:28 | 3291872 AGuy
AGuy's picture

" you get a self-directed IRA LLC, you can buy metals and take delivery legally. "

Its silly to put any new money in an IRA at this point. Regardless of how you invest it (in PMs, land, tangible assets). Its still subject to taxes upon withdrawl and a 10% penalty on early withdrawl. The only way out of a IRA is to switch to a Roth IRA (Paying the taxes due) and waiting 5 years to avoid the 10% penalty. Then you can cash it out. Considering the US has 16.6 Trillion in Debt and still a 1.1 Trillion budget deficit, and giant bulge of pending retirees collecting entitlements, there are significant risks the rules will change or the dollar will crash before 5 years are up.

Also consider is very difficult to set up overseas accounts for american citizens because of the 2009 Obama banking rules. Most banks will simply refuse your funds if you're an American. The 2009 rule has already establish capital controls on Americans, its just done in a very sneak way.



Sat, 03/02/2013 - 00:02 | 3292662 CPL
CPL's picture

Best way to consider any money locked away under a tax deflection savings account in any western country with a 'harnmonized central bank to the Federal Reserve (all of them) is to consider it gone if you aren't holding it, investing with it or harvesting with it.

You have to understand, none of you are leaving regardless of where people think they can hide on earth.  

They grab kids for downloading songs halfway across the globe on hastily devised legal platforms.  A US resident with investments, property and a pension arrangement...if you weren't on the other side of the planet four years ago, it's already too late.


Fri, 03/01/2013 - 14:58 | 3291134 Snoopy the Economist
Snoopy the Economist's picture

Slash: That's funny. You want an answer but won't accept 'manipulation'? The fed has the money at his disposal, the big banks and specialists in his pocket, and obamba in his ear. A high stock market IS the recovery. Volume and technical signals mean next to nothing anymore since the fed determines the market direction daily.

Fri, 03/01/2013 - 14:21 | 3291011 Duffminster
Duffminster's picture

I believe it should be around $3500 based on the correlation with increasing debt levels (and correlated to real economic grwoth) and the implied QE without which will cause massive interest rate sensitive derivatives and sovereign default to undermine the extant financial/banking power structure.  This is a long term game and short term, while they still can, the monetary authorities, through their proxies and with support from the deaf, dumb and blind funds and the explicit support of the PM futures desks at the top several bullion banks, cap gold and silver using every dirty trick, of which they have many but if the backdwardization continues to accelerate, it looks to me that we are nearing a turning point.  $1522 seems to be the bottom.  I expect the market to continue to chop and look for an exogenous event of one type or another to be the catalyst for a sharp move higher.

There is a very interesting and authoritative article on the increasing backdwardization in gold and silver.  Many blather about this subject but the interview with Sandeep Jaitly, who focuses on this topic as a full time occupation, his daily calculations are showing an acceleration in a long term backwardization trend that indicates a very bullish trend.


I also find these charts by Citi Analyst, Tom Fitzpatrick and the underlying reasoning to be solid long term analysis. 

As you say, for China, Russia, India, Vietnam and a host of other central banks and associated populations, the desperate actions of the "central planners" to mask the long term push monetary inflation via gold manipulation and their primary efforts to push everyone into risk-on (stocks), is a boon for those who are rotating into protection of their wealth and the suppressive actions turn what is otherwise simply a means of long term capital preservation into a likely major profit opportunity as the suppressive operations will ultimately unwind under increasingly severe supply/demand laws of economic physics.   The ponzie must ultimately collapse and debt based currency is for me, a ponzie.  I could of course be wrong.  This is a long term game and one must have conviction based in sober analysis of the facts rather than watching the painted numbers of the ticker in the short term conditions of daily and continuous supressive activities of the economic and financial mirage makers.




Fri, 03/01/2013 - 14:36 | 3291068 rogeliokh
rogeliokh's picture

To turn GOLD around we need a niddle to pinch that fat bubbled market for

few hundreds points, util then Jokers will keep running Netlix with 100000 P/E.

Averege Joe figure out, that he is safe here with Bernank. Need some event to

burst that bubble.

Fri, 03/01/2013 - 15:32 | 3291262 gaoptimize
gaoptimize's picture

But as a believer in the values that built Western Civilization, I'm disconcerted that this price manipulation has apparently aided and abetted the transfer of ~2,600 tons of gold from west to east in 2012, at a bargain.  I'll bet US stackers like you and me bought only a few percent of this amount.

Fri, 03/01/2013 - 16:47 | 3291529 sessinpo
sessinpo's picture

And why is it that you believe that those that are in the circle, have more information and connections don't see that same thing? Why wouldn't they be accumulating that gold and preventing you from getting it?

Fri, 03/01/2013 - 13:35 | 3290834 lolmao500
lolmao500's picture

Buy gold and silver, physical of course... WITH CASH... and burry it in sealed PVC pipes where you can. Do the same with guns/ammo/non-perishable food/medicine.

Always have crappy guns to give the state just in case... that way they'll never think you have guns when it hits the fan.

Fri, 03/01/2013 - 13:40 | 3290849 dick cheneys ghost
dick cheneys ghost's picture

I will be trading some 'jewish toilet paper' for some silver this weekend!! Cant wait!!


Best feeling in the world is to trade 'rothschild script' for shiny silver


Fuck u bernanke

Fri, 03/01/2013 - 13:47 | 3290878 Boston
Boston's picture

Buy gold and silver, physical of course... 

Just did.

My $28.00 limit order for silver was filled early this morning when I was sleeping. Next orders already entered at $26.00, $24.00 and $22.00.

The only difference is that I'm doubling my quantities for every step down in price.

Wish me luck!

Fri, 03/01/2013 - 14:37 | 3291075 Citxmech
Citxmech's picture

I bought yesterday at 28.50.  I also think that this is a very good buy point for Ag.  I'm not so sure we'll ever see $22/oz again - but here's to wishing!  =]

Fri, 03/01/2013 - 15:15 | 3291202 Bandit und Buster
Fri, 03/01/2013 - 18:06 | 3291804 Tango in the Blight
Tango in the Blight's picture

They should be renamed to Fiatman.

Fri, 03/01/2013 - 15:51 | 3291309 KnightTakesKing
KnightTakesKing's picture

Do you have any suggestions on dealers that will take limit orders for physical? The ones I've used I have to call them up on the phone or order online...

Fri, 03/01/2013 - 14:34 | 3291061 duo
duo's picture

Have one ounce of gold for every month you plan to be retired, two if you are married.

Fri, 03/01/2013 - 15:47 | 3291296 KnightTakesKing
KnightTakesKing's picture

I never considered that before, but it's really good advice.

Fri, 03/01/2013 - 18:32 | 3291887 AGuy
AGuy's picture

"Have one ounce of gold for every month you plan to be retired, two if you are married.'

Slight recommendation: Only need two ounce of silver per month if single. Need 2 ounces of gold if married :)


Fri, 03/01/2013 - 13:40 | 3290850 dbTX
dbTX's picture

What would America look like with $5,000. gold? I'm not sure, but I know what I'd look like. Bring it on.

Fri, 03/01/2013 - 14:28 | 3291039 cowdiddly
cowdiddly's picture

It would look exactly the same as now except an egg would be $1.00 each, a loaf of bread would be $6.00 and a gallon of gas $12.

Fri, 03/01/2013 - 14:37 | 3291072 Hi Ho Silver
Hi Ho Silver's picture



Optimistic much?

Fri, 03/01/2013 - 22:08 | 3292368 mjcOH1
mjcOH1's picture

It would look like Obama voters jacking 3x as many people per unit crack required, given no increase in the average wallet content.

Fri, 03/01/2013 - 15:32 | 3291264 BeerBrewer09
BeerBrewer09's picture

A REAL loaf of bread is $6 now, when made with nutritive ingredients.

Fri, 03/01/2013 - 15:53 | 3291316 FeralSerf
FeralSerf's picture

Eggs are about 15 cents each.  Does this mean I should sell the gold and buy eggs now?  Or shares in CALM?

Sat, 03/02/2013 - 00:16 | 3292695 akak
akak's picture

Eggs are a very poor store of value, but they are probably the WORST possible medium of exchange!  And how does one divide an egg to make change?


On the plus side, all the kneejerk anti-gold trolls will be happy to know that you can eat them.

Sat, 03/02/2013 - 15:59 | 3293879 FeralSerf
FeralSerf's picture

My point was that eggs haven't gone up as much as bread and therefor are a better value as a store of value if one believes this is temporary -- reversion to the mean and all that.

How are eggs different from pennies, at least concerning their divisibility?  Gold may not be much better.  15 cents worth of gold is not conveniently divisible either.   Half an egg is easier to eat than half a penny.  Admittedly eggs are less convenient to carry in one's wallet.

Fri, 03/01/2013 - 17:22 | 3291672 Hacked Economy
Hacked Economy's picture

I pay only $3.50 for a loaf of Ezekiel (sprouted grain) bread at my local supermarket.  It's among the best you can get, but even so, I'm seriously looking into learning how to bake my own healthy bread.

Sat, 03/02/2013 - 15:47 | 3293851 CPL
CPL's picture

Trick is making a big batch on a day off letting it rise once, then fold it into the shape you like, cover in wax paper and throw it in the freezer.  

When you want a loaf throw it in the oven 25 minute before you want it.


Lots of recipes for bread on youtube.  Big 20 lbs bag of flour should make around 200 medium sized bagettes with nothing but flour, salt, yeast and water.

Sat, 03/02/2013 - 16:06 | 3293896 FeralSerf
FeralSerf's picture

If you ever learn how to bake healthy bread you should get a Nobel Prize.  Lots of people have tried and failed.  And many have lied about bread's healthiness.   Bread consumption is an excellent way to get diabetes and heart disease (which are epidemic).

Sat, 03/02/2013 - 00:07 | 3292676 CPL
CPL's picture

You've visited Canada recently?  6 bucks for a pound of medium ground beef.  Bread is pretty close, on sale it's 3 bucks.

Fri, 03/01/2013 - 13:40 | 3290851 pods
pods's picture

I can tell you that there is nothing like looking at a shiny little fleck of gold in a gold pan.  

There is a reason why it has been valued for thousands of years.  It really is special.

It will be here long after it hits $10k.  In fact, it will still be the same, lustrous beauty after the $.



Fri, 03/01/2013 - 14:23 | 3291020 keninla
keninla's picture

Unless of course it is a nice nugget in the pan.


Fri, 03/01/2013 - 13:43 | 3290859 Texas Ginslinger
Texas Ginslinger's picture

HUGE GIANT BIG FAT DISCLAIMER: Nothing on this site should be construed as investment advice or guidance. It is not intended as investment advice or guidance, nor is it offered as such. It is solely the opinion of the writer, who is NOT an investment counselor/professional.

That said, why read it..????

Fri, 03/01/2013 - 15:14 | 3291153 Kirk2NCC1701
Kirk2NCC1701's picture

"...why read it..?"

Because the "$5,000/oz Gold" headline gets everyone all hot & lathered, and gets them to read the article.  Call it Hopium for gold bugs.  The same way Bernanke uses fiat-Hopium for Wall St clansmen.  Same intent, different brands of Hopium.

Fri, 03/01/2013 - 13:45 | 3290866 LawsofPhysics
LawsofPhysics's picture

What the "official" policy is with regard to 99% of this is irrelevant so long as fraud is the status quo.    As to the question "Can you walk into an appliance store an buy a refrigerator, dishwasher and washer/dryer with a few ounces of the ancient barbaric relic?" - Ask yourself, would someone readily share the fruits of their labor with you for an ounce of gold or silver?  Common sense will prevail and the thining of the herd will be painful no matter what the "official" policy is.

Fri, 03/01/2013 - 13:45 | 3290871 balz
balz's picture

I prefer black text to gray text.

Fri, 03/01/2013 - 13:49 | 3290886 NoWayJose
NoWayJose's picture

The only way gold will NOT hit $5000 is if Congress comes up with a credible plan to cut entitlements. And that does not look like it will happen anytime soon.

Fri, 03/01/2013 - 13:53 | 3290900 ParkAveFlasher
ParkAveFlasher's picture

Rickards on ShitCo via Silver Pumpers:

I don't normally drop video links, but when I do...

Fri, 03/01/2013 - 18:36 | 3291901 AGuy
AGuy's picture

"The only way gold will NOT hit $5000 is if Congress comes up with a credible plan to cut entitlements"

Peak Oil will prevent any effort by Congress to correct the budget problems. The Bull market in Oil is still just beginning and will probably end with a bang: WW3.


Fri, 03/01/2013 - 13:49 | 3290888 Bay of Pigs
Bay of Pigs's picture

And then you have this. Sure appears someone wants more gold and silver.

China Silver imports climb 36% y/y to 152 tons in January

Fri, 03/01/2013 - 13:53 | 3290897 sitenine
sitenine's picture

Happy sequestration day! Gold is back to parity with platinum as I type. The fucking wheels are coming off folks. The only thing you have to know now is, "if you don't hold it, you don't own it." Act accordingly.

Fri, 03/01/2013 - 13:53 | 3290899 davidsmith
davidsmith's picture




 Precedent won't matter; survival of the State and its Elites will trump every other consideration. 


Glad someone finally gets it.  Overthrow the U.S. Government NOW!






Fri, 03/01/2013 - 15:25 | 3291227 Kirk2NCC1701
Kirk2NCC1701's picture

And yet, ironically enough, all too many are still opposed to Obama and his path to the End:  Spend into oblivion, to achieve hyperinflation and the end of USD as the GRC. 

Blow it up till it goes 'pop', I say!  That way, gold bugs (me too) can see gold go to levels where we can swap it for fiat, which we then immediately swap for other real assets ('Tara'!).  Isn't that the real dream?  Otherwise, why wish for higher valuation against the fiat currency you supposedly don't approve of or 'believe' in?  Riddle me that:  Why DO you believe in $5k or $10k gold, if not to cash it into fiat?  And then what!?

Fri, 03/01/2013 - 18:47 | 3291929 AGuy
AGuy's picture

"And yet, ironically enough, all too many are still opposed to Obama and his path to the End"

Not really, because the GOP also caused the debt to run up too. the GOP also did nothing to prevent the housing bubble, block banking deregulation (Glass-Stegall). GOP also supported Bush's "Nation building" Effort in the occupied ME nations.  Obama is just following the playbook handed down by Bush and previous adminstrations.


"That way, gold bugs (me too) can see gold go to levels where we can swap it for fiat"

Consider if: gold ownership is taxed like property taxes: (ie you own $500 per ounce of gold per year) and the capital gains tax goes to 90% or 95%. Since very very few Americans own gold, you can guarentee the gov't and bankers will target PM ownership sooner or later. Its not if there would be mass riots in the streets if private gold was confiscated.



Fri, 03/01/2013 - 14:02 | 3290936 Hobbleknee
Hobbleknee's picture

Since when is 30 years a short period of time?  It's a third of a lifetime!

Fri, 03/01/2013 - 14:14 | 3290982 NoDebt
NoDebt's picture

Half a lifetime if you smoke.  Puff puff.

Fri, 03/01/2013 - 15:17 | 3291209 McMolotov
McMolotov's picture

A fourth of a lifetime if you drink. At least that's what I tell myself.

Fri, 03/01/2013 - 14:06 | 3290946 farmboy
farmboy's picture

Simple, A capital gain tax and start value at 300 $ per ounce, terorrist labelling, mandatory exchange at state oulets for a "paper " value, a wealth tax of 5% at least on assets, citizen revolt, break down of society as we know as the haves are outnumbered by the don't haves, retirees living on wortheless fiat money etc.

Fri, 03/01/2013 - 14:34 | 3291058 TBT or not TBT
TBT or not TBT's picture

Exactly. Gold can be confiscated. Commerce can be controlled thanks to digital control of money and transactions. The mark of the beast. We all have one. Except for the illegal aliens.

Fri, 03/01/2013 - 18:58 | 3291948 AGuy
AGuy's picture

" A capital gain tax and start value at 300 $ per ounce"

Better yet. Yearly property taxes on PM's Say $250 per year per ounce of Gold, or $10 per ounce of silver? Seems fair, right? </SARC> You pay property taxes on real estate, perhaps your car. Sooner or later they will figure it out and start charging property taxes on other assets such as PMs.


" haves are outnumbered by the don't haves, retirees living on wortheless fiat money etc."

Yup. Happens everytime in Socialists states. Socialism feeds on other people's money (OPM). Sooner or later,  they run out of other people's money and start eating the seed corn. "USA, land of the free" died in 1964. Its is place was born the Socialist states of America. "One nation, under Marx, redistributing Weath, wih no liberty and Justice for "Just Us"




Fri, 03/01/2013 - 14:06 | 3290949 Thisson
Thisson's picture

Hard to take an article like this seriously when it includes the statement that higher interest rates could be a factor in increasing the price of gold.  Gold increases in price as interest rates decline!

And do you really think that retirement assets with a US custodian will be immune from an Argentinian-style confiscation?  Because I don't!

Fri, 03/01/2013 - 14:32 | 3291045 Dr. Engali
Dr. Engali's picture


Fri, 03/01/2013 - 14:30 | 3291046 dhengineer
dhengineer's picture

Friday night:  "Everything is going according to my long-term plan!"

Monday morning:  "Huh? Where'd my money go?  Whaddya mean I'm broke?"

Fri, 03/01/2013 - 14:50 | 3291111 SilverRhino
SilverRhino's picture

That's EXACTLY how it's going to go with millions of Americans on one fell weekend.

Fri, 03/01/2013 - 15:14 | 3291199 Whiner
Whiner's picture

Gold took off during CArter-Volker. Gold more inversely correlated to dollar printing, debt expansion, panic -fear

Fri, 03/01/2013 - 15:23 | 3291234 Pareto
Pareto's picture

I was thinking the same %^%$* thing!  But, gold actually did rise during the Volker years when he started reigning in inflation - rates rose as did gold, but, not commensurately or with any cause and effect type relationship.

Fri, 03/01/2013 - 17:26 | 3291694 chubbar
chubbar's picture

Not true Thisson, It is about what REAL interest rates are doing. If inflation is 10% but interest rates go up to 5%, you still are negative 5% and gold is going to climb because it makes more sense to hold gold than a debt instrument that pays 5% less than the devaluation of the currency! Of course the U.S. defaults on its debt at 5% interest rates, probably not going to increase the confidence in the FRNs.

Fri, 03/01/2013 - 17:26 | 3291695 chubbar
chubbar's picture

Not true Thisson, It is about what REAL interest rates are doing. If inflation is 10% but interest rates go up to 5%, you still are negative 5% and gold is going to climb because it makes more sense to hold gold than a debt instrument that pays 5% less than the devaluation of the currency! Of course the U.S. defaults on its debt at 5% interest rates, probably not going to increase the confidence in the FRNs.

Fri, 03/01/2013 - 14:07 | 3290951 KingdomKum
KingdomKum's picture

we few,  we happy few,  we band of silver holders  .  .  . 

Fri, 03/01/2013 - 14:12 | 3290974 dhengineer
dhengineer's picture

The question in my mind is "Why have a "retirement" account at all?"  Why not just invest in PM's, private loans/notes, raw land, and foreign securities outside the traditional IRA or 401(k) framework? 

Anyone investing in a Roth account has already given up the so-called tax advantage now, and has no idea of the tax rates in 10 or 15 years when the money comes back out. 

If you put money into a self-directed retirement account, you get a tax break today, but you will pay taxes on every dime that comes out in the future, and, as the article points out, the rules for administering the account are very difficult to comply with.  Maintenence of the assets of a self-directed account have to be paid out of the money already in the fund.  Plus, you need a trustee to oversee the account since all assets have to be held at arm's length.  This also means that you cannot invest in a vacation home that you intend to use for your own personal vacation.  I looked into setting up such an account, but decided to forego it in favor of holding my "retirement" funds in regular accounts without outside trustees, who take hefty fees for their services.  If the feds decide to do a grab, they just have to stop any withdrawls or transfers from these accounts, and then you are royally screwed.  Self-directed or traditional, "retirement" accounts are traps.

If you want to invest for retirement, buy PM's and hold them yourself.  Buy land through a blind trust.  Lend cash to worthy borrowers and hold the notes, charging enough interest to cover the risk and provide an after-tax income that would be higher than funds held in retirement accounts.  Buy a small retirement or vacation home overseas.  If you have enough cash, look into buying a citizenship from any number of countries around the world.  But don't pour money into an account that the gummint can shut down overnight.

Fri, 03/01/2013 - 14:20 | 3291000 sitenine
sitenine's picture

Maybe it's not right for everyone, but I have found that the best retirement plan is to start your own business (while also purchasing PM when able).

Fri, 03/01/2013 - 14:26 | 3291029 dhengineer
dhengineer's picture

Fat-finger duplicate...

Fri, 03/01/2013 - 14:26 | 3291030 dhengineer
dhengineer's picture

Exactly, especially if it caters to the needs of aging Boomers.  Anytime you can develop alternative streams of income you are way ahead of the game.

Fri, 03/01/2013 - 14:42 | 3291089 NoDebt
NoDebt's picture

DH- a Roth is when you pay the taxes NOW and get the money out later tax-free.  You're thinking of a "traditional" account where you avoid the taxes now but have to pay them when you make withdrawals later.

Roth account is a good idea..... right up to the point the government says "Sorry, Charlie, we're taxing it on the way out now, too.  Double taxation is the least you can do to support your loving government."


Fri, 03/01/2013 - 15:17 | 3291210 dhengineer
dhengineer's picture

You are correct.  What I meant is that a Roth is funded with after-tax money, so you get no write-off now, as you do with a traditional IRA.  And, as the laws stand today, there is no tax on the withdrawl, since you already paid the taxes on the money.  HOWEVER, if the gummint decides that they need your money, they could very well impose a new tax or some kind of fee, when you withdraw your money. 

Fri, 03/01/2013 - 14:12 | 3290975 mmadeel
mmadeel's picture

When yer 60

Fri, 03/01/2013 - 14:20 | 3291006 lotusblue
lotusblue's picture

Yet another FEAR driving article.My sheep are driven the same way by my dogs.

Fri, 03/01/2013 - 14:22 | 3291012 Canadian Dirtlump
Canadian Dirtlump's picture

Uncle Sam looks to be a silver bug in that picture, based on my recurring irish sunglasses and unusually large recurring dental bills. I keep telling the cops I fell.

Fri, 03/01/2013 - 15:31 | 3291251 Kirk2NCC1701
Kirk2NCC1701's picture

"unusually large recurring dental bills". 

Ha, I know of someone near & dear to me, who achieves the same thing with 2-digit copays!  Company insurance -- with a clever twist.

Fri, 03/01/2013 - 14:23 | 3291021 rsnoble
rsnoble's picture

How can the majority of people who have taken huge pay cuts have a self-directed retirement acct when they have to hand the fucking clowns at the courthouse $3-$5k yearly in real estate taxes so that those elite peasants can have a retirement?  What are they going to direct? Pennies?  No because they're getting rid of pennies.

In this new age the majority have 2 choices: work till  you cant and die or #2 live in a fucking shack and eat like an ethiopian and save all  your $.  Your choice.

Fri, 03/01/2013 - 14:25 | 3291025 rsnoble
rsnoble's picture

Oh and save me the speech about what people should be doing and how you're doing so well.  I said "majority".  That's why none of this bullshit is ever going to work and this place is going to turn into a huge Detroit.

Fri, 03/01/2013 - 14:27 | 3291034 the not so migh...
the not so mighty maximiza's picture

FTW in a fucking shack and eat like an ethiopian and save all your $

Fri, 03/01/2013 - 14:26 | 3291028 FranSix
FranSix's picture

SD accounts probably come out of frustration with the initial crash in the Nadaq. We have been in a bear market for equities since then. Mostly these accounts would have been poached already by abolishing the 'no-down-tick' rule allowing short sales in any asset as long the proceeds are suitably hedged. Mostly that hedge would be treasuries.

Fri, 03/01/2013 - 14:46 | 3291067 NoDebt
NoDebt's picture

OK, given that this is close to what I do for a living let me point out a couple things you might want to know.

1.  If you're self-employed (1099) you can open up a personal 401k any time you want.  Call up TD Ameritrade, or Schwab or whatever low-cost custodian/trading house you like and they'll hook you right up.  You can trade anything you want as long as that institution can clear the trade for you (including international investments, but not physical gold, real estate, etc.).  It's the easiest route to victory and the one I use personally.  You can find custodians that can handle physical as well, if you look around.  BASIC CONCEPT:  An IRA with higher yearly contribution limits and no income limitations.  No matching contributions, though- you can't self-deal like that in case you were wondering, you sneaky bastards.

2.  I don't care how you set it up, if it's a 401k or any type of tax-advantaged retirement account the IRS knows EXACTLY how to find it and enforce their rules.  The article mentions setting up a trust in the US as a requirement, which it is.  So....... I don't care what you do after that or where you put that money with what custodian on-shore or off.... they will find it.  IF YOU THINK THIS WILL SAVE YOU FROM THE GOVERNMENT FORCING YOU INTO A 50% TREASURY BOND ALLOCATION YOU ARE SMOKING CRACK.  It's still a US-based trust.  They're still all over your ass.  And God help you if you're invested in a lot of illiquid physical assets the day they tell you it's time to turn half of them over to the government to get your required Treasuries RIGHT FREAKING NOW.

I mean seriously, do you really think this Rube Goldberg do-it-yourself 401k is going to shield you from the IRS when the SHTF?  Really?

Do something constructive with your time.  Work on a way that we can avoid it ever actually coming to shit like this.

Sat, 03/02/2013 - 11:12 | 3293328 Wave-Tech
Wave-Tech's picture

How about becoming your own banker, here is an interesting and legal concept to research.

Fri, 03/01/2013 - 14:46 | 3291101 ultraticum
ultraticum's picture

Anybody had any luck finding a good alternative IRA custodian?  If so, please do let us know. 

Most of these firms are small, not very transparent about fee structures, and for whom bad online reiews can be found.  Forgetting about the merits of IRAs for now, am trying to get mine into an IRA LLC . . . need to find a good, inexpensive custodian. 

Fri, 03/01/2013 - 14:49 | 3291110 shovelhead
shovelhead's picture

^ Loves to sit on Uncle (Sodomite) Sam's lap.

Prudence and foresight planning is not fear.

It just looks that way to the gullible.

Fri, 03/01/2013 - 15:33 | 3291259 Totentänzerlied
Totentänzerlied's picture

NO CHARLES. Imagine the USA at $50/gal gas (still well below its true value as a substitute for human labor), hell, $10/gal would do it, even oil over $90/bbl will do it over a few decades.

Fri, 03/01/2013 - 15:34 | 3291268 Kirk2NCC1701
Kirk2NCC1701's picture

I love my SD (Self-Directed) IRA.  They are AWESOME, IF you know what you're doing.  I assume that, as astute ZH types, that you DO know what you're doing, right?

Fri, 03/01/2013 - 15:53 | 3291311 Just Observing
Just Observing's picture

I don't know what America would look like with 5,000 buck gold, but MY NET WORTH would look a heck of a lot better...ahahahahaaaaa


And as for walking into an appliance store and buying with a couple ounces ?

When I remodeled my kitchen, the granite countertop guy was more than happy to take Gold Eagles in payment.

Fri, 03/01/2013 - 16:02 | 3291353 hankwil74
hankwil74's picture

The more expensive gold gets, the harder it is for someone to "corner" the gold market and cause a disconnect between physical and paper gold.  It is going to take a very large country (China, India) to stop taking dollars for to cause a real disconnect between physical and paper gold.

Fri, 03/01/2013 - 16:18 | 3291412 the grateful un...
the grateful unemployed's picture

gold rises in value, and the money shows up in the personal savings column. this creates a whole new surge of collateral, money which can be used to borrow more money. The Fed can either continue to fight this surge in real collateral with their phony electronic collateral (which only benefits the big banks, who aren't lending the money.)

Or the Fed can restrict credit to tamp down the surge in borrowing associated with the new collateral, since the banks aren't lending, the problem they cause by restraining an already weak recovery isn't the big problem we think it is. or they do a little of both, with an end to make their phony collateral look as good as the real kind so they can continue to monetize government spending.

restrictions on lending are one of the tools in the Fed chiefs toolbox. it seems obvious that collateral is collateral, and if it begets economy activity, then it must be a good thing, except for the government monetization problem, and the problem that wealth through gold, like any currency moves through the economy much slower than credit, which is money on steroids.

Fri, 03/01/2013 - 16:56 | 3291566 Gimleteye
Gimleteye's picture

I am a bit puzzled by some things--I get why we price Au in dollars, it is an easy way to get some handle mentally on its value BUT if fiat will be so degraded that AU=5k, or more; why would anyone take fiat NOW to exhange for gold  why not take--I don't know--ammo or food, go straight to bartering? If I bought 1000$ worth of silver for example, I am giving the silver dealer paper that (as is implied by the very act of buying silver) will be worth less and worthless in the future.  Whay does the silver seller take the fiat? Regardin the IRAs, if I take all my fiat out, pay the tax hit (passed the penalties years ago) and have a pile of cash, wouldn't that be better in the near term--ie spend the cash on useful things, like food, land, ammo, etc.? Help me understand these things, okay?

Fri, 03/01/2013 - 17:00 | 3291582 dark pools of soros
dark pools of soros's picture

by the time they let gold go to $5000 bread will have already past that for months

Fri, 03/01/2013 - 17:38 | 3291729 Kirk2NCC1701
Kirk2NCC1701's picture

Probably true, DPOS.  Also, ever notice the great irony of some ppl who buy gold because they allegedly don't like or trust the fiat/paper-money, but rejoice or moan with the price fluctuations of gold? 

If they are genuine, what would it matter?  If it goes up, they plan to do what?... sell if for more of the hated fiat?  And then what?  You get the sense that they are actually treating it like a speculative stock, than a true store-and-forget item of value.

Fri, 03/01/2013 - 18:10 | 3291816 Jeepers Creepers
Jeepers Creepers's picture

I don't think they'll just march it and take over retirement plans, much easier to just inflate it away and keep the proles on the couch with their Cheetos.  And then blame the high prices for food and gas on the EVIL corporations that are gouging you, not the evil politicians that are buying votes.

Fri, 03/01/2013 - 23:10 | 3292497 BuckShotJones
BuckShotJones's picture

Can I invest in Eurozone horse meat -  free of government intervention?

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