Retirement Can Still Be Golden

Cindy you and aftershock should be acknowledged for getting it right on the 2008 Crash and Real EState Avanlanche. If you were shorting market back then you should be rich now...not sure why you need to ask/predict/accept as fact that end of world is coming to the financial markets/real estate. Not sure if you and authors realize the lunacy that we would all live in if your predictions materialize...be like what would it be like if dow went to 40,000 with low inflation and everyone making money growing it on trees.....it would be too good to be true. YOur scenario is too harsh to imagine. YOu really believe end of the world? if so, why are you writing you should be out partying!

I don't think Cindy is predicting the end of the world.

They are however saying this will be the end of the world as we know it and I feel this will be true.

While NO ONE can predict the future with 100 percent certainty you will most likely see the late 70's/early 80's only in hyperdrive.

Big inflation, big rises in gold and silver and then big double digit interest rate increases which will cause a major collapse in the real estate markets as well as the stock markets.

The only difference between then and now will be the US government will probably default on it's debt since we owe the world so much money vs. the world owing us so much money 30 years ago.

I will say however that while Aftershock states "Gold will be a good investment for many years to come", I think once interest shoot higher then the rate of inflation that may be a good time to dump pm's and start buying cheap real estate and dividend paying stocks.

I hope you can suggest the safest way to convert dollars to physical gold without leaving any records, while avoiding risk of being cheated. How do I tell which are legitimate coin dealers? I need info for the Houston area. I believe you are right, just asking how. Thank you!!

I too would like to know how exactly do you go about buying gold and not get ripped off.

How to buy gold without getting ripped off? Check the spot price. Then, if you're buying American Eagles, you should pay between 3.5% and 5% above that, depending on quantity. That's if you're buying one ounce coins. The fractional coins have a bigger mark up, up to 20% over spot, any you may only get 5% over when selling, so stick with the one ounce coins if possible. Those are a good deal, especially when you can usually sell them back at 1-2% over spot. No records are kept unless you pay with more than $10k in cash. Buy at least $1000 at a time or you may owe sales tax. if you sell to a dealer, certain quantities require them to issue a 1099. Even if they don't, you will have a capital gain (if you make money) tax due, and the rate may be higher than other capital gains. Check with your tax advisor.

Gainseville Coin sells gold at the best prices i've seen online.
I have used them and am satisfied.
wwwDOTgainesvillecoinsDOTcom

Thanks for your comments everyone. Larry is correct that we are not predicting the end of the world. The worldwide mega-recession will create a difficult situation for years to come, but we will get through it as we have many difficulties before. If you haven't already, you can download the Aftershock "Bonus Chapter" on the book's Amazon page, which offers more details on what the post-Aftershock economy will look like and the opportunities for the future.

http://www.amazon.com/Aftershock-Protect-Yourself-Financial-Meltdown/dp/0470918144/ref=cm_cr_pr_product_top

As for buying gold, we can't recommend specific dealers in this forum, but you can email Bob Wiedemer, one of our authors, at Bob@theforesightgroupinc.com for suggestions on this. Either way, be sure to research a company before buying. You can check with the Better Business Bureau to see if there are any registered complaints.

In your 2nd Edition book, I didn& 39;t see any information regarding liquidating savings bonds versus allowing them to mature.

Ilene,
For bonds, we generally recommend short-term only. Anything maturing more than a year or two from now will likely take a heavy hit from inflation and rising interest rates. You'll have to take a look at your specific situation and consider the costs of liquidating, as well as the advantages of gold or short-term euro bonds. As always, check with your financial advisor before making a move.

Hi, I'm a 53 yr old baby boomer how much of my net worth should be in gold/silver, right now I have aprox 11% in coins/bars and another 5% in ETF's and mining stocks. I'm just curious what you think is a good mix.
I'm accumulating a lot of cash now and it's making me nervous if we have a bout of high inflation but I don't want to get to much into gold/silver since it has a tendency to fall in price fast.

On the discussion of buying gold, what are the risks on using an ETF like GLD vice buying gold coins directly?

I'm currently dollar cost averaging out of stocks using GLD. Also, I'd like to start adding silver, since I'm only holding gold and feel better with some diversification in that class. Thanks!

Sean,
We can't give specific investment advice in this forum (SEC rules), but we predict a long-term upward trend for gold with volatility in the short term. It's worth noting that we are already seeing the effects of inflation (up to 3.9 percent, according to the conservative calculation of CPI), which bodes well for gold and poorly for US dollars.

If you're looking for specific advice regarding your situation, you may be interested in our private consulting service. The link is at the top of this page. Thanks.

Rich,
Gold ETFs like GLD and IAU are fine ways to invest in gold. The downside is that they are not 100 percent backed by physical gold (some of it is "paper gold"). There is also PHYS, which is 100 percent backed by physical gold but is traded at a premium.

In the long term, you may want to consider transitioning to physical gold and silver bullion, but in the meantime ETFs will track the price quite closely.

What do you recommend doing with Series EE Savings Bonds?

I'm not understanding why you recommend "staying away from long-term bonds and all fixed-rate investments (including whole life insurance)." I understand getting out of stocks, but wonder what the reason is for avoiding fixed rate investments and whole life.
Thanks.

Tom and Nancy,
The problem with fixed-rate bonds is inflation, which has already tripled in the past year to 3.9 percent and rising. When interest rates don't keep up with inflation, you're effectively losing money even if the dollar value goes up. Even with inflation protected securities, like TIPS, you have to be concerned about default in the long term (though they should be okay in the short term).

hello, If we are liquidating because it's getting close to losing a lot of money,,I want to no where to put cash to get it out of danger??? Where it is safe? If banks fail, do they have to let you in to your safe deposit box?? Thanks

Alexander,
Cash in demand deposits (i.e. checking accounts) will be safe, although depositors may find themselves suddenly the customers of a different bank. Even less liquid forms of money (savings accounts, CDs, etc.) will probably be bailed out by the government in the early stages. Only after inflation reaches truly damaging rates will the Fed likely decide to end such bailouts. A safe deposit box is your possession; that won't change. All of this is still a few years away though, so there's no rush.

Hello, Sorry, I forgot one question if that is ok and I am sure that it applies to alot of people. If you have a 401k, where is the safest place to put money or is it better to pay the penalty and withdraw it since the safest place should be a money market, but if it& 39;s not a money market account but a mm, like prime federated obligations mm? It appears that anyone who is in a 401k is playing Russian roulette without having CD& 39;s offered to the participant for a safe haven!! Thanks Alexander

I am an attorney. What are the areas of law you believe will be in demand leading up to and after the Aftershock? I realize bankrupcy is an option, but as you mentioned, when everyone is broke, there may not be the need. Please advise. Thank you.

Our financial advisor has recommended a mutual fund (MFS Funds) that buys corporate (U.S.) bonds. We are 60 & 62 and don& 39;t have lots of years to wait for a market rebound, so we are thinking of rolling over some of our IRA funds out of the market and into something that& 39;s safer, without triggering a tax event. He tends to be a market "cheerleader," so we wondered about your perspective. Two questions: Considering the current economic climate, what do you think of such a fund?
Is there some other tax protected place that would be better to roll over into? Thanks very much for the help.

Government DB pension plans...specifically CalSTRS...in the book you recommend cashing them out? I understand the principle, that I have no control over what they invest in, but it& 39;s such a mind bending proposition, with a relatively low cash out.

Alexander and Cheryl,
We hesitate to recommend cashing out, but in the case of pension plans that are invested in the markets, you may not be able to count on them when you need them. In the case of 401Ks, it's not so much a matter of the institution where they're kept but rather the flexibility to invest in safe positions. As always, due diligence is important and discussion your situation with a financial advisor is recommended.

Hi David,
In addition to bankruptcy, debt collection, foreclosure, and anything dealing with business restructuring should be in demand.

Gerri,
We have to be careful about giving specific investment advice in this forum (SEC rules). Generally speaking, right now we prefer the relative safety of government-backed bonds, particularly short-term Treasuries and inflation-protected securities. This will change as things progress. Active management is a must.

We offer a general overview of investment options in Chapter 7 of Aftershock 2nd Edition, and will be coming our with our next book, Aftershock Investor, later this year. You can also look at the services we offer at the top of this page if you're interested in a more in-depth look at your situation.

FOR Gerri who posted on: February 15, 2012

I bought MFS Utilities fund several years back - it's been a real dog, I'm hoping to find a break even point and get away from it - the aftershock book seems to have some good advice as well as Robert Kiyosaki - - just my 2 cents worth - good luck

Dear Aftershock Team,

Hi, I have an Inverse ETF x 3 [FAZ],

already down 50%...Should I cash out and

go into Gold now with QE3 expected?

Or do you think I should hold for 2012.

Thanks so much !!

Thanks to Jack and the Aftershock Team for the feedback. It's nice to have a place to do this Q&A. Appreciate the forum.

Jun,
Inverse ETFs like that can be risky. When the index is reconciled daily, it may not necessarily reflect the long-term trend. Also keep in mind that while we think the financial market will get hit very hard in the long term, the next year or so could be pretty good for stocks in general (especially as we see more money printing, which will likely be effective in the short term at reinflating the bubbles, even if it costs us dearly in the long term).

We can't really give specific recommendations in this forum, but it looks like a risky position right now. Proceed with caution.

Thanks Aftershock team.

I am currently in Asia and recommended your book to many ppl which they find it helpful!

I have other questions,

1. When interest rate go up either due to high inflation or bond market, do you think that the gold price would still rise even with double digit interest rate?

2. When dollar collapses, i think you mentioned owning foreign currency, however, arent foreign currencies actually derivative of the dollar? Thus, what i would like to know is that if dollar fails, will other currencies also fail? But then if Asian currencies fail, why would they not continue to bail out us dollar? Buying t-bonds...
Not rescuing us dollar could mean suicide for the emerging market...please ur comment will be helpful

Most of my 401K monies are connected to a certain Fund provider who has limited options for me to choose from. I can move towards Bond funds but what other options should I choose, short of taking it out? I would rather not, seeing the fees were all paid in advance. Will Bonds survive most of the onslaught?
Thanks

You state that IRA's will not be safe in the coming Aftershock. If one isn't able to move into one of your recommended investment areas; what about a money market acct.? Basically no return, but will it be a safe-r place?

Jun,
High inflation will pretty much cripple the bond market, as existing bonds will lose much of their value and issuers of new bonds won't be able to afford higher interest rates. Bankruptcies and write-offs will make lenders very wary of tying up their money even at high interest rates. The result is that gold, as a physical asset and presumed intrinsic value, will be seen as a major safe haven. That and the limited supply will send prices soaring.

Cor,
Difficult call, and there is some reason to hold on to a 401k in the short term. The long term is problematic though. Bonds will be hurt both by high inflation eating away their value, and from defaults. The most solid, short-term and government-backed bonds, and those protected against inflation should hold up somewhat longer than most, but even those are far from risk-free. We can't give specific investment advice in this forum. You may be interested in our consulting or other services listed at the top of the page.

G. Golden,
It's not entirely true that IRAs aren't safe from the Aftershock, just that many of them are in unsafe investments. Those who can put IRA funds into safe investments should come out okay.

Money markets should be okay for a while. The short terms and reliability of their investments give them somewhat limited risk over the next couple years, and when problems do come up with commercial paper and similar investments, the government will bail them out for a while. It's way down the road, when government guarantees don't hold up, that money market funds will be unsafe.

I just finished the second edition of Aftershock. Thanks for the update. Wondering about the financial services sector and how it will fair once the last two bubbles pop? I implement software to all the financial sector to help them assess risk, originate loans, service loans/etc, manage the accounts, detect fraud and ultimately work the collections and recovery - pretty much the entire customer lifecycle. Do you see this sector as standing up or winding down in the aftermath of the last tow bubble pops?

Thanks for addressing my previous question about selling a house vs. a rental house. One question that was not addressed was the rental prices of housing in the future. Do you anticipate the price of renting a house will skyrocket as well?

Tom,
With crashes in stocks, bonds, and real estate, the financial sector stands to be among the hardest hit of all. Certainly it won't disappear, but with little trading happening, and many companies overleveraged to begin with, it's not going to fare too well in the long term.

David,
The nominal price of renting may rise due to inflation, and in the short term rental prices may go up as fewer people can get mortgages. But in the long run, rental prices should follow real estate in general, in that high unemployment and hard times across the board will drive real prices (adjusted for inflation) down.

I've read your latest book with interest and some alarm. You stated that healthcare will endure changes as well and noted that Psychiatrist jobs will withstand the economic blow. I am a psychologist and own a private practice small business. Seven independent contractors work with me but I hold the majority of the risk ( for employees, rent,operational expenses,etc). Given people may lose their health insurance benefits and they may be unable to afford self-pay, I am concerned I may go out of business even though I am in the healthcare sector. I would be interested in your opinion if I should try to sell my business now while I hopefully have the chance. I love my job. I'm about 4 years from retirement.

I work in the Medical Field for the Government. The TSP ( Thrift Saving Plan ) is thier type of 401k. So now that I just finished the portion about what will happen to Whole Life insurance policies and Annuities...If the world tanks...I will loose big time. There is no way to take out the money unless I borrow from it. Then I will have to pay it back with interest...I loose even doing that...Looks Like I will have to stop putting money in and use that money to put else where..

Sandie,
It's a legitimate concern. It's a tough decision to sell a business, but while healthcare is a relatively safe place for jobs, it will still struggle as a business venture. We don't expect a collapse for another 2 to 4 years, but selling a business can be a long process. Be sure to discuss any transition with a financial professional before making a decision.

Richard,
It's a tough situation with limited options to protect your investments. We are working on The Aftershock Investor right now and will look into options for government workers with TSP plans that we can include.

Hello, While money mkts and short term bonds might be OK for now, what will be safe when the dollar bubble finally bursts? Can't put all $ into gold...where should it go?! Thanks.