Analysis by the US Department of Labor shows the dangers of hidden 401K fees:

Assume that you are an employee with 35 years until retirement and a current 401(k) account balance of $25,000. If returns on investments in your account over the next 35 years average 7 percent and fees and expenses reduce your average returns by 0.5 percent, your account balance will grow to $227,000 at retirement, even if there are no further contributions to your account. If fees and expenses are 1.5 percent, however, your account balance will grow to only $163,000. The 1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent.

So, in this example, the additional hidden fee of 1% caused this retiree to lose $64,000!

Unfortunately, many employers are not looking at the cost of hidden fees since they aren’t paying them, you are. Most of the information on the fees is cloaked in difficult language or hidden altogether. Efforts by US Representative George Miller to create legislation mandating investment companies to disclose these hidden 401K fees were blocked by Senator Max Baucus last week. Miller isn’t attempting to cap fees or change fees, all he wants to do is let consumers know what the fees are. Pretty infuriating that his efforts have been stripped from the legislation.

Did you know that you have other options? You can rollover your 401K funds into gold (you can also do this with your IRA or an old 403b). A retirement fund with physical gold holds its value despite vacillating currencies and stocks. You can personally control your wealth without worrying about mysterious hidden fees and the senators lobbying to keep you in the dark.

In a response to a weak dollar and tumbling Euro, Russia is looking to diversify its vast, half-trillion dollar reserves with Canadian and Australian dollars. Russia has already purchased about 5 tonnes of gold this year.

47 percent of Russia’s reserves are in US dollars, 41 percent are in euros, 10 percent in British pounds, and 2 percent in Japanese yen. Russia’s international reserves total $458.2 billion and are the third largest in the world.

The volatility of the dollar and euro are causing officials to look for alternatives. The first deputy chairman of the Russian central bank, Alexei Ulyukayev told Bloomberg, “Adding the Australian dollar is being discussed. There are pros and cons. We have added the Canadian dollar but haven’t yet begun operations” with it.

In a seminar Tuesday, billionaire investor George Soros warned that Europe will experience a recession as a result of the currency crisis. Soros went on to speculate that the 27-nation European Union may even dissolve under the pressure, leading to social unrest.

“Germany is going to smell like roses but (the rest of) Europe is going to be pushed into a downward spiral, stagnation lasting many years and possibly worse than that,” Soros said of Germany’s plan for a 750 billion euro rescue mechanism that emphasizes a high savings rate and a trade surplus.

European banks have struggled to find funding after overleveraging on sovereign bonds of weak countries, according to Soros, and the European Central Bank is stepping in to lend. He credits low interest rate differentials as the reason why German and French banks have bought so many Spanish bonds.

If the EU continues to have no way for countries to leave the union, and no correction mechanism for the euro, Soros believes the outcome could be nightmarish, and he drew parallels to the rise of fascism in the 1930s. “If there is no exit, (it) is liable to give rise to social unrest and, if you follow the line, social unrest can give rise to demand for law and order and (sow the) seeds of what happened in the inter-war period.”

Soros, who holds about 5.5 million shares of the SPDR gold trust in one of the top positions of his hedge fund, further clarified, “In other words, I think a recession next year is almost inevitable given the current policies.”

Sadly, the housing recession is not over. Economists from Fannie Mae, Zillow, and Bob Bach spoke on the four myths that are currently coloring the housing market at a recent National Association of Real Estate Editors conference. The speakers projected that housing values, which have fallen 4.1% year over year, will not reach a bottom until the third quarter of 2010.

The Four Myths are as follows:

1. The recession in housing is over.
2. After prices hit bottom, we will see a return to housing appreciation that matches historical levels.
3. The worst is over in the foreclosure crisis.
4. The homebuyers tax credits saved us.

The analysts cited the huge shadow inventory of delinquent homes as well as the massive increase in foreclosure rates as evidence that the above assumptions are myths. We couldn’t agree more – the housing market has not finished falling, and it will stay flat for several years. 23.3% of single family homes have negative equity, which leads us to believe that foreclosures will continue, leaving a glut of houses in the market to keep prices low.

As this turmoil in the real estate market continues with no clear end in sight, gold remains our favorite investment strategy.

A bill to extend unemployment benefits and provide aid to state governments was defeated in the Senate today, despite President Obama’s pleas earlier this week. The 24 billion in aid would have prevented layoffs of teachers, firemen, and police. Democrats are revising the bill in an attempt to provide funds to the nation’s jobless. Its expected that they will cut out the additional $25 a week that was added to unemployment benefits in last year’s stimulus bill and try to pass a new bill.

Every Republican voted against the bill and Democratic moderates joined them. The final tally was 45-52. One controversial aspect of the bill was its attempt to close a tax loophole enjoyed by investment fund managers to pay for the extension of unemployment benefits. While the very rich typically fall into the 35% tax bracket, investment fund managers only pay 15%. That’s right, not only do they pack in hidden fees to your investments, they are also getting a 20% tax break for doing it! Another example of Wall Street greed triumphing over the nation’s poorest and most in need.

More bad news for Greece - Moody’s Investor Services has joined Standard & Poor in assessing the country’s credit rating as “junk status.” Their rating dropped by four notches, from A3 to Ba1. Though the government of Greece has insisted they will pay their debts, the rating measures the likelihood that the nation would fail and default. A rating of this sort suggests that economists believe a default is very likely.

The country received a massive bailout from the EU and International Monetary Fund in May of 110 billion euro, and will receive a second package in September if the suggested “austerity measures” are implemented. Already strikes have made the news, a reaction to the austerity measures by unions seeing their pensions and salaries slashed.

“There is considerable uncertainty surrounding the timing and impact of these measures on the country’s economic growth, particularly in a less supportive global economic environment,” Sarah Carlson, lead analyst at Moody’s told the Associate Press.

A default by Greece would not be good news for the Euro, especially with Spain and Portugal struggling as well. Household investors in Europe are preparing, as we reported yesterday, there has been a huge increase in German demand for gold Kruggerands.

The month of May brought record foreclosures of US homes – for the first time, every state in the union saw an increase in seized homes. Bank repossessions are up 44% from May of 2009 to a total of 93,777.

Rick Sharga, of RealtyTrac told Bloomberg, “We’re nowhere near out of the woods. We’re likely to set a quarterly record for home seizures if June is anything like May.”

Foreclosure filings have been received by 1 out of every 400 homes in the United States. The ten states with the most foreclosures in May also have very high unemployment rates – California with 72,030, then Florida, Michigan, Arizona, Illinois, Nevada, Georgia, Texas, Ohio, and New Jersey.

While pundits point to leading indicators and call this economic period we are in a “recovery,” it doesn’t feel like that for many Americans, especially the 9.7 % who are unemployed. Gold has historically been a favorite refuge for investors among economic turmoil, and numbers like these signify that the time to protect your wealth with gold is now.

Credit Suisse released a report this month with 8 reasons they are bullish on gold. Their analysts believe gold may spike up to $1400 an oz in the next year.

“We on the global strategy team remain overweight of gold (last October we forecast a $1,200 gold price) – and see the risk that the gold price could rise another 10% to 20%. We acknowledge that our view on gold is more positive than the house view (now under review) – and that there are short-term downside risks (most importantly, a pull-back in worries about sovereign debt). However, we believe the following factors are supportive of the gold price.”

The team looked at a number of different scenarios that Central Banks may enact, as a response to the situation in Greece and the greater worldwide credit crisis. Interest rates are expected to remain low.  Japan and China  are likely to further diversify their reserves with more gold, as gold makes up only 2.5 and 1.6 percent (respectively) of each central bank’s assets. The report also cited general under-ownership of gold and declining mine supply as other reasons for the expected gold spot price increase.

The world’s largest gold coin will be sold at auction later this month. The 2007 Canadian Maple Leap with a $1-million face value is estimated to be worth about $4 million now. It is fifty-three centimeters wide and at 100 kilos, 4 men are required to lift it. The front face is a portrait of Queen Elizabeth while the back is imprinted with three maple leafs, just like the Gold Canadian Maple Leaf coins.

The Ottawa mint created five of these coins back in 2007 to showcase the 99.999 percent gold purity of their regular Maple Leaf coins. At the time, the novelty coins sold for over $2.3 million. The spot price of gold has dramatically risen since then, and a spokesperson for the auction house says, “The starting price will be based on the daily gold rate.”

One-ounce American Eagle Proof gold coins have long been an investor favorite – but unprecedented demand of the bullion has caused the US Mint to suspend production of proofs temporarily. All of the 22-karat gold blanks that the Mint has available are being used for Gold American Eagle Bullion Coins.

Little known Public Law 99-185 is the reason. Public Law 99-185 states that the US Mint is required by law to produce enough coins “in quantities sufficient to meet public demand . . . .” Originally, the Mint planned to only suspend production of the Ultra High Relief Double Eagle to leave enough blanks for the bullion coins. Shortages are therefore exceeding the Mint’s own analysis.