American families are now battling a 2.7% inflation rate this year.

Inflation jumped 1.6% just this week. Have you bought gold yet?

This was the biggest drop since 1990. The administration is saying the consumer spender will lead us out of the recession.

With 15.3 million unemployed, the jobless consumer spender? With a 2.7 percent rise in the consumer price index? With energy prices during this cold winter shooting up 18.2% – the biggest rise since ‘79?

Though as Theresa Bryan told the Assoicated Press when they asked her how she had been affected by inflaction, “”I don’t notice anything because I’m so broke.”

Sri Lanka purchased 10 metric tons of gold from the International Monetary Fund today.  The purchase was made with SDRs, the IMF’s currency denomination, but the price is equivalent to about $375 million.

Sri Lanka is cointinuing the trend among Central Banks this year, who are snapping up gold as soon as it becomes available. India and Mauritas have also purchased gold from the IMF this fall, and China and Russia have both increased their gold reserves substantially this year.

Don't be like this guy

Congratulations! You made the choice to rollover your 401K! The last thing you want is to lose more than half of it to taxes. Watch out for these pitfalls:

1. The Same Property Rule – If you take a rollover distribution from your 401K in a certain asset class, you need to reinvest into the new retirement vehicle the same amount and type of asset. For example, if your 401K is distributed to you in cash, you must roll cash into the new account. You cannot take the cash and buy a mutual fund and then put the fund shares in the IRA.
2. The 60 Day rule – Once you take the rollover distribution, you have only 60-days to invest that money in a qualified retirement account. If you miss this deadline, the IRS will be at your door. 60 days may seem like a lot of time, but the Employee Benefits Research Institute reports that 60% of people who take an early distribution do not get it into another qualified account within the time limit.
3. The 12-Month Rule – You are only allowed to do one rollover from or to an IRA within a twelve month period. The exception to the rule is a conversion from a traditional IRA to a Roth IRA.

A 401K Rollover can be complicated to do on your own, especially as most Americans will only have to do it once or twice in their lives. You may want to check out our information on IRAs and 401Ks. Many people don’t even realized that they can own a gold IRA.

The Reserve Bank of India (RBI) is in talks with the International Monetary Fund to purchase the remaining 201.3 tons of gold that the IMF has offered for sale. However, there may be some competition as other Central Banks look to strengthen their reserves.

An Indian government official stated

RBI is an independent body, and the government does not interfere in its affairs. It will get the gold if its bid is successful and at the price it has offered.

The RBI purchased 200 tons three weeks ago from the IMF and already has seen a gain of $800 million from that investment!

Today Bloomberg surveyed the most accurate dollar forecasters in the world to try to discover when the dollar will bottom out. The problem? None of them know. They don’t know how far the dollar will slide, or when we can even determine we have hit bottom.

Even when the Fed prepares to raise interest rates and curb money printing, they believe the dollar will continue its downward trend for some time.  If you are holding gold, take comfort that you will be protected through the dollar’s slump. Here is what the experts are saying:

Camille Sutton of Scotia Capital

The dollar will lose the near-term race for interest rate increases and then lose the long-term race.

The consensus from the Bloomberg survey is that the Fed will not raise rates until at least the middle of next year. Which is further bad news for the dollar, according to Callum Henderson of  Standard Chartered:

History tells us the dollar shouldn’t start rising on a sustained basis until 12 months after the Fed starts to lift rates. It’ll take time to drain the oversupply of dollars from the market…The dollar will remain weak until the Fed’s rates rise above the competitors’…If the apex of the crises were in 2001 and 2008, then dollar weakness will last into 2011.

So, what is this “growth” that has been reported by the media? Gernot Griebling, of Stuttgart Bank:

Financial markets and equity markets have been too optimistic concerning economic growth next year. Risk aversion should rise again.

Are you leaving your job? One loose end to tie up is handling your 401K. You generally have three options.

• Cashing out – take the money and run. Or more likely, cash out and possibly be penalized by taxes and fees. If you are under 59 1/2, the penalty alone will be 10% of the total.
• Let it sit. Some people even forget they have old 401Ks! If you do let it sit, log in every year and readjust your fund allocations so that your level of risk and exposure is balanced to your comfort level.
• Roll it over into an IRA. This is probably your best option!

IRAs have many, many advantages to 401Ks. For example, in a 401K your investment opportunities are extremely limited. You may only be allowed to invest in a select number of funds, and even then there are tons of hidden fees.

With an IRA you can have the security of a precious metals in your retirement account. You can invest in stocks, cash, mutual funds, gold, and even real estate in an IRA. Gold in an IRA is one of the best ways to prepare for retirement by providing you a safe inflation hedge as well as high returns. You can’t hold gold in a 401K but you can in an IRA.

IRAs have more relaxed withdrawl rules for both emergencies and major financial decisions than a 401K would. For example, a first time home buyer can take a withdrawal to put towards the cost of a down payment from their IRA without penalties (there could be some tax payments involved, consult your accountant if you’re considering this), but 401Ks do not offer the same advantages.

Many investors are hoping that the current stock market rally signals the end of the recession and a return to business as usual. They are expecting a profit-filled decade, just like what followed the 1982 rally.  David Rosenberg and Barry Ritholtz have put together the above chart.

It reinforces the theme of one Forbes article, titled “Don’t be a Sucker, Take Your Gains.”  Forbes says that the rally is over.

Odds are the huge rebound since March has run its course. And even though it yields nothing, it’s time to raise cash.

We do disagree about cash, though. Why have your money sitting in a savings account, slowly eroded by inflation, when you can buy gold, which has already gained 33% this year?

Adding another nail to the US dollar’s coffin, the Central Bank of Iran publicly stated today that the nation made an extra $5 billion simply by replacing US dollars with euros in its currency basket.

This news could cause more developing and developed nations to drop the dollar for something more stable and more valuable, quickening the dollar’s decline. This news may even cause American households to diversify their savings into something more stable like gold. As large institutions like Central Banks and hedge funds move out of dollars, it is a sure sign of further instability for the currency.

Iran had been planning the switch since 2005 and began enacting the plan in October of 2007. They succeeded in selling 85% of oil in euros, and have limited sales with the US dollar to only 15%, which they are also seeking to perform in a different currency. “Iran has considerably reduced the total of US dollars in its currency basket,” Mahmoud Bahmani, the Central Bank Chief, said at a bankers’ seminar in Tehran.

A number of new reports are coming out next week despite the holiday that may affect markets. Existing home sales will be reported on Monday. Economists are betting that the extension of the tax credit may lead to an increase in sales. New home sales will be reported on Wednesday.

The big data coming is the Consumer Confidence Index, which will be released on Tuesday. President Obama recently spoke about the importance consumer confidence plays in the economy. Last month the numbers came in lower than economists expected, which contributed to the spike in gold’s price as more investors feared pullbacks in the stock market.

Gold prices are holding well above $1100/oz right now. At the time of this post, today’s gold price is at $1152.80/oz.  Gold’s support remains broad, with large and small investors alike strengthening their positions in the market.

While we may have long been suspecting the truth, a government report has gone ahead and confirmed it: CEOs are cutting retirement packages for themselves while stiffing their workers’ pensions. The Government Accountability Office (GAO) has studied the top ten companies whose underfunded pensions were given to taxpayers to pick up the tab through the Pension Benefit Guaranty Corporation (PBGC). The PBGC is running a $22 million deficit, if you recall.

The results are disgusting. “Together, the 10 companies underfunded their pension plans by more than $11 billion affecting 200,000 workers. But their executives drew a total of $350 million in compensation,” reports CBS news.

Here are two particularly awful situations:

At the very same time pensions were drying up for 122,000 United Airlines workers, its top executives were cutting deals to make their own golden years comfortable and secure. CEO Glenn Tilton, CFO Frederic Brace and COO Peter McDonald together got $7.6 million worth of retirement benefits in four years – from 2002 to 2006 – and earned a combined $55.5 million compensation, with perks like a car and driver and country club memberships.

Reliance Group Insurance underfunded its plans by $121 million in the five years before it failed. But its top management brought home $70 million in salary, bonuses and benefits. Chief executives Robert Steinberg and George Baker used the corporate plane and helicopter for $200,000 worth of personal travel. That included family trips to China, Greece and Hawaii.

Aren’t you relieved some investigating is going on? Too bad it didn’t occur before the companies were allowed to dump their funds on the taxpayers! This type of widespread corruption is occurring all over companies. It’s horrible for employees, and it’s horrible for shareholders. One way to protect yourself as a shareholder against lossess as CEOs are paid despite falling stock prices is to diversify your portfolio. Gold is no one’s liability. It is the perfect place to store wealth because it’s not an entity that can defraud it’s employees or it’s shareholders.