Gold and Silver or a ‘Guaranteed’ Retirement Account: Which Would You Rather Have in Your IRA or 401(k)?

While it is true that mining company stock or warrants provide leveraged returns in precious metals bull markets, they would suffer a decline, at least temporarily, in any stock market plunge and gold-based exchanged-traded funds (ETFs) are not a sufficiently time-tested investment vehicle alternative when you have the opportunity to own the actual metal instead.”

Will We See Future Appropriation of 401(k) and IRAs?

Blasi offers this investment advice because he believes that when one realizes the magnitude of the financial predicament the U.S. might well find itself in shortly, it is conceivable that an appropriation of private retirement accounts (IRAs, 401(k)s, etc) might prove to be too compelling for most politicians to resist.

With an economy and financial system on life support, Blasi says, trillions of dollars of new U.S. debt must be sold to keep up the daily operations of the welfare state. “Unfortunately, the recent match-ups between desperate seller and willing buyer (transparent buyers) have been falling short. As a result, debt monetization appears to be expanding via the growing share of debt auction issuance being taken down by ‘Direct Bidders.’ Consequently, if this continues, a new source of massive funding must be found very soon” he maintains.

“The trillions now invested in private 401(k) and individual retirement accounts (IRA) could well be the source of financing for sagging U.S. Treasury sales” suggests Blasi who asks, rhetorically: “Will the laws and rules in place to protect individuals in their attempt to set something aside for retirement be safeguarded by the representatives elected to advocate for them in Washington? Will the principles and moral integrity of the political class keep them from appropriating the trillions of dollars held in 401(k)s and IRAs? I’m not so sure!”

‘White House Task Force on the Middle Class’ Proposal

Blasi bases his fears on the recent ‘White House Task Force on the Middle Class’, in which Joe Biden discussed the possible creation of so-called ‘Guaranteed Retirement Accounts’ (GRAs) which would provide protection from ‘inflation and market risk’ and potentially ‘guarantee a specified real return above the rate of inflation.’ He is sceptical of the real motives behind any such introduction asking: “Why such a magnanimous gesture? Where would such a deeply indebted public find the extra funds to invest in such a sure fire offer?”  “Forgive the cynicism”, he adds, “but as an aside, should such a creation come to be, what are the odds that the officially declared rate of inflation used to index such a vehicle would fall short of real CPI? Furthermore, is there not risk in having one’s retirement account stuffed with IOU’s that nobody seriously believes will ever be paid off in a currency retaining any semblance of purchasing power?”

Government Motive and Opportunity Behind Proposed ‘Guaranteed Retirement Accounts’

“The motive would be to keep a bankrupt political and economic system going a little while longer,” Blasi believes, while “the opportunity would be that the trillions of other people’s dollars would be ‘protected’ in the hands of Congress. Indeed, unless there is some other massive pool of untapped wealth yet to be discovered, and appropriated, the rumours as to the confiscation of individual retirement monies may have legs!”

Why an Orchestrated Stock Market Crash Might Occur

Blasi goes on to surmise that: “To successfully commit such an assault, it would serve the orchestrators best if a crisis ensued whereby the victims implored the perpetrators for their gracious protection. This point causes me to wonder if an event, or series of events, might transpire that drive disillusioned equity investors to the ‘safety’ of government guaranteed paper.”

“Perhaps, with stocks still selling below their peak of a decade ago”, maintains Blasi, “it would not be particularly difficult, with the assistance of a clueless and complicit media, to cause the public to sour on the ‘stocks for the long haul’ mantra. Maybe just one major orchestrated sell off in the stock market, coupled with some additional high profile exposure of the creepy doings of investment bankers, would set the stage for a major short-term shot in the arm for a beleaguered Treasury and Federal Reserve.”

“If one believes that the deployment of Guaranteed Retirement Accounts are reasonably probable”, Blasi maintains that “then the remaining action item in such a scenario would be to coax the public into personally assuming the debt the rest of the world was refusing to accept,” and asks: “If the beliefs of many regarding activities conducted by ‘The President’s Working Group on Financial Markets’ (Plunge Protection Team) are sound, could not this same entity be utilized for such theoretical events as those described?  Frankly, the possibility that such an initiative might be needed to rescue the Treasury market does add an additional, and considerable, threat to the equity markets.”

Blasi believes that such a substantial sell-off in the equity markets would present a convenient buying opportunity for well-funded international interests at the expense of millions of ordinary investors and would be a natural extension to the play book used throughout the economic crisis, with a slight variant. “Instead of socializing the mortgage and derivative losses of bankers upon taxpayers as has been done of late”, he concludes, “in this scenario, mountains of unwanted debt would be dumped on a politically powerless citizenry in exchange for their ownership interests in viable revenue generating entities.

In times like this it begs the question: What would you rather own – silver and/or gold bullion or some form of promissory note?”

Chris Blasi is President of Neptune Global Holdings LLC ( www.NeptuneGlobal.com ) and an occasional  guest contributor to both  www.FinancialArticleSummariesToday.com and www.munKNEE.com.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Neptune Global Holdings LLC (Neptune). The author has made every effort to ensure accuracy of information provided; however, neither Neptune Global Holdings LLC nor the author can guarantee such accuracy. This article is strictly for informational purposes only and a sampling of diverse editorial opinion.  It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Neptune Global Holdings LLC and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  Neptune does not act as, nor offer the services of, an investment advisor. Individuals should conduct their own due diligence before making any investment choices.