News & Analysis
Advisors Still Can't – and Won't – Recommend Gold and Silver
Clients want alts in their IRAs — but advisers' hands are tied ... In February, the firm polled 1,000 people nationwide, along with 365 financial advisers with at least $10 million in assets under management. Two out of three advisers polled said that investing in alternative assets can help build wealth for investors, and 80% them said that their clients have expressed interest in using alternative assets. Meanwhile, about three out of four Americans familiar with retirement accounts are interested in adding these investments to their individual retirement accounts. But regulatory scrutiny, as well as tough broker-dealer compliance rules on the use of alts, have largely deterred advisers from adding them to clients' portfolios. Only one in 10 of the polled advisers said they have the capability to add alternatives – Investment News
Dominant Social Theme: Just keep investing in stocks and it will all work out.
Free-Market Analysis: One of the hallmarks of a controlled press is its regular departure from reality. The US press and the Western press generally have been departing from reality for most of the past 100 years and longer.
But in the past ten years the controlled investment press has truly proved how out-of-contact with the real world it actually is. While gold and silver have made huge gains year after year, the US press especially – the loudest and most aggressive financial press in the world – has never covered the story effectively.
The mainstream, controlled media has written millions of words about financial scandals such as the Madoff scheme, but it has studiously avoided reporting on the huge bull market in money metals that has been ongoing for more than a decade now.
This trend continues even though we can see from the article excerpted above that investors – more than the industry itself – are increasingly aware that the nostrums of the past 60 years are woefully inadequate. Here's some more from the article:
"In recent months, the top five adviser networks in the country have begun to scrutinize the assets clients are holding, such as nontraded assets," said Kelly Rodriques, chief executive of Pensco. "The adviser and the client may want these investments, but the institutions' administrative capabilities limit that."
The Securities and Exchange Commission and the North American Securities Administrators Association have issued warnings about the pitfalls of self-directed IRAs, including lack of information surrounding alternative investments. Meanwhile, nontraded real estate investment trusts in IRAs can come with their share of problems.
Tougher regulations have made it clear to large broker-dealers that it won't be easy to administer these alternative assets, Mr. Rodriques said. He added that clients working with his firm largely lean toward private stock, in which they invest in a growing company. At the same time, hedge fund holdings are also becoming more commonplace. Distressed real estate and the use of private notes have also captured investors' interest, he said.
We can see from all of the above that gold and silver STILL don't warrant a mention in articles such as this. And the best that the SEC can do is to "warn" about the pitfalls of self-directed IRAs.
This is part of the larger disconnect that the regulatory authorities have with the general public and it is one the mainstream media shares. Do either group in aggregate believe that the "public" hasn't noticed the price of gold and silver has risen tenfold in the past decade while stocks have stagnated?
The big story of the past decade financially has been the re-emergence of the business cycle and its changing from one valuing paper assets to one focused on money metals. This is perfectly explicable if one understands Austrian economics and free-market thinking generally.
It was Ludwig von Mises that elaborated on the modern business cycle and its central-bank generated booms and busts. As the success of Mises's paradigm has become evermore apparent over the past decade, the attacks on Austrian economics and libertarianism generally have ratcheted up.
The mainstream press, of course, is controlled by the same apparent dynastic families that run the world's central banks and apparently intend to create world government. Wishing to create world government, these families and their enablers and associates have set in motion the boom/bust cycles inherent to manmade currencies.
The elites have over time removed fiat money entirely from underlying gold and silver and far worse than this, they have made fiat a monopoly creation of mercantilist central banks. These banks derive their authority from the public venue even though they are privately run.
In fact, the elites have spent nearly a century divorcing economies from gold and silver because gold and silver essentially fetter economies and do not easily allow for the unlimited printing of paper money that the elites so desire.
Free banking and competitive currencies within a private market environment are preferable to the insanity of current monetary stimulation that takes place today. Any time government has a monopoly anything, but especially money, only ruin can occur.
Government will always do too much, print too much, etc. because the function is divorced from competition. This is only common sense.
Nonetheless, none of these issues get a thorough airing in the mainstream press. Even in this article, there are no mentions of the primary alternative vehicles of gold and silver.
Instead of warning people away from "alternatives," the SEC and the mainstream media should make a concerted effort to explain the business cycle and how money metals work within the modern paradigm.
Chances are that this business cycle shall run several more years and cycle through paper gold and silver and ultimately through junior mining stocks as well. This is how the cycle actually operates and the regulators are doing no one any service by obfuscating what's really going on.
But in fact, this is a good example of why regulation doesn't work. The SEC and other regulators actually seem to be nothing but reinforcers for the elite's paper-money paradigm. The real story of the current faux-economic environments around the world is not being told.
Regulations are barring investors from making proper use of gold and silver within the context of the modern business cycle. Investment publications themselves do not ever explain the reality of this cycle and as a result many investors – trusting the current Western system – have missed out on profit-making purchases.
Conclusion: Articles like this, along with regulatory intransience, make it clear that these trends are not going to be addressed any time soon. No wonder the alternative media is gaining ground.
Posted by Agent Pete 8 on 04/06/12 08:41 AM
Gold makes an environmentally toxic mess to produce, and it will not fit through a website form, sorry Ingo.
Posted by schrodingers_pussie on 04/06/12 01:21 AM
Gold is a commodity that has been used as money many times. It is not "money" unless it is defined as such by a society. I disagree that gold cannot be an investment. All commodities have times that they have more and less value to society.
Nothing I have said should be construed as suggesting that I don't believe that gold has value.
Posted by Bischoff on 04/05/12 03:59 PM
Gold is not an investment. Gold is Money. You don't invest in money.
However, when irredeemable paper currency starts loosing value too quickly, you want to hedge the value of paper currency in the form of real money (gold).
Gold can't be invested, because of the existence of legal tender currency. Still it is better to hold value with with gold sitting in a vault, rather than trying to hold value with investments denominated in increasingly worthless paper currency.
Posted by Abu Aardvark on 04/05/12 09:42 AM
You and feedbacker Purewater are right, Seer. I was so stupid to not listen to the mainstream experts and fell for those dubious silver and gold ideas years ago. My investment quintupled in the process, because those damned 'alternative' blogs and websites hampered my efforts to lose money in the stock and bond markets for years now.
Can you imagine just how mad I am?
Posted by Purewater on 04/05/12 09:02 AM
They are referring to specific investment such as hedge funds and private notes that their clients can't participate in. They didn't mention gold or silver... because their clients can own them. They can obviously own GLD, CEF, PHYS etc. Any financial advisor has the ability to buy those. Moreover, there is an overseas PM storage company that works with advisors. This isn't an article about alternative investments, it is an article about alternative investments that the clients of financial advisors can't invest in. BIG difference, sorry you weren't able to grasp that.
Reply from The Daily Bell
Gold and silver have ALWAYS been classified as alternative investments by the mainstream financial industry. Just not this time, huh? And THAT's the point. Sorry you can't grasp that.
Posted by Bischoff on 04/05/12 01:44 AM
"Free banking and competitive currencies within a private market environment are preferable to the insanity of current monetary stimulation that takes place today. Any time government has a monopoly anything, but especially money, only ruin can occur."
"Free banking" and "competitive currency" as a solution to irredeemable central bank fiat currency is a canard. The idea preys on the "free market" and "competition" aspect implanted into any "true" American. However, what is generally peddled as "free banking" and "competitive currency" is neither banking, nor currency, and certainly is not a solution.
There are only two types of banking systems which directly relate to the two types of currency creation.
There is private banking which creates a "positive" value currency under the Real Bills Doctrine with charter requirement to be redeemable in gold (gold standard), and there is central banking, which is controlled by the government, and which creates a "negative" value currency against government debt. The government central bank charters private banks to bring the irredeemable, legal tender, fiat, government central bank currency into circulation.
Redeemable RBD currency existed in North America from 1750 until 1933. By 1931, special banking interests and political interests succeeded to destroy the RBD currency system by violating provisions against secondary market sales of government gold bonds contained in the original 1913 FRA.
In 1935, special interest politician and banking interests were able to modify the original 1913 FRA to ex-post-facto legalize the violations of the 1913 FRA and to create a central bank to monetize government debt and circulate it through private banks.
Individual savers, with or without use of private investment trust, are easily competent to invest their own "positive" value currency for a return.
However, to invest "negative" value currency requires special training. Since the establishment of the Fed central bank in 1935, business schools and universities have been coopted by the central bankers to exclusively teach the special knowledge required to chose investment vehicle for "negative" value currency. Gold and the gold standard, as well as RBD currency has absolutely no place in such curriculum. It is Keynes and Friedman who have their theories applied, though now that it is evident that they don't work, their names are not mentioned with the adoration as before. Adam Smith, the proponent of the Real Bills Doctrine would never be mentioned in business schools today.
Central banking in essence amounts the central management of the economy and of investments. Gold and Silver as monetary metals have no function in irredeemable currency investment. As a matter of fact, gold or the gold standard is an actual thread to central bank currency and central management of the economy. That is why central banks and governments manipulate the "price" of gold downward to 1) discourage gold purchases, and 2) to give the impression of greater worth of their central bank currency.
Investment houses and brokers a highly discouraged by regulations to buy gold for their clients. The attempt is to protect the central bank currency under all circumstance. Gold is real money. The high demand for alternative (gold) investment proves that gold is money. However, government regulation will do anything to prevent people from acquiring real money, short of outlawing ownership of gold. The hope is to rescue the fiat central bank currency, and the banks connected to it, by hook or by crook.
It will not work. Central bank currency is doomed, because of the mathematical law of compound interest which is causing the destruction of the central bank currency.
The only solution is for government to relent, and to let private banks again create RBD currency under the gold standard. Otherwise, government will have no choice but to be tyrannical and run a centrally planned economy, suppressing private initiative whenever and wherever required to save its central planning and banking system.
If anyone thinks "free banking" and "competitive currency" is any kind of a solution to central bank currency, I have a large bridge for sale in the desert of Arizona, and it ain't the London Bridge at Lake Havasu.
Reply from The Daily Bell
First of all, there were likely "real bills" before all the things you cite as "necessary."
What you are stuck on is Adam Smith's Real Bills Doctrine.
But real bills are surely just as fungible as any other "money."
And money has been many things in the past - salt, beads, copper ...
You have an elaborate scheme for how money should work. It works for you - and contains some insightful historical attributes - but that doesn't mean it embodies a single, inalienable truth.
It doesn't. Let money compete. Let the best "money" win, or several. We believe that a private gold and silver standard would gradually re-establish itself as before. Perhaps real bills would be a feature of such a standard.
That would be up to the market, however, not politicians within the context of this sort of approach ...
Posted by seer on 04/04/12 08:41 PM
Thank You Purewater- I believe your analysis was correct. I again am disappointed by this yellow journalism approach to supporting a dubious idea. Do not be sorry for pointing out the truth.
Reply from The Daily Bell
He didn't point out the truth. He misread the article.
Posted by Agent Pete 8 on 04/04/12 08:12 PM
From NZ, today's NZHerald:
"Gold prices plunge overnight - is the rush over?"
Click to view link
Happy Easter to All.
Posted by Purewater on 04/04/12 07:12 PM
Here's a link to the article which Daily Bell conveniently didn't link to...
Click to view link
Posted by Purewater on 04/04/12 07:11 PM
I'm sorry but the Daily Bell looks like the one misrepresenting the story, not the "mainstream media"... I just read that article and it didn't mention gold or silver one time. I'm a financial advisor and all of my clients, every single one. You don't have a clue what most advisors are investing in, you just guessed based on a story that wasn't even about gold.
Reply from The Daily Bell
Good Lord, you just made our point. An entire article about alternative investments and not one mention of gold and silver!