The astute folks at The 5 Minute Forecast dig deep, and are very enlightening, in my opinion. This is another one of those times. This is a long entry, but hang in there while you read it and above all, hang onto your gold coins!
Whatever is left of the baby boom generation's retirement is about to get wiped out. It's the third and final step in the systematic destruction of a whole generation's wealth.
OK, bold statement... we agree. But hear us out.
The first step came with the dot-com crash. Retirement accounts stuffed with tech stocks pumped by CNBC — or funds that bought tech stocks pumped by CNBC — were vaporized.
Boomers picked themselves up, dusted themselves off and a few years later they figured they were riding high again. Yes, their retirement accounts were a shadow of their former selves... but their homes were rising in value 10% a year, every year. So who complained?
Phase 2. Federal Reserve Chairman Alan Greenspan encouraged folks to load up on ARMs. His successor Ben Bernanke assured them there'd never been a sustained nationwide drop in home prices.
Bummer. We know how this one ended, too.
In their effort to chase yield, bankers on Wall Street created the Frankenstein known as mortgage-backed securities (MBS) and went on to insure them with the abominable credit default swap (CDS). That derivative stew poisoned the entire global financial system...
Now comes Phase 3. Baby boomers are approaching retirement age. What are you supposed to do with whatever wealth you have remaining? Why, unless you're a speculator in stocks and commodities and willing to bet on monetary policy outcomes... you're supposed to play it safe with fixed income, of course — first and foremost with U.S. Treasuries.
A 10-year U.S. Treasury note yields a paltry 2.95% this morning. Consumer prices, even using the government's heavily gamed figures, grew 3.1% over the last 12 months.
In other words, if you lend your money to Uncle Sam in safe Treasuries, you lose all of your yield, and a bit of your principal, to inflation. It's even worse if you opt for a savings vehicle like a bank CD. The best rate we find for a 5-year CD on the Internet this morning is 2.41%.
This is no accident. It's policy. Even if, in the end, we discover it's accidental policy. Negative real interest rates are how the federal government will try to pay down some of its staggering debt.
Don't be a part of an accidental policy. If this doesn't scream: Buy gold, buy gold, buy gold!, I don't know what does! Call us today at Lear Capital !