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Friday, May 8, 2009

Is it Stupid to own an IRA or 401(k) Retirement Account?

I'm relatively confident in my analysis that the current economic system will collapse in approximately 20 years, via an agorist revolution. I'm not absolutely certain, but the momentum for an agorist revolution is definitely there. Compared to a year ago, I'm noticing quite a few other people writing intelligently about agorism.

All the evidence I see points to an increasing probability of total economic collapse. More and more people are gaining awareness of the massive scam.

Given that information, and given that I'm more than 20 years away from retirement, is there any point to owning an IRA or 401(k) plan? When the economic system completely collapses, my State paper investments will be worthless. This includes shares of GLD and SLV, because I don't have the right to convert them to physical metal. Those ETFs lend out their metal to short sellers, and there will be defaults during a time of hyperinflation.

Whenever you switch jobs, you may rollover your 401(k) plan to an IRA. For my former jobs, I rolled over my 401(k) account to an IRA. This way, I don't have to keep a different statement for each former job.

If the State is going to collapse before I retire, then the present value of all my State-licensed investments is zero.

That isn't totally true. For example, I can use my stock portfolio as collateral to buy a house via a mortgage. When the State collapses, I should be able to keep ownership of my house and get full allodial title, because nobody else will have a stronger ownership claim than me. When the dollar collapses in hyperinflation, I should be able to repay my mortgage with devalued dollars. However, that doesn't mean I should buy a house and maximize my leverage. I shouldn't refinance every time my home equity rises. Eventually, there will be another bubble and bust, and I don't want to lose my house/savings during the next recession/depression. If I pay off my mortgage (or make minimum payments on a fixed-rate mortgage), I'm much more likely to be able to keep it during the next recession/depression.

It's tempting to maximize leverage on my house and use the profits to buy gold and silver. As long as inflation is much more than the interest on my mortgage, that's a profitable trade. The flaw is that you'll can get wiped out during the next recession/depression. The long-term trend for the FRN-denominated price of gold is, of course, increasing. In a 2-3 year period, a decline of 50%+ is still possible, during a deflationary recession/depression. Of course, you could just deposit your gold in an agorist bank, declare bankruptcy, default on your mortgage, and then keep your gold! Then, use the gold to rent/buy another house from another agorist!

Due to property taxes, I don't get full allodial title to my house. I merely have a perpetual transferable lease. However, if the State collapses in 20 years, then I won't have to pay property taxes after that. Therefore, the present value of future property taxes is a finite burden. I'll probably get full allodial title after the collapse. During times of hyperinflation, property tax rates probably won't rise at the true inflation rate. That makes a house/land a reasonable investment for an agorist. I'll accept that I have to pay property taxes until an agorist police agency is strong enough to defend me from State enforcers collecting property taxes; by that time, the State has been defeated.

Gold or silver is the ideal investment for an agorist. You get immediate full allodial title. If you have agorist trading partners, you can use gold/silver as money without reporting the transaction to the bad guys. The primary risk of gold and silver ownership is "Where is a safe place to store it?"

It is legally difficult to invest in physical gold or silver in an IRA. The best alternative is GLD or SLV. In a SHTF scenario, GLD and SLV will be worth zero. You can buy gold and silver in an IRA, provided you choose a State-licensed custodian. In a SHTF scenario, there is no guarantee that the State-licensed IRA custodian will honor his promise to safeguard my gold. If I keep gold and silver in a State-licensed IRA, and there's another State seizure of gold (like Roosevelt in 1933), then I lose my IRA.

The whole point of having an IRA is tax-deferred compound interest. If you're a buy-and-hold physical metal investor, then you already have tax-deferred gains (really compensation for inflation). If I have agorist trading partners, I can trade my gold or silver for goods without any taxes at all!

It seems stupid to hire an IRA custodian to invest in gold or silver. If I take physical delivery of the metal, I have the same tax advantages as leaving it in an IRA. Plus, if the metal is in an IRA, I'm always at risk of seizure by the State.

I'm seriously considering "FSK should withdraw all the money from his IRAs, pay the tax penalty, and buy physical gold and silver. FSK should sell off all his stocks and buy physical gold and silver." I haven't done this for several reasons:

  1. My parents would freakout if I did this.
  2. I have no safe place to store the metal. It's too risky to keep that much metal in one place. An agorist banking system is needed. When I have agorist trading partners, I might ask them to store some physical metal for me. (I'll either paying a storage fee or on a time-deposit banking basis. I could lend someone gold, understanding they will sell it and invest the proceeds in their own business. In that case, I don't have a "demand deposit", but I shouldn't be charged a storage fee either.)
  3. I'm not 100% certain that the State will collapse within 20 years. I might as well keep my State-licensed investments as a hedge.
  4. Now may be a sub-optimal time to sell my State paper investments. Over a 10+ year period, gold should outperform the stock market. That may not be true in the next year or two.
  5. It's more convenient for me to keep my State-licensed paper investments. I'll keep my current investments, but all future investments will go to gold or silver.
  6. I'll need slave points until the State has completely collapsed. I'll probably have a combination of State-reported income and agorist income. For example, blog advertising revenue is reported to the State for taxation. I'm planning to continue that, even if I start agorist businesses. If I have a combination of on-the-books income and agorist income, then my tax returns won't look suspicious to a State bureaucrat. Agorist income should be invested completely in physical gold or silver, via an agorist gold/silver/FRN barter network.
Given that the State is likely to collapse in the next 20 years, it's probably in my best interests to cash in my State-licensed paper investments and convert to physical gold and silver. It's worth it even if I pay the tax penalty, because a 60% loss is better than an 100% loss. However, I'm not actually doing this (yet). I'm seriously considering it as a possibility.


No Gods Required said...

Always get a 401k if your employer does matching. Turning down free money is just silly. Invest in the stock market index only. Doing bonds is a loss, but the index should be average return. Shouldn't you secure your independence from your parents first?

Kevin Carson said...

IMO the best investment is not something that will appreciate in value as a future medium of exchange, but something that reduces your long-term need for a revenue stream. That includes owning the roof over your head free and clear, paying down debt. It includes, especially, acquiring the physical capital required to meet as many of your daily needs as possible yourself, if need be, without any wage income.

In the last depression, owning your own home free and clear and having a big vegetable garden were the margin of difference between inconvenience and disaster for many people. And the physical productivity of such things, and of your own labor, is something you can count on regardless of how paper assets fluctuate in value.

Anonymous said...

FSK says: It's too risky to store gold and silver metal.

Would it be worth it to a thief to steal gold from you? How would he even know you had it? Are you more likely to lose 30% of your savings in a market dip than you are to lose it in a burglary, assuming you take the proper precautions in both scenarios?

How does a thief profit from stealing a car? How does he profit from stealing a flat screen television? How does he profit from stealing 160oz (10 lbs) of gold bars/coins? Does he walk into a bank (a simple burglar, remember) and exchange them for cash? Can he even open the safe? What if he ends up getting everything you own except your safe, and your dirty laundry? Do you have insurance? Do you have an alarm? Do you leave your windows open and your doors unlocked? What kind of neighborhood do you live in? How likely is it for you to be burglarized, whether you have gold at home, or not?

So you have a math degree...well, what are your thoughts on the following:

What are the different probabilities? Are they all the same?
1) Robbed/burglarized under all circumstances
2) Robbed w/ gold inside
3) Robbed w/ gold inside a locked safe
4) Robbed w/ regular expensive consumer goods (jewelry, electronics, cash, whatever burglars steal)

What are 1-4 given:
1) 50-100k of insurance (how much is this?)
2) A security system
3) Intelligent habits - lock your doors, don't have strange people in your home, etc
4) Private security patrols
5) Local police (how good is your neighborhood)

I'm sorry, but when I consider the 'math' I think if one investment will net you all these benefits, and all you have to do is buy it, hold it, store it, and insure it, I do not see what the big problem is.

But I could be wrong. I have not called an insurance company and asked them how much it would cost to insure $50k worth of gold bars (isn't that insane, that this is only 55 oz of gold, at $900/oz). Do you realize how small that is? That's not even 4 lbs of gold. It could fit in a shoebox sized safe. It could also fit in a shoebox.

And you really believe you could not protect that from a burglary?

You could buy that much gold and your parents would never know. You'd walk in with a shoebox and they'd think you went shoe shopping. And that's $50k in gold. A number of people cannot afford that.

Everytime you say "my parents are paranoid..." I think of when you respond to commenters with "you're assuming the state is omnipotent." You're doing the same. You're assuming the factors 'against you' have a probability of 1 of occuring.

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