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Gold IRA Rollover Season – As We Begin 2014 Market Opportunity, Danger Abound

Author, Editor, Founder, and Executive Director @
January 7, 2014

This is the time of year investors assess their IRAs and other retirement plans and strategize for the future. The upcoming year, in my view, looks to shape up as one of much danger as well as opportunity.

I do not write often about specific trading strategies simply because I believe that gold is essentially a safe-haven asset – a buy and hold item and one of the premier armchair investments given the times. Those who choose to make gold a “trade”, do so at their own risk. At the moment, however, we have an important confluence of trends that I believe can be exploited within tax-advantaged retirement plans.

The following chart summarizes that opportunity:

As you can see the S&P Stock Index and gold price have crossed at roughly the 1575 level. The chart suggests an arbitrage opportunity likely to whet the appetite of those who believe gold’s downside was a pause in its secular bull market and stocks’ upside the result of a bubble created by the Fed money printing process.

Financial Times closed 2013 with a warning that “half of all UK money managers believe that stock prices are in a bubble territory.” In that same survey, two-thirds of money managers considered corporate bonds “richly priced.” Simultaneously, gold is coming off its worst year in the past thirteen – down nearly 30% from the beginning of 2013 and over 35% from its all time high.

Taking a closer look at recent stock market activity, the Wall Street Journal ran a largely overlooked article at the end of December describing how many private equity firms “are set to return a record amount of cash to their investors for 2013, after taking advantage of buoyant markets to sell hundreds of billions of dollars of investments.” One private equity manager summarized the attitude of many insiders by saying “There’s a time to reap and there’s a time to sow. We are selling everything that isn’t nailed down.”

Though private equity firms operate in the securities of companies not publicly held, the sentiment can be applied readily to publicly traded stocks and bonds. Too often, the small private investor is late to arrive for the party and late to leave while their more seasoned professional brethren tend to do just the opposite. If there is significant selling going on among the professionals, it might be time to take note.

As for gold, one recalls the ultimate contrarian advice of Nathan Mayer Rothschild, who made more than one fortune in the financial markets in his lifetime. The time to buy, he counseled “is when there is blood in the streets – even if the blood is your own.”

If the contrarian in you agrees with the assessment that there is a time to reap and a time to sow, as stated above, the time might be right to reap some stocks and sow some gold as we begin the New Year. After all, isn’t the principle advantage of owning a tax-deferred retirement plan the opportunity to roll profits from one sector of the financial markets to others?

Of course there is always the presence of danger in such undertakings, the stock market could very well continue trekking higher while gold continues to downtrend. In such matters, it always the duty of each investor to make his or her own assessment, but perhaps some judicious rebalancing within IRAs and other retirement plans makes sense at this juncture.


Opinions expressed in this commentary do not constitute an offer to buy or sell by the author or USAGOLD, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here. It is not engaged in rendering legal, accounting, financial or other professional services. The information herein is not intended to create, and visitation of it does not constitute a lawyer-client relationship, accountant-client relationship, or any other type of relationship. If legal or financial advice or other expert assistance is required, the services of a competent professional person should be sought.

Michael J. Kosares has over 40 years’ experience in the gold business. He is the founder and executive director of USAGOLD (both the website and gold brokerage service), the author of three books on the gold market, and the editor of "News, Commentary & Analysis," the firm's client letter. He has written numerous magazine and internet essays and is well-known for his ongoing commentary on the gold market and its economic, political and financial underpinnings. 

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