Monthly Archives: April 2013

BREAKING NEWS: Why did its price drop more than 13% in two days?

Gold’s Big Plunge
Why did its price drop more than 13% in two days?



Suddenly, a bear market in gold. On April 12, the precious metal settled at $1,501.40 on the COMEX – diving 4.1% in a single trading day and 20.5% under its all-time closing high of $1,888.70 on August 22, 2011. Statistically, that was the end of a lengthy bull market – one marked by 12 years of annual gains.1,2

As gold bulls discovered, the selloff was just getting started. April 15 was the worst day for gold in 30 years – prices slid 9.4% lower on the COMEX to a close of $1,360.60.3

Buyers crept back into the gold market April 16, and the yellow metal staged something of a rebound – but why did prices plummet so quickly? While the tragedy at the Boston Marathon stunned Wall Street and the nation, the key factors behind gold’s two-day retreat came from overseas.

One influence: a sell signal from Cyprus. Late last week, reports emerged that the central bank of Cyprus was going to sell its excess gold reserves. Those reserves are scant by global standards – around 40 metric tons – but investors worried that other distressed eurozone nations might follow suit.1,3

Another influence: China’s Q1 GDP. On April 15, its National Bureau of Statistics estimated first quarter growth at 7.7%, down from 7.9% in the fourth quarter. Economists polled by Reuters had projected China’s Q1 GDP at 8.0%. This riled Wall Street, and it was certainly unwelcome news for gold bugs as China’s appetite for gold seems to generally be quite strong. Stock and commodity investors were counting on the PRC’s growth to pick up, and instead they got one more signal of economic slowing adding to a perception of weaker global growth, implying less inflation and less demand to send gold prices higher.3,4

Another lesson in diversification. Historically, many investors have hedged with gold – holding a little in their portfolios, but not too much. During the 2008-09 bear market in stocks, the flight to quality was strong and gold played the role of the “safe haven”. Now, stocks are strong and gold prices have suddenly sunk. Both of these downturns illustrate why many investors feel it is wise to allocate portfolio assets across different investment classes.

1 – [4/12/13]
2 – [4/16/13]
3 – [4/15/13]
4 – [4/14/13]

What does this say about BONDS?

Bonds and Interest Rates
A look at how one can greatly affect the other.


2012 new webste and 2012 panther mayor 021

Is the bond bull history? Bond titan Bill Gross called an end to the 30-year bull market in fixed income back in 2010, and he has repeated his opinion since. Legendary investor Jim Rogers predicted an end to the bond bull in 2009, and he still sees it happening. This belief is starting to become popular – the Federal Reserve keeps easing and more and more investors are leaving Treasuries for equities.1,2,3

If the long bull market in bonds has ended, the final phase was certainly impressive. During the four-year stretch after the collapse of Lehman Brothers, $900 billion flowed into bond funds and $410 billion left equities.2

In 2013, you have bulls running, an assumption that Fed money printing will start to subside and the real yield on the 10-year TIPS in negative territory. Assuming the economy continues to improve and appetite for risk stays strong, what will happen to bond investors when inflation and interest rates inevitably rise and bond market values fall?

Conditions hint at an oncoming bear market. When interest rates rise again, how many bond owners are going to hang on to their 10-year or 30-year Treasuries until maturity? Who will want a 1.5% or 2.5% return for a decade? Looking at composite bond rates over at Yahoo’s Bonds Center, even longer-term corporate bonds offered but a 3.5%-4.3% return in late March.4

What do you end up with when you sell a bond before its maturity? The market value. If the federal funds rate rises 3%, a longer-term Treasury might lose as much as a third of its market value as a consequence. It wasn’t that long ago – June 12, 2007, to be exact – when the yield on the 10-year note settled up at 5.26%.5

This risk aside, what if you want or need to stay in bonds? Some bond market analysts believe now might be a time to exploit short-term bonds with laddered maturity dates. What’s the trade-off in that move? Well, you are accepting lower interest rates in exchange for a potentially smaller drop in the market value of these securities if rates rise. If you are after higher rates of return from short-duration bonds, you may have to look to bonds that are investment-grade but without AAA or AA ratings.

If you see interest rates rising sooner rather than later, exploiting short maturities could position you to get your principal back in the short term. That could give you cash which you could reinvest in response to climbing interest rates. If you think bond owners are in for some pain in the coming years, you could limit yourself to small positions in bonds.

The Treasury needs revenue and senses the plight of certain bond owners, and in response, it has plans to roll out floating-rate notes by 2014. A floater backed by the full faith and credit of the U.S. government would have real appeal – its yield could be adjusted per movements in a base interest rate (yet to be selected by the Treasury), and you could hold onto it for a while instead of getting in and out of various short-term debt instruments and incurring the related transaction costs.6

Appetite for risk may displace anxiety faster than we think. In this bull market, why would people put their money into an investment offering a 1.5% return for 10 years? Portfolio diversification aside, a major reason is fear – the fear of volatility and a global downturn. That fear prompts many investors to play “not to lose” – but should interest rates rise significantly in the next few years, owners of long-term bonds might find themselves losing out in terms of their portfolio’s potential.

Citations. greg oliver 0921`4000083`=
1 – [10/27/10]
2 – [9/15/12]
3 – [2/7/13]
4 – [3/27/13]
5 – [2/6/13]
6 – [2/6/13]

What’s the most important part of YOUR LONG TERM CARE PLAN ?

How LTC Insurance Can Help Protect Your Assets
Create a pool of healthcare dollars that will grow in any market.

2012 new greg webste and 2012 panther mayor 027
How will you pay for long term care? The sad fact is that most people don’t know the answer to that question. But a solution is available.

As baby boomers leave their careers behind, long term care insurance will become very important in their financial strategies. The reasons to get an LTC policy after age 50 are very compelling.

Your premium payments buy you access to a large pool of money which can be used to pay for long term care costs. By paying for LTC out of that pool of money, you can preserve your retirement savings and income.

The cost of assisted living or nursing home care alone could motivate you to pay the premiums. Genworth Financial conducts a respected annual Cost of Care Survey to gauge the price of long term care in the U.S. Here is a summary of the 2013 survey’s key findings:

*In 2013, the median annual cost of a private room in a nursing home was $83,950 or $230 per day – up 3.6% from 2012. In the past five years, the cost has risen about 4.5% annually.
*A private one-bedroom unit in an assisted living facility has a median cost of $3,450 a month, or $41,400 annually. It was 4.5% cheaper last year.
*The median payment to a non-Medicare certified, state-licensed home health aide is $19 an hour in 2013, up 2.3% from 2012.1

Can you imagine spending an extra $40-85K out of your retirement savings in a year? What if you had to do it for more than one year?

The U.S. Department of Health & Human Services estimates that about 70% of Americans will need some kind of long term care during their lifetimes. Additionally, 69% of Americans older than 90 have some form of disability – often a direct cause for long term care.2

Why procrastinate? The earlier you opt for LTC coverage, the cheaper the premiums. This is why many people purchase it before they retire. Those in poor health or over the age of 80 are frequently ineligible for coverage.

What does it pay for? Some people think LTC coverage just pays for nursing home care. That’s inaccurate. It can pay for a wide variety of nursing, social, and rehabilitative services at home and away from home, for people with a chronic illness or disability or people who just need assistance bathing, eating or dressing.3

How much will your DBA be? DBA stands for Daily Benefit Amount – the maximum amount that your LTC plan will pay per day for care in a nursing home facility. You can choose a Daily Benefit Amount when you pay for your LTC coverage, and you can also choose the length of time that you may receive the full DBA on a daily basis. The DBA typically ranges from a few dozen dollars to hundreds of dollars. A small number of these plans offer you “inflation protection” at enrollment, meaning that every few years, you will have the chance to buy additional coverage and get compounding – so your pool of money can grow.

Medicare is not long term care insurance. Some people think Medicare will pick up the cost of long term care. That is a misconception. Medicare will only pay for the first 100 days of nursing home care, and only if 1) you are getting skilled care and 2) you go into the nursing home right after a hospital stay of at least 3 days. Medicare also covers limited home visits for skilled care, and some hospice services for the terminally ill. That’s all.4

Now, Medicaid can actually pay for long term care – if you are destitute. Are you willing to wait until you are broke for a way to fund long term care? Of course not. LTC insurance provides a way to do it.4

Why not look into this? You may have heard that LTC insurance is expensive compared with some other forms of coverage. But the annual premiums – in the vicinity of $2,000-2,500 for the typical policy right now – are cheap compared to real-world LTC costs.3

Ask an insurance or financial professional about some of the LTC choices you can explore. While many Americans have life, health and disability insurance, that’s not the same thing as long term care coverage.

GREG OLIVER -0483]5-13458]2-063482]54-068]53-0 LTC EXPERT

1 – [3/18/13]
2 – [3/18/13]
3 – [12/4/12]
4 – [8/3/12]

Expected Fiduciary Rules Could Worsen Retirement Crisis

Expected Fiduciary Rules Could Worsen Retirement Crisis ( NOW WHAT )

As a small business owner, you may want a better retirement plan – one that will let you and your key employees save much more for retirement.

If the annual contribution limits on standard retirement plans disappoint you, you should know about these alternatives.

Simplified Employee Retirement Plans (SEPs). A SEP allows your business to simply set up and fund retirement accounts for your workers – and for yourself. Most SEPs don’t even have to file annually with the federal government. Employer contributions are 100% vested from the start, and you can even supplement the SEP with another retirement plan. In 2013, these plans have a $51,000 maximum contribution limit.1,2

SIMPLE IRAs/SIMPLE 401(k)s. This is a small business retirement plan with mandatory employer and optional employee contributions. It appeals to small business owners who don’t want to deal with plan administration or non-discrimination tests. In 2013, the maximum pretax employee contribution to a SIMPLE 401(k) or SIMPLE IRA is $12,000, $14,500 if you are 50 or older. All contributions are instantly 100% vested. The business owner must make fully vested contributions (of up to 3% of an employee’s income). A SIMPLE IRA has age requirements and does not permit loans, while a SIMPLE 401(k) allows loans and has no age requirements.3,4

Safe Harbor plans. These plans combine the best features of a traditional 401(k) and a SIMPLE IRA. An owner-operator can avoid the big administrative expenses of a traditional 401(k) and enjoy higher contribution limits. The Safe Harbor plan allows for employers to make matching or non-elective contributions. Typically, employers match contributions dollar-for-dollar up to 3% of an employee’s income. The 2013 limit on elective employee deferrals is $17,500, or up to $23,000 if you are age 50 or older.5

DB(k)s. These retirement savings vehicles marry aspects of a traditional pension plan to an auto-enroll 401(k). You and your employees can contribute to the 401(k) component through salary deferrals; plan participants also have the potential for a small income stream in the future. The pension-like income equals either a) 1% of final average pay times the number of years of service, or b) 20% of that worker’s average salary during his/her five consecutive highest-earning years.6

And for the smallest businesses, there are…

Solo(k)s. Combine elements of a profit-sharing plan with a 401(k) and you have the Solo(k), a retirement savings vehicle designed for sole proprietors with no employees other than their spouses. In 2013, the maximum employee salary deferral contribution is $17,500, $22,500 for those 50 and older, as with a standard 401(k). The self-employed individual can also make a profit sharing contribution up to a combined maximum, including his/her employee deferral, of $51,000. So in 2013 the total contribution limit for a Solo(k) is $51,000 or $56,500 if age 50 or older.3,7

Keogh plans. Keoghs are designed for small unincorporated businesses. There are defined benefit, money purchase and profit-sharing Keoghs; the defined benefit variation is a qualified pension plan offering a fixed benefit amount. If you’re self-employed and the Keogh is your only retirement plan, the 2013 contribution limit for a profit-sharing Keogh is $51,000 or 100% of eligible compensation, whichever is less; the maximum deductible contribution is 25% of eligible compensation. You can actually participate in other retirement plans in addition to your Keogh.8

Did you know you had so many choices? I can help you explore them. Call me or email me today.

GREG OLIVER 09583459083459045092745=0924835
1 [7/17/12]
2 [2/3/13]
3 [10/19/12]
4 [6/7/11]
5 [4/9/13]
6 [4/26/10]
7 [10/24/12]
8 [4/9/13]


Better stay under the radar

under the radar...

under the radar…

From the Desk of GREG OLIVER

TAX ALERT Living large. Does the IRS peruse social media? Yes it does, as we all do. The IRS has done good detective work for years; its investigators know to check out DMV and employment records to get a better picture of an errant taxpayer. Today, photos and posts on Facebook, MySpace and Twitter can telegraph potentially valuable nuggets of information, particularly about young taxpayers who have come into wealth that their returns don’t seem to show.