CHISWICK, WEST LONDON – Greetings from my childhood home, and welcome to another Friday mailbag edition…
This week, we talk gold – including gold IRAs and gold-related credit cards… how homeschooling may impact wage inflation… and the relationship between our “Income for Life” whole-life insurance policies and the Dow-to-Gold ratio we track in these pages.
I even give you my top three tools for curbing your smartphone addiction – which, as regular readers know, is something I have several years of (on and off) experience with.
Let’s get right to it…
Reader question: I would like to transfer my traditional IRA account to gold/silver IRA account. Which companies do you suggest?
I can’t give personalized advice. But generally, in a situation like this, you would need to contact a self-directed IRA custodian that can handle physical gold allocations, like Goldstar Trust, Millennium Trust, or Kingdom Trust.
These companies can “host” your IRA. Then you simply fund your new IRA by transferring funds from your existing IRA custodian.
Once your new IRA has funds, you find the gold coins – or Perth Mint Certificates – you want to buy in the marketplace, and where you’ll store them. Finally, you direct the seller to send the bill to your new IRA custodian.
Reader question: Have you ever looked at Glint? It is a concept, already in practice, that uses offshore, allocated gold as the reserve for a MasterCard debit card and is useful for spending in most currencies of the world. Please comment.
Yes, I have looked at Glint.
Glint is a sort of multi-currency bank account, where you can keep balances in different currencies, including gold. Then, using a Glint card, you can spend your balances as if you were using a regular debit card.
It looks great… and safe. When you elect to hold your savings in gold, for example, they allocate and segregate physical gold for you.
That said, I don’t use Glint, so I can’t personally vouch for it. And I probably won’t use it in the future because gold is a long-term investment for me. I prefer to use dollars and pounds for my everyday transactions.
But I’m glad there are people out there building innovative new apps for people who want to own gold.
Reader question: I read how “homeschooling” is removing a lot of people from the labor pool in the U.S., at a time when there are many unfilled job vacancies. Won’t this lead to wage inflation?
The number of children being homeschooled in the USA has doubled since the start of the pandemic… up to five million children today. More homeschooled children means less adults in the workforce (as someone has to stay home and supervise).
It’s probably not a big factor in rising wages by itself, but when taken with other trends that are limiting the supply of labor – vaccine mandates and government transfer payments – I can’t see how we’ll avoid robust wage inflation over the next few years…
Reader question: Any advice for someone who also wants to curb their smartphone addiction?
Oh man, it’s so hard. I’m a chronic user… a total junkie. Even sitting quietly for five minutes is hard for me. My fingers start drumming and I rock back and forth.
Kate says my rocking makes her dizzy. And I still haven’t figured out how to completely remove that cursed thing from my life, but I haven’t given up trying… (I wrote about my latest – and ongoing – attempt in the September 8 Postcard.)
Here’s what I’ve learned so far…
First, the rest of the world expects to be able to contact me whenever they want. If I want a normal social life, I have to concede that to them. Or I’ll just end up inconveniencing people who I care about, which would be self-indulgent.
A flip phone solves this. My friends and family can still call or text me, which is especially important when I’m making plans with them.
I refuse to be the person who screws up a rendezvous with a friend because I didn’t bring a mobile phone out with me and they couldn’t contact me.
That’s the first thing.
Second, I could only get rid of my smartphone by taking some of the key apps I use to the computer.
I don’t think it’s possible to remove the internet from one’s life altogether unless you live in the woods and don’t have any contact with the rest of society.
From shopping, to paying bills, to banking, to getting directions, to ordering taxis, to finding local establishments, to answering emails, I need the internet. And, of course, I’m a financial analyst and researcher.
I just do all that stuff on the computer now. Then I use “intermittent fasting.” No screen time except during normal working hours, for example.
Third, I use a printer. It’s an essential piece of equipment for cutting down on screen time.
I print investment research, newspaper articles, tickets, directions, long emails that I need to reply to etc. (I compose everything I publish – including emails – in pencil and then transcribe the text into an app.) This saves me hours of screen time.
Finally, I keep a notebook and pencil handy. I get urges to do important but not urgent tasks on the phone all the time, like sending a message to someone, or buying something, or looking up some information, or printing something. I write these down in a list and then deal with them in batches.
In short, the tools I use are:
1. A flip phone for keeping in touch with others
2. A computer for doing online chores
3.And a system of printing, batching, and intermittent fasting.
Using these tools, I have mostly quit my smartphone and drastically reduced my screen time… (I’m aiming to get my screen time down to one hour a day…)
Reader comment: I believe, as you do, that silver will come back and think it’s the one of the best investments. No matter what happens, it’s still currency and protects my principal.
To me, this is our key investment mandate over the next few years – protecting or preserving our principal. Playing defense, in other words (although sometimes the best defense is offense).
The most defensive assets are, in my opinion, cheap, hard, liquid assets that don’t care if the feds print trillions of new currency units… But that won’t lose too much value when the feds’ experiment in fake money and free credit collapses.
Silver hasn’t advanced in price from the early 1970s (adjusted for inflation). So it will serve us well as we try to preserve value…
Reader question: If you didn’t have any Income for Life policies now, would you start them at this time or wait for the Dow-to-Gold ratio to reach your target?
Thanks for the question. First, to catch new readers up, I use the term “Income for Life” for our whole-life insurance policies.
As I’ve said many times before, it’s one of the world’s most powerful wealth-building secrets. Our policies just grind away, year after year, compounding our savings tax-free… and offering us liquidity whenever we need it.
Now, to answer your question, Income for Life is a savings product… not an investment product.
A savings product is a store of value… a place where value can sit and wait, out of harm’s way, until you need it again. By using a savings product, you’re not taking any chances. And on the flip side, you’re not expecting much return above the risk-free rate.
The deal with Income for Life is, it’s an excellent safe place to store wealth, tax-free, with high interest and peace of mind in the event of your untimely death. But only if you’re willing to commit to it for the rest of your life.
So that’s the trade-off. Great benefits, but no flexibility. (You can borrow against the policy if you really need cash, but you have to pay it back, so you shouldn’t take this path blithely.)
Personally, I’m willing to take this trade-off, for a few reasons…
One, as I’ve said many times, I want to be a long-term investor, but I’m vulnerable to impulsive decision-making. So I like savings and investment vehicles that force me to act like a long-term investor.
Two, I’ve got children, so the life insurance benefit is valuable to me. It’s a way of passing wealth to my children and future grandchildren without paying inheritance tax. And I have peace of mind they’ll have money after I leave this world.
Three, we started young and healthy enough (10 years ago) that I’ve had time to let the policy grow and produce enough dividends for the policy to become self-funding.
All that said, let’s get back to your question. That is, if we didn’t have these policies already, would we start them now, or wait for the Dow-to-Gold ratio to reach our target?
The Dow-to-Gold ratio, which I’ve been tracking in these pages since 2019, is a stock market timing indicator. In other words, it’s a gauge of the attractiveness of saving versus investing. And right now, it indicates that saving is more attractive.
But Income for Life is a permanent investment. Permanent in the sense that I’m holding it until I die, no matter what… so timing a purchase of whole-life insurance according to the Dow-to-Gold ratio or any other indicator doesn’t make any sense.
In short, I would buy Income for Life now, if I hadn’t already bought it. It’s working really well for us so far. But if I were aged 70 or above, I might write the policies on my children’s lives instead of Kate’s and mine.
The Dow-to-Gold ratio only has any bearing on our Income for Life policies in one way. That is, when stocks are cheap again relative to gold, I’ll probably borrow from the policy and invest the loan in high-quality equities.
I expect that to be within the next 10 years, when the Dow-to-Gold ratio falls to a level below 5 again.
And that’s all for today… As always, thanks to everyone who wrote in! Please keep your questions and comments coming at [email protected].
I read every note you send us, and I’ll respond to as many as I can in future Friday mailbag editions.
– Tom Dyson