Yup – that’s right! Last week I made my last, full contribution to my 401k.

I think most financial ‘advisors’ would probably cringe if I told them that I had stopped my 401k contributions, especially since I have been regularly making them over the last 2 years now, after I graduated college and found a full-time job (9 months later)!

Even worse, they would probably think I was crazy if I told them that I actually did have a plan to build wealth! Not contributing to your 401k is not exactly what ordinary people who want to retire financially prosperous, are supposed to do.

Then again, I am anything but ordinary! J

But I did stop making full contributions, which I had set to 10% of my income and am now making 4% contributions only – let me explain why.

Inflation is Burning My Dollars (and yours too…)

As I was writing this I received a news notification for an article that read ‘Black Friday Weekend: Record 52.4 billions spent’. According to the article, that’s a 16% increase in sales from last year’s record, which was 45 billion dollars.

You wouldn’t think it, reading an article like that and seeing people out there so willing to spend money, but this economy sucks!

Notice I said, ‘spend money’ and not ‘spend their money’ because unemployment is still at 9.1% (about 18.2% if you include the U-6 figure) and most people out there are paying with credit cards, not cash. But the real reason I mentioned this article is because it proves a point, which is that inflation is on the rise.

In fact, last week I read that as of October of this year, the inflation rate was 3.5%. So – yes, while there could have been more shoppers out on Black Friday, the fact that this year’s sales record was broken again does not necessarily mean more people bought more goods or services. They could have also paid more for them (even with the ‘sales’).

We can go into a long discussion about why inflation keeps eating at our dollars and why I think that we are on a straight course to hyperinflation if the federal reserve continues this disastrous monetary policy of printing money ex nihilo (out of nothing) but I’ll leave that for another post and instead will tell you what I am doing to protect dollars.

What’s that shiny object doing in my IRA?

Oh yeah, it’s a precious metal! J

I didn’t know this until a few weeks ago but it is actually possible to hold physical precious metals (gold, silver, platinum, palladium) in an IRA.

For those of you who are not familiar with what that is, an Individual Retirement Account (IRA) is a self-directed retirement plan not sponsored by an employer (401k) that offers more investing opportunities and allows you to invest pre-tax or after-tax dollars.

Last week, I submitted an application to open a precious metals IRA with a local metals IRA provider and have opened my account. I will begin funding my precious metals IRA with 6% of my income, on a bi-weekly basis, starting the December 1^st.

As you probably already know, the price of metals such as gold, silver, platinum and palladium has skyrocketed over the last 5 years.

In fact, if you look at a kitco silver and gold chart, since 2006 the price of –

1. Gold has increased a whopping 321%, from about $530 an ounce to $1705 an ounce.
2. Silver has increased a staggering 355%, from about $9 an ounce to $32 an ounce.

Some people think that it’s just a big bubble that will soon burst. I can’t blame them because I thought the same months back but the more research I did and the fact that the federal reserve seems to like printing and injecting money into the market, the more I rapidly changed my mind.

The fact is that historically (since forever) precious metals have been regarded as the only ‘real’ money and the fact that people are buying up gold and silver tells me that they are losing confidence in the value of the dollar, as is the rest of the word, and are hedging to protect their wealth (dollars) against inflation.

I am confident that, long-term, the value of gold and silver is going to be way higher than it is today and that is exactly why I am building a precious metals IRA!

Here is the big question – Should you do the same to protect your dollars against inflation?

Legally, I cannot give you the answer to that question but what I can say is that if you don’t like working harder for less, take the information above, do your own research and protect your money.

Mastermind: Do you think gold and silver prices are bubbles? If so, why and what are you doing to protect your wealth, if anything?

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