YourCreditCompany.com Official Blog

From all of us, to all you!Have a safe and memorable holiday season!We’ll be back in January, and look forward to prosperous new year!Your Credit Company 

Remember the late 70s and 80s when it seemed as though every other best-seller (especially “business books) dealt with doomsday prophecy?  Well, we’re not saying it won’t happen; with the collapse of the dollar, hyper inflation, mass unemployment, etc, but it DIDN’T.  And it won’t this time either.  Still, our regular readers are well versed in our theories about gold, especially under current circumstances of global government distrust reaching new levels as directly reflected through their central banks, just like our Fed.

Anyway, we’ll cut to the chase.  You want to own gold but you don’t know how to buy and hold, and in what format.  Right?  Join the club!  We are not suggesting one form of gold over another, all forms from mining stocks to ETFs to mutual funds, futures contracts, bullion bars (the list goes one) are okay with us. With gold reaching new highs, even moderate gold bugs asking the question, “do I own gold the right way…how can I actually possess gold in an affordable manner while minimizing the premium or buying and selling costs?” 

For most average Americans; owning actual gold coins is a great option.  Not only are the coins themselves internationally recognized for exactly the same value at any time, they’re FUN to play with.  Problem?  Cost.  Many folks hopping on the gold bandwagon are overpaying for their precious metal fixes.  A classic case of great and sound financial planning (right decision making) colliding with overzealous coin dealers, mints and sellers of all kinds.

With gold prices up over 56% in the past year alone ($1,190 at the time of this writing), the average Joe/Jane consumer demand for gold coins has soared; up 142% at Stacks a, NY coin retailer, in one year according to Tip of the Week’s Jeff D. Opdyke.  Here’s the problem.  Practically everyone who can make a buck by minting, auctioning, selling, trading is doing so. 

The worst at “leveraging” this hype offender?  You guessed it; your/our very own Uncle Sam; the U.S. Mint (usmint.gov), who currently sells one ounce Double Eagle gold coins for $1,540 direct, but according to reports, some people are paying up to $3,000 per coin!  In fact, virtually all forms of numismatic value are way overpriced in our book; even the $20 gold pieces which are commanding 50% premiums over their pure gold content value. 

Keep in mind that to fully exploit the awesome hedging and protection (currency- inflation) power of gold, you must buy as close to the spot market price as possible; the bullion price. Your not buying birthday gifts for your office palls, you’re buying retirement investment power. So while Double Eagles, Kruggerands, Maple Leaves, Coronas, and the like are inflating above pure bullion pricing, deals can be had, especially for the less known gold coins (still pure and still 1 oz. or just shy).  Even better might be the lower quality $20 coins “bought as close to bullion prices as possible” according to another New York coin dealer, Scott Travers.  He suggests smaller denomination told coins which do not demand the same premiums.  If/when gold prices do fall, these lesser popular coins will not fall as much in value; although we believe in a strict buy and hold posture for at least 36 months. 

One last closing point about storage.  Get your own safe; hide it, or even better yet cement it into your floor.  Store your own goodies.  Why trust anyone with this?  Finally never borrow money to buy a non-income producing investment asset, including gold.  Cash only, no credit!

Your Credit Company 

Trends are funny animals.  Animals travel in herds and packs and the herd mentally tends to drive our financial security decisions.  Precisely inverse to how we should operate!  We were wondering if we missed some vital laws of retirement or education funding “absolutes”. 

When it comes to choosing investment vehicles, we have been thinking “…why can’t and why shouldn’t the average investor acquire individual corporate, muni, treasury or even government agency bonds; at least for a portion of his/her overall portfolio?  In fact, with so many problems afflicting all forms of stock, bond, ETF funds lately; with account balances continuing to go the wrong direction, and just wanting to have some control over what your working dollar will be worth (someday!)

Simply put, we want, you want to place a dollar today into something which we know is save, we know the interest it will pay out and we know its value for certain upon maturity; at least for some of our chips.  Long before Wall Steet ruled the world with mad scientist “investment medium” invention, we purchased instruments; CDs, dividend paying stocks, T-bonds, corporates, munis, etc. to serve a very specific and predetermined purpose.

As funds, pools, trusts, and policies of every conceivable flavor were not relentlessly peddled by Wall Street through Madison Ave., we did our homework and made our own selections.  We closed and managed our own deals sometimes with professional help, sometimes not.  We lived in the age of doctors who gladly and regularly made house calls.  Now, with all the markets malaise, we are suggesting “going forward to the basics”.  That the most safe, most dependable investment you can make is to buy individual bonds, not funds, when NOT if  interest rates begin to rise again.

The bond fund darlings will take a beating as their prices decline.  If rates rise sharply, quickly, bond prices will plummet.  At least when you buy your very own personal bond you will know exactly where you stand even in the worst case, with rates rising if you simply hold till maturity.  You know with certainty that you will get your principle back while earning market or higher interest rates along the way; depending upon credit risk, maturity date and liquidity. 

For example, if you could buy a Marriot International Inc. (Hotel chain) bond yielding 6.5% with a 2015 maturity, would you?  We would!  Houston investor Todd Kulp did just that.  If you buy into a fund, the value might not recoup for a couple years; at least with your own bond, you receive par value upon maturity.  Here’s how it works; how we see it.  These are not normal times; rates basically have only one way to go…UP! 

This being the case, why would you buy into any bond fund of any type of kind, unless the maturities were extremely short (180 days or less) or your products were 100% government insured?  Either way, to preclude principle loss in these days through a fund, you are looking at 3%-4% on the high side; nowhere near 6.5%. 

Historically, corporate bonds have earned 1.96% over Treasuries.  For our money, realizing that all bond yields have decreased, we like corporate bonds even more; especially AAA credits, like Marriot.  Only 5 years out, this type of arrangement seems to be a safe and fair bet.  Still if you abhor any risk whatsoever, buy the 10 year T-bond currently yielding 3.4%.  No mystery here!  Your bank or broker will be happy to oblige your wishes to fill your individual bond orders.

Your Credit Company