TAKING STOCK: All that glitters is not gold or silver

Dear Mr. Berko: An adviser recommended we move my entire IRA of $116,000 into gold and silver. He tells us that inflation is going to be rampant in the U.S. and Europe, the U.S. dollar will become worthless, the stock market will fall at least 50 percent, oil will reach $250 per barrel, gas will sell for $11 per gallon and taxes for everybody will rise by at least 50 percent. His scenario appears logical and irrefutable, and three of his clients who are friends of ours have converted everything into gold. Our question to you is our home that has no mortgage. It's fairly priced today at $165,000, and this adviser can arrange a $125,000 mortgage on the property at 7.25 percent. He wants us to take the money from our 30-year mortgage and put it into gold and silver, which we would keep in a safety deposit box at the bank. We are a little reluctant to do this because we don't want to have monthly payments of about $760.00, which we can afford from our pensions and Social Security. Considering what is going to happen to the economy, we think we are doing the right thing, but we are not sure we should mortgage our home. We told him that we might write you, and he said that he would be very pleased to have a discussion with you anytime. This adviser is brilliant and has impressive designations after his name, some of which are CFP, CIC, CFS, CGS, BA, ChFC, CLU, CIMA and a DDIV. We want to know if you would approve of putting a mortgage on the house. Our adviser tells us we can easily pay it off in a few years by selling some gold or silver at higher prices. Please advise us. R.T., Wilmington, N.C. Dear R.T.: How does this fellow get all those designations on one business card? It's my experience that people who have all those letters after names have three things in common: 1) They're insecure, 2) they are frauds and 3) they have a destructive need for recognition and approval. Has he also tried to sell you dinars from Iraq? If the economy does what this con artist tells you it will, all the gold and silver, including what's in Mother Hubbard's cupboard, won't be worth a tinker's dam. If you believe this will happen, get yourself a pound of iodine crystals to purify water and buy a dehydrator so you can load up on K-rations. But first, take nine steps backward and 12 deep breaths, and realize that nothing will never be as bad a you think it will be, and conversely, nothing will ever be as good as you think it can. That's a fact. Do not put your IRA money in this gold and silver scheme, and don't mortgage your home. But you should know the going mortgage interest rate is perhaps 5.0 percent, definitely not 7.25 percent. And an honest adviser would tell you: "Never mortgage your home to invest in the stock market unless it's a sure thing. And that there are no such things as sure things." Gold and silver are highly speculative commodities, not IRA investments. Frankly, there are many stocks, if the dividends were reinvested in each of the last 30 years, that have handily outperformed gold or silver. And you know many of them, such as McDonald's, Clorox, Johnson & Johnson, Abbott Labs, Coca-Cola and Procter & Gamble, to name just a few. Meanwhile I don't want to talk to this sociopathic snake, who can probably shed tears on demand. These guys are "articulate incompetents" who have mastered the art of misrepresentation. Your only protection from these con artists is common sense and knowledge, but those qualities seem to be rare today. ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2011 Creators Syndicate Inc. Published: Wed, Mar 16, 2011