Roth IRA – The Basic Principles of Roth IRA

Posted on August 19, 2011 by Alex Roth

Roth IRA or Individual Retirement Account is a retirement investment account which is advantageous from the tax free side. It’s basically almost the same as traditional IRA or the regular 401k retirement plan, but in order to benefit from this type of investment, people need to pay attention to the certain rules.

This type of investment is different from the general individual retirement management. The ideas about this type of investment originated from Senator William Roth, with the purpose to benefit the account holders in financial ways.

People won’t need to pay up for the advancement tax, even when they have had the account for less than five years and they have withdrawal period around 59 years old. The benefit of having this type of retirement plan is that people can have different retirement adjustments and settings, and all of them are possible. There’s no such thing as impossible planning when it comes to this investment management. The primary fund is able to be withdrawn freely without the account holders have to pay for the tax usage. Unlike the traditional IRA or the regular 401k, this retirement type doesn’t have any distribution setting or doesn’t have any minimal or lowest withdrawal limit.  The remaining funds might be distributed to friends or families once the account holder dies.

When people start having this retirement account, they need to know the basic principle and the guidelines. The IRS has come up with quite easy to understand rules. As long as the following rules are met, everything is considered okay.

  • Tax
  • Income
  • Income limitation
  • Age

It’s also important to pay attention to the contribution restriction, distribution of the withdrawal, and also types of investments they want.

Basic IRA Withdrawal Rules

These are the basic rules concerning Roth IRA withdrawals

  • The primary contribution for the Roth IRA can be withdrawn anytime, without holders have to pay for the penalty fee, considering that the investment has reached the proper withdrawal period.
  • Once the holder reaches 59 years old, they can withdraw the earnings. Before that, they can’t do it or they have to pay up the penalty fee.
  • The holders have to invest for their contribution earning for about five years.
  • There’re several exclusions for the rules.

Withdrawing Roth IRA Fund before 59 Years Old

When the account holders withdraw their fund before they reaches 59 years old, they will have to pay for the penalty, which is about 10% of the total investment.

Withdrawing Roth IRA Fund after 59 Years Old

When the account holders withdraw their fund after the due date, they won’t have to pay anything – tax or penalty – considering that they have reached minimal five years holding account period.

Investing the Roth IRA for Five Years

When the account holders want to withdraw their fund without paying any tax or penalty fee, they need to really pay attention to the conversion or contribution process of the investment where they need to turn the earlier tax five years before the withdrawal period.

Exceptions of Withdrawing Roth IRA Funds

The account holders won’t need to pay for the 10% penalty fine if these particular circumstances happening to them

  • The original account holder passes away and the beneficiary close the account
  • The account holder is considered incompetent based on IRS regulations
  • The account holder has to use the money for the initial house purchasing purpose
  • The account holder needs to reimburse medical care cost
  • The account holder has to buy health insurance and he doesn’t have any job
  • The account holder has to repay his tax debt due to Roth IRA levy tax
  • The account holder has to pay his or other family members’ educational cost

Roth IRA Calculators and How to Count Everything

When people want to know the benefits they can get from having this particular retirement investment, they can always count everything from the beginning. In that way, they can imagine how much money they will spend and how much money they can gain from having this particular account. They can plan and manage their retirement purposes and objectives and also count everything, with the help of special Roth IRA calculator. If they’re going to plan everything, they need to consider about the following things:

  • Think and determine the amount of money they need to contribute based on annual time plan.
  • Think about the annual charge and benefits they can get.
  • Think about the benefits and usage of additional annual contribution, if there’s any.

If they’ve managed to consider about everything thoroughly and they’ve managed to count their loss and benefits, they can decide proper amount to start their retirement investment right away. If they already have traditional IRA, they can also change it into Roth IRA, which is more profitable.

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Silver recoups sharp loss and rises 2% on record volume

Posted on May 22, 2013 by Alex Roth

Today’s AM fix was USD 1,378.75, EUR 1,070.21 and GBP 908.39 per ounce.   Yesterday’s AM fix was USD 1,353.75, EUR 1,051.95 and GBP 890.86 per ounce. 

Gold climbed $ 19.40 or 1.43% yesterday to $ 1,384.30/oz and silver finished 2% higher. 

Silver’s recovery yesterday from being 10% lower at one stage to recouping these losses and then rising more than 2% was very positive technically. The key reversal is leading some to postulate that we may have seen the bottom or are close to a bottom. 


Spot Silver in USD, 3 Days, May 17, 20, 21 – (Bloomberg) 

This theory is bolstered by the fact that the 10% losses were due to a handful of a very large trades in a low volume session in Asia, while silver’s subsequent 12% reversal to the upside came amid extremely high trading volume with silver trading volume 82% higher than the 100-day moving average on the COMEX.

Silver’s fall could have been related to the gyrating yen/dollar price as some hedge funds and banks use proprietary trading systems and sharp losses in a leveraged yen/dollar position could have led to forced liquidation of silver.

However, the scale of the 10% loss in the silver market, and only the silver market suffered such large losses, would suggest that it was not simply due to margin selling on yen speculation losses. 

Rather, the scale of selling suggests one or two massive sellers, likely institutional, who were determined to force the silver price lower, possibly in order to close or buy back underwater short positions.

Resistance in silver during the period March 2008 to September 2010 was $ 20/oz and this level provided support overnight and is an important long term support level.

While paper gold and silver is being manipulated though the use of leveraged selling on commodity exchanges and other gold and silver investment vehicles are being  liquidated — especially the ETFs — demand for physical gold and silver remains very robust as seen in high premiums internationally and lengthy waiting times for delivery.

The paper players have won the recent skirmishes, but those who own gold and silver bullion and focus on the long term will win the price war.

The scale of demand from China and India continues to be underestimated and this demand has accelerated after the recent price weakness. Large buy orders from China, India and other Asian markets are pushing the physical premiums to record levels.


Spot Silver in USD, 2007-2013 – (Bloomberg)

India is paying a premium of nearly $ 40 per 10 gram bars. Dubai buyers are paying a premium of $ 7-10 per kilogram. 

Turkey is reported to be paying a premium of $ 25 an ounce over spot prices. 

Hong Kong and Singapore buyers are paying premium of $ 5 per ounce for gold bars.

Demand is not just very strong in Asia. Bullion coin and bar demand also remains very robust in the U.S. and in Europe where premiums have also risen.

Government mints in Australia, the U.S, Canada, South Africa, Austria and the U.K. are reporting soaring bullion coin demand and are having difficulty meeting the scale of demand. 

Silver coins, in particular, are seeing rising premiums and delays in delivery.

Also little reported is the fact that refineries in Switzerland and elsewhere are also finding it hard to cope with the scale of international demand for gold and silver bars. 

It is clear that the recent fall in gold and silver prices was triggered by speculative traders operating in the futures markets and to a lesser extent by more speculative buyers of ETFs. 


Cross Currency Table – (Bloomberg)

Their short-term view of generating a trading profit is in stark contrast to the views of long term investors and store of value buyers of gold and silver bullion, as evidenced by the massive wave of physical bullion buying that has been seen in the last month.

The smart money will again accumulate and dollar cost average into positions on the dip.

News

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Silver recoups sharp loss and rises 2% on record volume

Posted on May 22, 2013 by Alex Roth

Today’s AM fix was USD 1,378.75, EUR 1,070.21 and GBP 908.39 per ounce.   Yesterday’s AM fix was USD 1,353.75, EUR 1,051.95 and GBP 890.86 per ounce. 

Gold climbed $ 19.40 or 1.43% yesterday to $ 1,384.30/oz and silver finished 2% higher. 

Silver’s recovery yesterday from being 10% lower at one stage to recouping these losses and then rising more than 2% was very positive technically. The key reversal is leading some to postulate that we may have seen the bottom or are close to a bottom. 


Spot Silver in USD, 3 Days, May 17, 20, 21 – (Bloomberg) 

This theory is bolstered by the fact that the 10% losses were due to a handful of a very large trades in a low volume session in Asia, while silver’s subsequent 12% reversal to the upside came amid extremely high trading volume with silver trading volume 82% higher than the 100-day moving average on the COMEX.

Silver’s fall could have been related to the gyrating yen/dollar price as some hedge funds and banks use proprietary trading systems and sharp losses in a leveraged yen/dollar position could have led to forced liquidation of silver.

However, the scale of the 10% loss in the silver market, and only the silver market suffered such large losses, would suggest that it was not simply due to margin selling on yen speculation losses. 

Rather, the scale of selling suggests one or two massive sellers, likely institutional, who were determined to force the silver price lower, possibly in order to close or buy back underwater short positions.

Resistance in silver during the period March 2008 to September 2010 was $ 20/oz and this level provided support overnight and is an important long term support level.

While paper gold and silver is being manipulated though the use of leveraged selling on commodity exchanges and other gold and silver investment vehicles are being  liquidated — especially the ETFs — demand for physical gold and silver remains very robust as seen in high premiums internationally and lengthy waiting times for delivery.

The paper players have won the recent skirmishes, but those who own gold and silver bullion and focus on the long term will win the price war.

The scale of demand from China and India continues to be underestimated and this demand has accelerated after the recent price weakness. Large buy orders from China, India and other Asian markets are pushing the physical premiums to record levels.


Spot Silver in USD, 2007-2013 – (Bloomberg)

India is paying a premium of nearly $ 40 per 10 gram bars. Dubai buyers are paying a premium of $ 7-10 per kilogram. 

Turkey is reported to be paying a premium of $ 25 an ounce over spot prices. 

Hong Kong and Singapore buyers are paying premium of $ 5 per ounce for gold bars.

Demand is not just very strong in Asia. Bullion coin and bar demand also remains very robust in the U.S. and in Europe where premiums have also risen.

Government mints in Australia, the U.S, Canada, South Africa, Austria and the U.K. are reporting soaring bullion coin demand and are having difficulty meeting the scale of demand. 

Silver coins, in particular, are seeing rising premiums and delays in delivery.

Also little reported is the fact that refineries in Switzerland and elsewhere are also finding it hard to cope with the scale of international demand for gold and silver bars. 

It is clear that the recent fall in gold and silver prices was triggered by speculative traders operating in the futures markets and to a lesser extent by more speculative buyers of ETFs. 


Cross Currency Table – (Bloomberg)

Their short-term view of generating a trading profit is in stark contrast to the views of long term investors and store of value buyers of gold and silver bullion, as evidenced by the massive wave of physical bullion buying that has been seen in the last month.

The smart money will again accumulate and dollar cost average into positions on the dip.

News

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Short squeeze fades in precious metals, contrarians spot time to buy

Posted on May 22, 2013 by Alex Roth

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the “Reprints” link at the top of any article.

The price of both silver and gold slipped back in London on Tuesday morning, cutting into yesterday’s rapid gains from four-year and one-month lows respectively.

World stock markets stalled after hitting a series of near and new all-time highs so far this month.

The British pound fell hard – supporting the gold price in Sterling above £910 per ounce – after new data showed a slowdown in consumer price inflation.

“These stunning upside reversals off fresh lows [in gold and silver] were somewhat justified,” says a note from brokers INTL FC Stone, “given that both were quite oversold.”

Monday’s sudden leap in the silver and gold price, which took only a few minutes, was sparked by a “classic short squeeze” according to several analysts today.

Bearish bets in gold futures rose last week to a record holding for speculative traders, breaking 100,000 short contracts – which profit if prices fall – for the first time on record, according to US regulatory data.

Monday’s dramatic $ 30 jump in the gold price equaled a 2.2% rise, but saw silver jump faster – up 3.9% in a matter of minutes.

Across in Asia, “Physical support for the price is currently huge,” says another analyst in a note, “but will not last forever in our view.

Two weeks after both India’s gold-buying festival of Akshaya Tritiya and tight restrictions on Indian gold imports, “There is no action in the market,” said one Mumbai bank dealer to Reuters earlier.

“Everybody has stopped consignment imports. [So] premiums are still on the higher side in the domestic market” at up to $ 20 per ounce above the world’s benchmark gold price for London settlement.

On the production side today, London-listed gold miner Petropavlovsk Plc – whose shares have lost two-thirds of their value since New Year, and whose executives have waived 2013 bonuses to help slash costs – extended the gold hedging program it began in February.

With output forecast around 21 tonnes for the next 12 months, Petropavlovsk has now hedged 15 tonnes of that gold, locking in a price of first $ 1,663 and then $ 1408 per ounce.

Forward sales by larger gold producers grew throughout the 1990s bear market. The industry’s total “hedge book” reached more than 2,900 tonnes in 2001. Leading analysts GFMS said earlier this month they don’t foresee a big move back towards gold hedging by miners any time soon.

As a sector, North America’s major listed gold mining stocks have dropped half their value since the price of bullion peaked in September 2011.

The gold price today stood 28% lower from then, trading at $ 1,375 per ounce by lunchtime in London.

“We have been tempted [by gold mining stocks] for a long time,” says Robin McDonald of Cazenove’s $ 1.6 billion Multi-Manager Diversity fund, speaking to TrustNet, and “we saw the fall of 22% back in April as the right time.”

Now adding Blackrock’s Gold & General fund to his holdings, “People have become wholly disillusioned with the asset class,” McDonald says.

“In my experience, when nobody has anything nice to say about an asset class,from a contrarian standpoint, it’s time to buy.”

Looking at silver bullion on Monday, Bank of America Corp’s Michael Widmer in London told Bloomberg that “A lot of the investors who bought silver on a view of Dollar debasement or inflation picking up massively I think are now disappointed.

“The other point,” Widmer added, “is that silver industrial demand in [this global] mood of subdued economic growth is not doing particularly well either.”

Meantime in the stock market, investment bank Goldman Sachs has raised its target price for the S&P 500 index – currently at 1665 – to 1750 by year’s end, with further advances to 2,100 in 2015.

“We forecast dividends will rise by 30% during the next two years,” says Goldmans. “Further expansion [in the price/earnings ratio, with stocks rising faster than revenues] is possible if interest rates stay low, growth improves.”

After holding U.S. interest rates unchanged between zero and 0.25% for the 53rd month running at the Federal Reserve’s last policy meeting, central bank chief Ben Bernanke is due to testify Wednesday to the Joint Economic Committee of the Senate.

“Bernanke is unlikely to hint at a tapering of [quantitative easing] bond purchases,” says today’s Commodity Daily from the analysis team at Standard Bank in London, “which would be a positive for gold.

“Below $ 1,360 the metal represents a reasonable buying opportunity.”

News

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Platinum falls with gold despite media attention

Posted on May 22, 2013 by Alex Roth

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the “Reprints” link at the top of any article.

As investors weigh the possibility that the Federal Reserve will scale back stimulus plans, the U.S. stock market is making a small pullback this morning. The market is relatively quiet in anticipation of the Fed minutes and the Bernanke testimony tomorrow.

Equities: We believe the market could be very ripe for a pullback, after steadily marching higher through the whole month of May. After hitting 1670, the JUN13 E-mini S&P 500 market is range-trading this morning in the 1660s. Right now, the market is up .75 points to 1665.50. The JUN13 E-mini Nasdaq 100 is up 2.25 points to 3023, and the Nikkei futures are up 125 points to 15465.  Even though we believe the equity markets are in the potential early stages of a longer term bull market cycle, we also think this market is indeed ripe for a small pullback, and we may get a reason for that on Wednesday, if the minutes from the FOMC give official indication of a slowing of Fed stimulus.

Bonds: The bonds have been fairly bearish this month, with various fed officials peppering the newswires with comments of slowing QE. The JUN13 U.S. 10-year note is down 1 tick to 131’25. We continue to hold the belief that the U.S. bond markets (10-year and 30-year futures) have potential to move lower in price. As we have been discussing, the key metric to watch each month to help determine when the Fed will or won’t start to slow its own bond purchases is the unemployment percentage.

Currencies: The U.S. dollar continues its bullish run against the Aussie dollar and the Japanese yen this morning. The yen is still holding above our key pivot level of 97.60, and since this is true as of now, we would not be surprised to see a short covering rally. The Aussie dollar is down 17 ticks to 97.81. Our key short term resistance level is 98.26, and our next key support level below is 96.80. We believe the trend for this currency is clearly down, but would not be surprised to see a short term sideways trade to consolidate the market before its next move.

Commodities: After a rapid short covering rally in gold, which took the futures up to $ 1,400, the market is back down to $ 1,370 today. Platinum is down big, trading down $ 28 to $ 1,457. Our key resistance levels for platinum are $ 1,500 and $ 1,520. Even though platinum is gaining media attention as an “alternative precious” metal to use as an investment, we still believe it is susceptible to downward price movement if the U.S. dollar continues to have strength.

Click to enlarge.

About the Author

Anthony Lazzara

Anthony Lazzara

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.

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6 reasons gold stocks will begin a huge rally

Posted on May 22, 2013 by Alex Roth

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the “Reprints” link at the top of any article.

1. Huge rallies begin from these conditions

Below is the NYSE Gold Miners Index which is tracked by the GDX ETF. Look at the RSI. Not only did it reach a multi-decade low but it has remained oversold far longer than during the comparable periods. In the four previous periods, the market rebounded suddenly and strongly in percentage terms. Meanwhile, the bullish percent index, a breath indicator is more oversold than in 2008. We plot the indicator with a 10-week moving average that shows it as far more oversold than in 2008. While this indicator does not go back that far, odds are it is likely at a 13-year low.

Click to enlarge.

2. Springtime is usually a turning point for gold stocks.

According to seasonal analysis, precious metals usually peak in the late spring. However, a study of the past 12 years shows that it’s more apt to say that spring is a turning point. In the above chart we mark the tops or bottoms that occurred in April or May. Assuming we are presently at a bottom, then spring will have marked a turning point in gold stocks during 11 of the past 13 years.   

3. A selling climax already occurred and the recent low is a false breakdown.

The selling climax occurred in April when GDX declined 24% in only six days. The 20-day volume average peaked days later at 30 million shares. The previous high was 21.5 million shares in June 2012. GDX has also formed a bullish RSI divergence and Monday reversed on record up volume. Prior to Monday, recent weakness was on average volume which was substantially less than during the selling climax. This is a subjective thought but this potential bear trap and false breakdown could be the retest. When you get a failed retest that is a trap or false move it can result in a V bottom. Look for a potential head and shoulders bottom or a V bottom. Finally, if the RSI pushes above 50 then that is a good sign. 

4. History suggests the cyclical bear is just about over

Each secular bull market in gold shares has endured two major cyclical bear markets. The chart below, which uses weekly data, shows the four corrections. It is possible this correction could last a bit longer and move a bit deeper but in the big picture, the next big move is higher, not lower. 

5. There is potential for a huge short squeeze.

Gross short positions are at all-time highs. Some short positions were covered as gold rebounded from its crash low at $ 1,320. After the rebound fizzled short positions reached an all-time high. Gold has formed a short-term double bottom. Without a doubt, short covering contributed to Monday’s huge reversal. If Monday’s rebound is sustained, look for a torrent of short covering to follow. 

6. Cyclical rebounds usually are huge in percentage terms

The chart below shows the first five months of performance of the cyclical bull markets within secular bull markets. The advances that began from the least oversold conditions were the least powerful. If the next rebound is similar to 2000 or 2008 then it will achieve more than 50% in the first five months.

There you have it. It’s been a tough road for precious metals but the path ahead has strong potential of being significantly profitable compared to these levels.

Good Luck!

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