A reader at Dave Ramsey, Peter Schiff, and Decline of U.S. Economy asks if he should move his 403b and pension over to Vanguard’s International Growth Fund and Fidelity’s Select Gold.

So I’m starting to think that Schiff’s recommendations sound plausible. Problem is, I have very little savings, and a decent sum of money in my employer sponsored 403b (basically the same as 401k) at Vanguard. I also have an employer paid pension at Fidelity.

Fidelity has the “Fidelity Select Gold” mutual fund. Our Vanguard plan has no mutual funds available for precious metals although they do have some International Funds.

So my thinking is to move my Vanguard funds into the international funds and my fidelity fund into the Fidelity Select Gold fund.

Is this a viable alternative to investing in gold bullion?

Garret

Hey Garret,

First off I’m not qualified to answer your question. Understand that I’m not giving legal advice or investment advice with this reply. I don’t feel I’m well enough read (on investments) to instruct people on how to invest. That being said I’ll share my opinion…

From Fidelity’s website

“Investing primarily in companies engaged in exploration, mining, processing, or dealing in gold, or to a lesser degree, in silver, platinum, diamonds, or other precious metals and minerals. Normally investing at least 80% of assets in securities of companies principally engaged in gold-related activities, and in gold bullion or coins. Potentially investing in other precious metals, instruments whose value is linked to the price of precious metals, and securities of companies that manufacture and distribute precious metal and mineral products (such as jewelry, watches, and metal foil and leaf) and companies that invest in other companies engaged in gold and other precious metal and mineral-related activities. Normally investing primarily in common stocks.”

This is not the same as owning bullion… or as safe. They’re involved in many aspects of the gold ‘market’ without your investment being tied directly to gold. So goes the gold ‘market’… so goes your investments. As you may be aware gold crested earlier this year (in dollars) around $1,000/ounce. Now it’s on a plateau in the low $800′s. Also, the dollar is currently rising in value.. will this continue? Or will Washington print its way into the next depression? I honestly don’t know. But for now the gold mints can’t keep up with the demand for gold coins… that was NPR radio last week. Also, three weeks ago Alan Greenspan spoke before some group of useless bureaucrats and said our economy would get worse. Since he caused the current mess I’d say he probably has a better idea than most on how long it will last. The October 29th Central Bankers meeting was rather gloomy.. they seem to think things may get worse as well.

Members anticipated that economic data over the upcoming intermeeting period would show significant weakness in economic activity, and some suggested that additional policy easing could well be appropriate at future meetings. In any event, the Committee agreed that it would take whatever steps were necessary to support the recovery of the economy.

All this doom is good for gold… at least in the short term (two more years). For now I think gold is stable as a hedge (but as an investment with profit as the goal… the money has already been made). It’s a tough call… and it’s all yours.

So putting money in international funds vanguard…

Vanguards IGF (on the surface) looks good to me

I still have no faith in the dollar and I fully expect 2009 to be worse than 2008 for the U.S. economy.

To answer your question… this strategy is a decent one for the circumstances you are in (my opinion). I do not expect our economy to repair itself rapidly… we’ve had too much bad behavior and the spanking is long overdue.

Good Luck and Happy Hunting!!

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