TFMR Podcast #26 - David McAlvany of McAlvany Financial Group


I met David McAlvany last month at FreedomFest in Las Vegas. I asked him to come on for a podcast and he happily obliged. I'm glad he did.

At FreedomFest, I showed up the first morning to hear presentations from John Browne and Peter Schiff, both of EuroPacific Capital. They were terrific but so was this other guy who I'd never heard of before. His name is David McAlvany and I was immediately struck by the feeling that here was someone who "gets it".

Since I'm often asked if I "know any good financial advisors", I thought that David would be a good person to introduce to Turdville. He seems to see the world as we do and he is doing his level best to warn the masses of the coming disasters. His firm is producing a three-part video series that promises to be educational and informative. The first video came out a few months ago and is linked below. I strongly encourage you to take some time to watch the video once you've finished listening to the podcast.

If you suspect that David and his company can help you in any way, more information can be found at

The Fuse is Lit | European Perils | Part 1


Aug 27, 2012 - 2:38am


I would not want to presume either than the FRN fails or that it is strong.

I can only suppose that it will continue the same action that it has had over the past 70 years.

To answer your question, I do not think it wise to go "all in".

You need fiat to trade for things.

Aug 27, 2012 - 12:35am

Just realized why so little activity here.

Going over to the other thread. Thanks Guys!

Aug 27, 2012 - 12:33am


Didn't really need to, but haven't checked them for some time. Two are four star and one is five.

Aug 26, 2012 - 11:55pm
Aug 26, 2012 - 10:51pm


Strong, you are a good man. I am "assuming" there of course. You go far above the call of duty, but it's much appreciated. However, please let me inquire. Your entire scenerio appears to assume that, 1.) the U.S. dollar and financial system is maintained for at least another five years, 2.) PM's will NOT make a strong run in the next three to five years. Of course there are no "guarantees" they will, and I fully understand that, but both of those premises seem to run counter to the sentiments of not only those here, but also those around the world who are held in high esteem by most here. It would appear that you do not concur???

Now, to clarify some points. I do know three bank presidents or loan officers and have done work with them all for from twenty to forty years. Trust is not a problem.

I am not considering draining one or both the 401k and/or IRA, of which I do have both.

Sorry to keep amending the ground rules, and I don't mean to do that, but I didn't expect such a comprehensive analysis. But I do appreciate it. Slow day I guess.

Aug 26, 2012 - 10:12pm

@Terabytes some thoughts and numbers for you

I've read the comments from various people.

Some questions for you to think about.

1. Do you really trust the bank to honestly handle the loan note? I've seen alot of shady deals around California and would never want to see any family member older than 65 (i.e. fixed income) in a home with ANY type of promissory note to ANY other party. Our family actively seeks to eliminate any bank from any leverage over ANY of our family members. After the horrible performance of the major banks and the outright defrauding of so many Americans with an utter lack of any prosecution of white collar crime by the FBI, why in the world would you want to allow any bank or any other party an opportunity to lien on any property of yours?

2. Provided you have an incredible relationship with a local banker and bank, and that you actually execute a 10 year note HELOC for say $100,000 (25% of a $400,000 home), you would likely get a 2.5% rate.

The official core inflation rate is only 2% now, but if the core starts reflecting reality, you could see a 7 to 9% actual rate in some future year. This is the scenario that you are attempting to guard against with your gold doing a better job preserving your wealth than the USD cash in the 401k.

However, the FRB has already stated that they want persistent zero interest rate policy set for the next 2 years (2014) and is now rumored to be ready to move past 2014 (say 2015?) with ZIRP in place. A ZIRP situation for the next 3 years would also be guarded against by the silver and gold position, but by how much? For instance, if you are losing a relative 3% of your buy power each year, how much does that really erode your actual holding.

Again, returning to the supposed idea that you may have $100,000 in the 401k, you would be losing $3,000 per year of wealth by virtue of ZIRP.

Eric Sprott raises the important observation that Negative Interest Rate Policy (NIRP) is different than ZIRP. Under NIRP, you are not only losing the 3% buy power per year, but you are also also losing say 1-2% as the central bank holds sovereign debt bonds (i.e. bunds) that are yielding NEGATIVE 0.25%. Between the costs of the 401K fund and the NIRP bunds, you could be losing as much as 4-5 % of the 401k's actual buy power. Therefore, in this actual real - world situation, you will be losing as much as $5000 per year or nearly $500 per month of your buy power over the next 3 years due to FRB policy.

The insurance you appear to be looking for is to eliminate the loss of buy power over the remainder of your life.

Let us assume you are going to live to 100 years of age (another 20 years). The worst case scenario is NIRP for the next 3 years (I can't believe that the world would permit the revision of these debts for longer than 3 years). Therefore, let's assume that you need to insure against $15,000 of loss of buy power, based upon wanting to preserve the wealth of $15000 and lock in gains?

Instead of cashing out the entire 401k, would it not make more sense to cash out enough to just buy say 10 ounces of gold and say 500 ounces of silver?

10 ounces of Au = $17,000.

500 ounces of Ag = $17,000 or so?

This would mean your loan is only $34,000 and you've preserved the other $70,000 or so in the 401K.

If you only want to handle the Au, you can withdraw $34,000 and pay uncle sam his cut. Then, buy and hope the heck that gold moves up 30% over your lifetime. it might, but it might not.

My guess is that a mix of gold and silver bullion is a better call. You can achieve this by using the 50:1 gold, silver ratio to your advantage. If you assume that the ratio should correct to say 40:1 or even 35:1, you can do a calculation to start buying silver periodically.

In order to help your fixed income breathe better, if you hold some in cash and keep powder dry after building your base, you can pull out some in the next tax year (unless you think Ag and Au are going through the roof and orbital in the next few months).

Keeping powder dry for fixed income people is important. You need more than 50% of your powder dry in order to take advantage of dips. Remember to BTFD first. Do not run in on upticks and beware of big runs. They're designed to suck in the speculators (which you are going to partly doing based upon your age and profile) and yet may not pay off.

You need dry powder in 5 years. If you blow through it too fast now, you might not be able to BTFD in the future.

If you buy on a periodic interval, you can dollar cost average and not really care what the daily or weekly chart says.

I kept a spreadsheet for two years with spot price of gold and silver. I got really busy with personal and health stuff a few months back and returned to the sheet today after 90 days siesta. I totally laughed. The price was nearly the same!

Aug 26, 2012 - 9:51pm


I hear you on the "clear roof over the head" alright. As I analyze further, it would appear that under my plan the greatest risk would be that after borrowing the fiat and converting it to PM, the good old gov confiscates the retirement account. However, if that be the case, then the PMs should be at a multiple level. When it comes right down to it, I guess the real question is which risk has the most probability of actually happening. We already have a good stack, based on our son's advice and reading this forum. Great credit to Turd. Thanks Big Guy!

Perhaps an interesting exercise would be to make a list of the risks and see which ones the gang considers the top three, and in what order.

Aug 26, 2012 - 9:07pm


I have an extreme prejudice against debt. That said, and with a better understanding of your situation, I think I'd borrow from my whole life policy before I'd risk the roof over my head. If you don't have one, that's out. I'd definitely do a little math with my accountant to see exactly what my tax liability would be. Have you maxed out this year's withdrawals? I'd also do some projections for the next five years, making some educated assumptions about inflation, the probability of rising real property taxes (is your taxing authority struggling for funds, or in the black? Are there limits on the amount they can raise taxes each year?) Lastly, you may want to look at how your estate would be affected by the decisions you make. I know Zero wants a 55% estate tax, but I don't remember where the threshold is pegged. I don't know if certain assets would be exempted. I almost had a coronary when I found out how much my parent's estate tax bill was. Lots to consider, and I'm no financial planning guru, but I know I'd be crunching a lot of numbers before I did anything. Before I make any major moves I try to make as long a "what-if" list as I can.

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Aug 26, 2012 - 8:36pm

Cashing out 401ks

Since a few people have mentioned it I'm posting this:

"Progressives" want to replace your 401k' & IRA's with a "Universal Pension System".

This would "relieve" you of the burden of the volatile market and low Treasury yields. It would also bail out city & state pensions that are underwater due to low bond your expense!!!!

Aug 26, 2012 - 8:10pm

RE: Alias

I think for now on I'll just use John Galt... they'll know it's fake, and maybe get the message...

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Key Economic Events Week of 11/23

11/23 9:45 ET Markit flash PMIs
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11/24 9:00 ET Case-Shiller home prices
11/24 10:00 ET Consumer Confidence
11/24 11:00 ET Goon Bullard
11/24 12:00 ET Goon Williams
11/24 12:45 ET Goon Chlamydia
11/25 8:30 ET Q3 GDP 2nd guess
11/25 8:30 ET Durable Goods
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11/25 10:00 ET Core inflation
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Key Economic Events Week of 11/16

11/16 2:00 pm ET Goon Chlamydia
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11/17 10:00 ET Business Inventories
11/17 1:00 pm ET Chief Goon Powell
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11/19 8:30 ET Jobless claims
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Key Economic Events Week of 11/9

11/9 1:30 pm ET Goon Mester
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11/10 10:00 ET JOLTS job openings
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Key Economic Events Week of 11/2

11/2 9:45 ET Markit Manu PMI
11/2 10:00 ET ISM Manu PMI
11/2 10:00 ET Construction Spending
11/3 U.S. Election Day
11/4 November FOMC begins
11/4 8:30 ET ADP jobs report
11/4 8:30 ET US Trade Deficit
11/4 9:45 ET Markit Services PMI
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11/5 8:30 ET Productivity & Unit Labor Costs
11/5 2:00 ET FOMC Fedlines
11/5 2:30 ET Chief Goon Powell presser
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10/27 8:30 ET Durable Goods
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10/29 8:00 ET ECB monetary policy stmt
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Key Economic Events Week of 10/19

10/19 11:45 ET Goon Chlamydia
10/20 8:30 ET Housing Starts
10/20 1:00 pm ET Goon Evans
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Key Economic Events Week of 10/5

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10/2 8:30 ET BLSBS
10/2 10:00 ET Factory Orders

Key Economic Events Week of 9/21

9/21 8:00 ET Goon Kaplan
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9/21 Noon ET Goon Brainard
9/21 6:00 pm ET Goon Williams & Goon Bostic
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9/23 10:00 ET Chief Goon Powell on Capitol Hill
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9/23 Noon ET Goon Rosengren
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9/24 10:00 ET Chief Goon Powell on Capitol Hill
9/24 Noon ET Goon Bullard
9/24 1:00 pm ET Goon Barkin again & Goon Evans #3
9/24 2:00 pm ET Goon Bostic #4
9/25 8:30 ET Durable Goods
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