Rigged 401(k) Plans Exclude Gold

People with 401(k) plans have been sold a great investment tale. This tale
includes long-term growth, investment diversification and a source of retirement
income that will keep 401(k) owners smiling just like the happy people in the
marketing brochure. The only thing people need to do is sock away as much money
as humanly possible into their 401(k) plan, and great riches will follow. But is
it true? The Diversification Farce Most 401(k) plans purport to offer a
diversified menu of investment choices that complies with the U.S. governments
Employee Retirement Income Security Act. Some of these 401(k) investment choices
may include U.S. stocks, small-cap stocks, international stocks, emerging
markets, bonds, money market and probably even a few target dated retirement
funds. The claim is made that a portfolio of stocks, bonds and cash offers
adequate diversification. But missing from your 401(k) mix are other notable
asset classes like gold (NYSE: GLD ), silver (NYSE: SLV ), precious metals
(NYSE: GLTR ), commodities (NYSE: GSG ) and global real estate (NYSE: RWO ). How
can a 401(k) menu make the false claim that its diversified if it lacks coverage
to all major asset classes not just stocks, bonds and cash? Regardless of these
petty atrocities, ERISAs distorted diversification standard is good enough. So
long as 401(k) providers comply with ERISA, they can make the technical claim
they offer a diversified investment menu to 401(k) participants. Why Does it
Matter? An estimated 72 million people have 401(k) plans or something similar
with an aggregated sum of $3 trillion, according to the U.S. Department of
Labor. Now more than ever, 401(k) investors need to have a complete set of
investment choices to combat instability in government and the global economy.
And a straight portfolio of stocks, bonds and cash wont cut it. The only product
structures that accommodate asset classes like physical bullion and commodities
are exchange-traded funds. But since the 401(k) industry has a bias against ETFs
in favor of mutual funds, they refuse to give their 401(k) customers a complete
investment solution. Instead, they favor the status quo. A recent study by the
U.S. Government Accountability Office proves this. It showed how the 401(k) and
mutual fund industry has spent much of its efforts not on issues to improve
401(k) plans, but on fee splits with business partners, marketing and defending
their bureaucracy. A GAO study revealed that revenue sharing, whereby a mutual
fund company shares its fee income with the 401(k) plans administrator, is a
common practice. The actual compensation can range from 0.05% to 1.25%. Why is
it a problem? Because it creates a hidden incentive for the 401(k) service
provider to recommend investment choices with higher fees, some of which may
even include funds with substandard performance. In this slimy environment, how
could a precious metals ETF that offers no hidden B-52 fees or other subversive
fee payments ever make it onto a 401(k) menu?