Pension Deficit
A pension deficit refers to a condition when a pension fund has insufficient assets to meet its obligation. This term is also referred to as “underfunded pension.” A pension fund can have a deficit for many reasons—one of these reasons could be due to market downturns. Pension funds usually invest their assets to grow over time; if the market turns against them, the losses add up, causing severe hardships in gaining back the amount lost without taking more risk. When a pension fund has a deficit, it pays its current obligation from current income, rather than withdrawing it from assets grown over time.
Demand for Silver Coins Jumps 148%; Investors Start Pouring In
By Michael Lombardi, MBA for Profit Confidential
As central banks around the world are now net buyers of gold bullion, I’m getting more bullish on silver. (Don’t get me wrong. I love gold, and I am a big believer of gold prices moving higher.) But gold bullion may have become too expensive for small investors to own…and silver could just be that low-priced alternative for investors to protect themselves from coming inflation.
At present, both gold bullion and silver alike are experiencing significant negative sentiment. In the midst of all this and severe pressure from the bears, the demand for silver hasn’t declined; as a matter of fact, the demand for silver is increasing and robust to say the least.
In February 2013, the U.S. Mint reported that it sold almost 3.7 million ounces of silver in coins. In the same period of 2012, it sold 1.49 million ounces of silver. Simple calculation would show that’s an increase of more than 148% in demand for silver coins in one year! (Source: U.S. Mint, last accessed March 5, 2013.)
Looking at the long-term chart of silver below, we see it is still in a bull market:
Chart courtesy of www.StockCharts.com
Technical analysis of the chart above would indicate a significant amount of support available for silver prices at the $28.00-an-ounce level. This level has been tested multiple times, with silver prices bouncing higher on heavy volume each time $28.00 an ounce was hit.
With central banks around the world printing paper money and working overtime to devalue their currencies, even if they stop now, the damage to fiat currency (and the inflation issues we will have to … Read More
The Pension Deficit Problem Threatening Corporate America No One Seems to Talk About
By Michael Lombardi, MBA for Profit Confidential
As key stock indices continue to march towards new highs, there’s a wave of trouble brewing among big-cap companies regarding their pension deficits. While the mainstream focuses on a stock market propped up by low interest rates and money printing, few are talking about the big threat to corporate America known as the “pension deficit problem.”
According to Mercer, a pension consultant company, at the end of 2012, pension funds of S&P 500 companies had assets of $1.59 trillion and liabilities of $2.14 trillion—a pension deficit of more than $550 billion. (Source: Mercer, February 5, 2013.)
Some big-cap companies are showing concern and doing something about their pension deficit problems. For example, Ford Motor Company (NYSE/F) expects to spend $5.0 billion in 2013 to decrease its pension deficit—about the same amount Ford spent in 2012 on building plants, buying equipment, and developing new cars. (Source: “Low Rates Force Companies to Pour Cash Into Pensions,” Wall Street Journal February 3, 2013.)
Even with all the measures taken to control its pension deficit, Ford’s pension deficit increased to $18.7 billion at the end of 2012. Chief Financial Officer (CFO) Bob Shanks said, “It has got to be a problem for any large company that has a defined benefit plan.” (Source: Ibid.)
The Dow Chemical Company (NYSE/DOW), one of the big-cap companies on key stock indices, posted a loss of $716 million in the fourth quarter of 2012. The company’s CEO, Andrew Liveris, said the company is facing a “massive pension headwind” due to the change in the discount rate. The company expects that pension costs will go up to $250 million … Read More
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