GOLD & RARE COIN BREAKOUT!
Jan. 1, 2004
"Consumer confidence hits 10-year low," AP
"Economy's woes go deeper than Iraq" - USA Today
"Dollar Falls After Snow Embraces Decline - CBS
"Gold looks like it's ready to run" - CNBC Morning Call
With daily headlines like these is it any wonder investors are confused and lacking confidence?
It seems the world is full of nothing but unanswered questions, especially when it comes to the all important question; "What should you do with your money today?"
Significant economic developments have prompted me to send this Special Alert to our clients and prospective clients. I am very bullish on gold coins for several reasons (outlined below) and am now convinced that bullion and numismatic U.S. gold & silver coins are in the early stages of a long term (“secular”) bull market!
The time has come to clearly identify the enemies of your finanical holdings and your best friends -- especially during times of uncertainty and lacking confidence.
A NEW BULL MARKET IN GOLD IS EMERGING NOW! - CONTRIBUTING FACTORS:
· Continued weakness of the U.S. dollar vs. foreign currencies.
· Prices of other commodities are rising as expressed by CRB index.
· The price of oil has risen, causing inflationary pressures.
· Overvaluation of the Dow, Nasdaq, and S&P 500.
· Consumer confidence is falling due to scandals/investigations on Wall St.
· The potential of future terrorism and "financial terrorism".
· The trend of diminished gold mine producer hedging/increased "buy backs".
· The Howe-Bolzer report proving the worlds central banks have loaned significantly more gold than previously reported, resulting in inventories half the size previously believed by the public.
· Strong demand for gold from Asian/Arab countries, gold dinar launch.
· The exacerbation of the annual shortfall of physical gold between world mine production and world consumption to over 1,500 tons.
· The technical breakout of gold out of 15-year downtrend.
· The potential of a "slingshot" short covering rally caused by producers and bullion banks that are massively short gold. · Looming annual U.S. budget deficits and $400B trade deficits.
Even the most bullish stock ananlysts will concede that today the potential of an ongoing bear market in stocks and the U.S. dollar is possible -- because all markets are cyclical in nature. Smart money is beginning to understand that we are in a major paradigm shift in which investors sell paper denominated assets and buy hard assets like gold and other commodities.
UNITED STATES RARE COINS: THE TOP PERFORMER
-> Few people noticed that gold was the best performing market sector in 2002, and more importantly, it appears this trend is just beginning. (Gold broke out of it's 15-year downtrend in 2002).
-> The last time we saw this major shift into hard assets was in the early 1970's when gold rocketed from the low $140/ounce to $850/ounce in January 1980. But the best news is still ahead.
-> High quality U.S. gold pieces ($20 Liberty and $20 St. Gaudens) prices exploded upwards during this time period.
-> The price movement for lower grade $20 pieces (AU & MS-60), higher grade (MS-63 & MS-64) and very high grade (MS-65) perfomance is illustrated in the enclosed 23-year charts.
[NOTE:The price movement of gold bullion may be overlaid on each of the $20 gold piece charts for a comparison by clicking on the chart]
-> Note that between 1985-1988 gold prices rocketed from $300 to $500 (a 66% increase) the wholesale price of a MS-65 $20 St. Gaudens rose from $1,200 to $4,000 (a 233% increase). That is over three the growth -- over the same time period!
-> The same is true of the MS-65 grade $20 Liberty, which rose from a wholesale price of $1,800 to over $10,000 (a whopping 455% increase!)
-> This growth differential clearly demonstrates that the best way of taking advantage of this emerging bull market in gold, as well as having personal financial protection, is the acquisition of investment-grade gold numismatic coins. Period.
DOWNSIDE RISK VS. UPSIDE POTENTIAL
Take a good look around. People are afraid the economy and terrorism. Gas prices are still at high levels. Most investors continue to lose money in the stock market. Decent jobs are much less available. The dollar is falling like a lead balloon. Consumers, governments and municipalities are all facing debt problems of epic proportion. Companies are cutting back and the job market is tight. We have negative real interest rates, a falling dollar and a government that is printing more money in an attempt to inflate a failing economy. Most importantly, the overseas demand for gold is very strong and the central banks, which have sold gold heavily in the past to keep it from rising too quickly, are running out of gold to sell. All of these factors are extremely bullish for the gold/rare coin market.
With all of this as a backdrop, I ask you to consider your downside risk on gold - perhaps 10-15%. Now, consider your upside potential if gold bullion moves to $500, $600 or $700 in the next few years. That would be 40%-200% increase from the current $350 price. But that is just the potential of gold bullion. The upside potential of investment grade U.S. rare coins is two to three times higher than bullion, based on past performance (1980-2003).[DISCLAIMER: Past performance is no guarantee of future performance.]
We have confidence in our product, based on a 6,000 year track record which illustrates that gold is worthy of your confidence, no matter what crisis we may face.
The real question is, "Can you afford NOT to own some gold right now?" That question must be answered by each investor once he comes face to face with the facts, the numbers and the alternatives. That is the job of Swiss America brokers and, if they have done their job right, you will soon understand why we are 100% confident that rare gold coins are ready to rocket. Call us today at 1-800-289-2646 to join the new gold rush into quality U.S. gold coins.
Craig R. Smith
CEO, Swiss America
P.S. In Jan 2004, I published an update to this report, which is titled 2004: WHAT'S IN STORE?. Please read!
P.P.S. Also, please read The Right to Own Gold for detailed U.S. economic and gold history. Here are a few sample quotes from noted economists that support our position ...
"We're now in the first or early phase of the gold bull market. Every time gold dips, every time some central bank or some manipulator dumps gold, the metal moves out of weaker hands and into stronger hands. Finally, gold establishes a rock-bottom base. The weak hands have either been knocked out of the market - or sold out or scared out. Once that happens, gold will be ready to move higher and ultimately into its second phase. The second phase is the phase where the public finally becomes interested in the item. But we are not near the second phase yet. Skepticism towards gold, is the condition of the market at this time. Before this bear market [in stocks] is over we're going to see things that we've never seen before. I don't profess to know just what these "things' will be. But I know enough to appreciate gold in this era of deficits, debts and phony money. Gold is ultimate money, gold is safety. Before this bear market is over, we're going to need safety, as much of it as we can garner".
-RICHARD RUSSELL, Dow Theory Letters
"Like gold, US dollars have value only to the extent that they are strictly limited in supply. But the US government has a technology, called a printing press...that allow it to produce as many US dollars as it wishes at essentially no cost...under a paper money system can always generate higher spending and hence positive inflation. Sufficient injections of money will ultimately always reverse a deflation."
-BEN BERNANKE, Fed Governor,12/3/02
"The pension crisis is shaping up to be the worst in history. Nationwide, corporate pension funds last year were an estimated $240 billion to $300 billion short of what they're committed to pay retirees, and that gap is growing. Shortages for state and city government pension programs could be another $350 billion".
-STEPHEN NESBITT, Wilshire Associates
"The rapidly growing trade in derivatives poses a 'mega-catastrophic risk' for the economy and most shares are still 'too expansive', legendary investor Warren Buffet has warned. But Mr. Buffet argues that such highly complex financial instruments are time bombs and 'financial weapons of mass destruction' that could harm not only their buyers and sellers, but the whole economic system. This year, he remains cool towards further share investments, despite the sharp correction in stock market values. Mr. Buffett says this 'dismal fact is testimony to the insanity of valuations reached during The Great Bubble'.
The unemployment rate rose to 5.8% from 5.7% percent in January, nearing an eight-year high, and hours worked fell, the Labor Department said. "The report was frighteningly weak, thereby raising the possibility of a double-dip recession,"
-DAVID ROSENBERG, chief economist for Merrill Lynch & Co.
"Clearly, the cabal is unable to keep gold below $350 for very long. With the dollar heading further south, it will be impossible. The Gold cartel has to use up too much gold at those prices. Even they have limits, especially since half the central bank gold is already gone. At some point, they are going to have to deal with the fact they cannot afford to kick in any more ammo to keep gold from taking off. The monthly supply/demand deficit is too large. Only sharply higher prices can bring gold anywhere close to an equilibrium price level."
-BILL MURPHY, GATA
"This era of low inflation we've enjoyed is about to come to a close. In the wake of September 11, monetary and fiscal policy was more stimulative than at any time in recent history - perhaps including WWII. As a result, money supply is surging, the dollar is falling, and we're piling up mountains of debt. All of these conditions inevitably lead to inflation. And if you think the Fed is going to raise interest rates and risk triggering a recession, think again. Corporate debt is too high and financial markets too leveraged to face the threat of a potentially catastrophic vicious circle in which economic weakness feeds itself. That's why to fend off any global abyss, the Fed will keep flooding the economy with money….and set the stage for roaring inflation. The bottom line: you must look elsewhere for long-term growth moving forward. And that means it's time to stand up and take notice of the vast fortunes to be made from assets that possess the only trait that matters for building your wealth in the turbulent '00s: the potential for sharp supply constraints relative to potential demand. In the past year or so, we've been seeing a massive shift in investors' preference from overvalued financial assets to undervalued real assets. This real asset bull market is just starting to get underway….and will attract more and more investors the higher it goes."
-STEPHEN LIEB, Personal Finance
"Gold and economic freedom are inseparable ... deficit spending is simply a scheme for the 'hidden' confiscation of wealth ... gold stands in the way of this insidious process."
-ALAN GREENSPAN, FED Chairman
"Gold has always been the "safe haven" to which people rush when they get panicky. When the dominos start to fall this time, the masses will become spooked and fall over themselves to get into gold, as they did in the late 1970's. This stampede could cause tremendous spikes of as high as $3,000 or even $5,000 an ounce."
-JAMES DINES, The Dines Letter
Special thanks to Dr. Fred Goldstein and Tim Murphy for contributing to this Special Alert.