In Search of the Best Investment on Earth
INTRODUCING "THE RULE OF GOLD"
By Craig R. Smith, CEO SATC
Dec. 29, 2005
"Buy the truth, and sell it not; also wisdom and
instruction and understanding."
Finding the truth can be hard in today's busy, noisy world.
Finding financial truth is even harder without a plumbline. It used to be the U.S dollar, until 2002. It then became the Euro, until 2005.
In 2006, gold is emerging as the new international plumbline, in a cockeyed world of paper and debt.
In Pilgrim's Progress, John Bunyan pictures the pilgrims passing through Vanity Fair. In Vanity Fair there were to be found all kinds of merchandise, consisting of the pomps and vanities to fulfill the pleasures of this present life. All the dealers, when they saw these strange pilgrims come into the fair began to cry out, as salesman do, "Buy, buy, buy -- buy this, and buy that."
The key is to develop your God-given ability of discernment, or common sense, then it matters not what the chorus of financial cheerleaders are saying because you're grounded in truth.
CNBC viewers polled on Dec. 28th felt tangible assets -- oil and gold -- would capture the financial news headlines again in 2006, followed by intangible assets -- Google and GM. Indeed, times they're a changing, yet gold stands firm as the only world currency capable of maintaining a 'truthful' store of value over history
The 'Commodity of Exchange' Has Changed!
In the neighborhood of my childhood there were two commodities of exchange: marbles and baseball cards. As I grew up, a third commodity of exchange appeared on the scene in 1967: Newly retired U.S. coinage minted in gold and silver.
Even as a teenager I intuitively knew collecting and saving these historic coins would someday pay big dividends in the future. After all, I thought, why would the government remove all of the precious metal from our money starting in 1967, if it were not more valuable than paper or pop metal?
Eventually I turned my hobby into a business, which will celebrate 24 years of service in 2006, by the grace and mercy of God. Since day one I have marveled at how much trust we Americans put in paper promises and debt instruments.
After the roaring 90's came a rude awakening in the financial markets: True wealth is tangible and even though the so-called financial experts had officially declared "gold is dead" it would rise again in the 21st century -- and so it has!
After slowly, but steadily doubling in price over the last five years, GOLD has now is begun moving up faster because it's entered a NEW phase.
Strong physical demand, central-bank buying and concerns about inflation are but a few of the major elements now driving this worldwide precious metals rally; which has still yet to fully impact the U.S. public.
Four years ago, my first book "REDISCOVERING GOLD IN THE 21ST CENTURY: The Complete Guide to The Next Gold Rush" hit the streets boldly announcing the beginning of a new global gold rush (back when gold was $265 an ounce). The book largely went unnoticed following 9/11. Yet very quietly and below most investors' radar screen, gold prices have doubled and some high quality rare gold coins have tripled!
Over these past five years it's been interesting to watch the mainstream financial community slowly begin to back peddle on their anti-gold positions. Why a mere five years ago owning gold was considered stupid by most financial professionals. But who's laughing now about the wisdom of owning gold?
In addition as of late 2005 there is yet another new and powerful reason to own gold: Gold is the only 100% safe currency in the world that's debt free!
Richard Russell's Dow Theory Letters hit this nail right on the head on 12/5/05: "Gold has entered a new phase. This phase is characterized by gold separating itself from all paper currencies including the dollar. It's clear something has changed -- that gold is now being accepted by sophisticated investors, not as a speculation, but as an alternative currency. Gold is now being accepted as the fourth currency along with the dollar, the euro and the yen. But there is a difference. Gold is also being recognized as the tangible currency and the ONLY SAFE currency."
$600 Gold is Still Cheap!
Gold prices have more than doubled since 2001 -- to $600 an ounce by Mid-2006 -- but that's still cheap if you consider gold's value in relationship to the falling value of the U.S. dollar over the last 25 years.
Gold's price peak in 1980 was $850 an ounce, but using inflation-adjusted numbers the same peak would be over $2,000 an ounce today (that's using official gov't inflation stats).
GoldMoney.com founder James Turk recently told CNBC he expected gold to hit $850 an ounce in 2006. "Using real world inflation numbers the price of gold would be $2,200 an ounce today" he explained, reasoning that since both stocks and real estate have risen tenfold since 1980, why not gold too?
I agree! Buying gold anywhere under $800/oz. is still a 'golden' buying opportunity!
Gold's impressive 18% gain in 2005 was over six times that of the S&P 500. Little wonder why speculators and long-term investors are actively accumulating gold during any price dip. Gold's bullish chart pattern of higher lows and higher highs is attracting more momentum-based buying.
Over the next few years I believe gold prices could easily double again -- to over $1,000 an ounce; based on fundamental, technical and cyclical reasons now embraced by scores of analysts.
So once you've decided to diversify some assets into gold, the next BIG question is: "Which type of gold sparkles brightest?" ... Gold stocks, gold ETFs, gold futures, gold bullion bars/coin or rare U.S. gold coins? ... Keep reading for our best advice on how to make your gold work the hardest for you over the next five years.
Invest in truth and wisdom as you would a great treasure -- and when you find them, guard them with your life.
DISCLAIMER: All of the provided information is believed to be accurate, however errors are possible. The opinions in the Commentary section do not necessarily reflect the opinions of Swiss America. Past performance of any investment is no guarantee of future performance. All investments have risk.