Gold protects wealth. This lesson isn’t new. But even I had to learn it the hard way.
Back in 1975 I was a senior officer with the world’s oldest and largest dealer in precious metals and foreign currencies, Deak-Perera. I learned this lesson firsthand and it forever taught me about the importance of the “barbaric relic”… gold!
Deak-Perera was one of the few financial institutions in the United States with a combined expertise in precious metals, foreign currencies and international banking. As a result of this knowledge the company was invited by the State Department in April 1975 to assist the South Vietnamese refugees that were pouring into the U.S. as Saigon fell. The company became the exclusive “moneychanger” for all five of the Vietnamese refugee camps.
You may recall that, as of Jan. 1, 1975, Americans could once again legally own gold bullion. It had been illegal to own gold since 1933, when President Roosevelt took the U.S. off the gold standard and ordered all privately held gold coins and bullion be surrendered to the government.
Unaccustomed as we were to handling displaced persons, it was nonetheless clear that even the most prominent of these refugees would be arriving at the camps with little more than the clothes on their backs and whatever valuables they could carry. And who knew just how valuable some of their belongings would be?
Only one thing was certain: They wouldn’t be drawing checks on their local banks. All banks in Vietnam had been taken over by the communists, along with the rest of the economy. At the time, the cruel joke was Vietnam was a true “cash-and-carry economy.” If you had the cash, you got to carry off anything you wanted.
A Day that Changed My Life
May 1975 found me at Eglin Air Force Base, Fla., one of the five refugee camps. I will never forget my experience with two families in particular. The experience is burned into my mind forever.
A middle-aged man, trim and well-spoken, was wearing what had once been an expensively tailored suit. He obviously cared deeply for his bedraggled family. He had been a businessman in Vietnam. In fact, I was later to learn, he had been a very successful banker. But now all his family’s wealth was in the small dingy canvas bag that he was hanging onto for dear life.
Even through all the adversity he and his family had recently experienced, there was still a glimmer of hope in his eyes. Despite losing his job, his home and his country, he still wore a relieved expression whenever he gazed upon that canvas bag. It was his key to a new life in a new country. It was, quite literally, a golden anchor.
Gently, carefully, he poured the contents of the bag onto the table in front of me. There, gleaming in the sun, was an enormous collection of golden taels. For those of you who are not familiar with taels, they are a form of gold bullion indigenous to Southeast Asia. Each tael was 1.2 ounces (37.5 grams) of .9999 pure gold. They looked like tiny wafers—thin sheets of gold, delicately wrapped in paper.
It was Deak-Perera’s job to buy the gold taels from the refugees, and, with the proceeds, issue traveler’s checks.
A Lifetime of Savings, Now Worthless
Further back in line there was another refugee who was less fortunate than the banker carrying the golden taels. Much like the banker, he was a successful businessman before he and his family were uprooted by war.
He approached my table with two suitcases in hand. Like his countryman with the taels, he had worked very hard, saved extremely well and carried all his worldly wealth in those satchels.
But there was one major difference. His wealth was in the form of piasters, the currency of the Republic of Vietnam. These were paper promises of a government that no longer existed. I had to tell this man his piasters were worthless. They would not buy anything—not even a Coke or a pack of cigarettes—in his new country.
Can you imagine toiling and saving for a lifetime for two suitcases filled with worthless currency?
Sad to say, other formerly valuable pieces of paper were now worthless as well. One was the Military Payment Certificates (MPC), issued by the U.S. military. Each one carried the likeness of a famous Hollywood movie star. Now they would not buy admission to a show.
Other items, even valuable diamonds, jade and loose gems, were hard to exchange on the spot for a fair price. Only gold had an immediate market at a fair price.
Before that day I always knew that precious metals were an important asset. But, after looking into the eyes of these two men and their families, I knew firsthand the value of gold and other precious metals. Gold holds its value when nothing else will.
Does gold in 2010 offer the same peace of mind and protection to Americans that it has through 5,000 years of history? Absolutely!
As an American, there are many threats to your hard-earned wealth. The most insidious is not military in nature. It is the weakening of the U.S. dollar.
In the past year these mounting costs exceeded our government’s revenue by more than $1.4 trillion. Meanwhile, the Federal Reserve loaned or guaranteed another $2 trillion. How will this debt ever be repaid? The only politically acceptable solution is to print more money. But creating more dollars means, inevitably, that each one is worth less. The dollar is being devalued right in front of our eyes.
Get Ready for Fireworks in the Gold Market
My friend Doug Casey likes to say that the price of gold is not only going to the moon, it’s going to several planets beyond.
When this happens… when gold prices double from where they are now and continue rising… when the dollar falls into the abyss… which would you rather own? Which do you think will better protect your life’s work?
Would you rather be holding two suitcases full of worthless U.S. paper? Or a canvas sack full of gold?
I’m going to choose the latter. I hope you will, too.
If you’d like to know about the safest, most secure way I’ve found to own gold, let me tell you about the Perth Mint Certificate program.
It’s one I helped develop 12 years ago, and it comes with the most rock-solid guarantee you’ll find anywhere. In case you’re not familiar with it, the Perth Mint is wholly owned by the Government of Western Australia. It has been storing and dealing in precious metals for more than a century.
The Perth Mint is the only depository operating today that can offer you a comprehensive storage and trading program, with the unconditional written guarantee of one of Australia’s wealthiest states. In addition, all precious metals stored at the Perth Mint, including your metals lodged under this program, are insured (at the Perth Mint’s cost) by Lloyds of London.
When we designed this storage program, we wanted to make sure it was SAFE. That is, that it offered Security, Affordability, Flexibility and Exclusivity. The Perth Mint Certificate Program has our highest endorsement on all counts.
Purchasing gold or other precious metals through the Perth Mint Certificate Program requires an initial investment of $10,000 or more. Sale amounts or additional purchases must be for $5,000 or more. There is no additional cost for unallocated storage; the one-time administrative fee is a very reasonable $50 per certificate.
When you are ready to dispose of some or all of your holdings, the Perth Mint will arrange to purchase them back from you at the then-current market price. Or you can take delivery of your holdings at the Mint or via insured delivery to most any location in the world.
To learn more about how the Perth Mint Certificate Program can help you find a safe haven for some of your assets in an increasingly troubled world, please contact my company, Asset Strategies International. You may email us at firstname.lastname@example.org, or call us at 1-800-831-0007 or 301-881-8600.
Please let us know how we can help you achieve your financial goals.
Asset Strategies International
Bob McDonnell won the gubernatorial race in Virginia on Nov. 3, raising concerns among some state residents about the future of its gun laws.
One organization— called Virginians for Public Safety (VPS), which promotes ways to reduce crime and gang violence and says it aims to "keep guns away from criminals, domestic abusers and children"—has criticized McDonnell’s support for unregulated firearm sales at state gun shows, as expressed during his electoral campaign.
Citing the governor-elect’s stated belief that appropriate lessons have been learned from the Virginia Tech shooting, VPS has pointed out that state legislators have taken no action to address the so-called "gun show loophole." It allows individuals who are not licensed firearms dealers to sell guns at gun shows without conducting background checks or maintaining records of sale.
According to VPS, the Virginia Tech Review Panel, which was set up to provide an independent review of the shooting, recommended that the General Assembly pass a law requiring background checks on private sales of firearms at gun shows, but this has not happened.
"McDonnell has also chosen to ignore the voices of those who were directly affected by [that] tragedy," the organization has stated.
Following the shooting, Governor Tim Kaine signed an executive order, which became codified in legislation, to require Virginia’s courts to forward Orders of Involuntary Commitment to the State Police so they can make them available to licensed firearm dealers for background checks.
As a candidate, Barack Obama vowed to change the way Washington worked and to end politics as usual. As president, Obama has demonstrated that his “hopeychangey” mantra was all talk and his nominations, appointments and associations bear this out, according to Michelle Malkin in her latest book, Culture of Corruption.
Starting with the failed nominations of people like Tom Daschle, Bill Richardson and Nancy Killefer, Malkin takes the reader step-by-step through the sordid history of graft, tax evasion and insider deals of Obama’s cabinet nominees and official wannabees in the president’s inner circle.
For instance, the ultimate insider, former Senator Tom Daschle, was slated to be Obama’s Secretary of Health and Human Services, where he would lead the charge to reform the nation’s healthcare system. He and the president were so sure that Daschle’s confirmation was in the bag that Daschle already had office space decked out on the ground floor of the West Wing of the White House.
But that came crashing down under “furious funnel clouds of ethical scandal, conflicts of interest, and tax avoidance,” Malkin writes. Daschle, it seems, had neglected to tell the Internal Revenue Service (IRS) about his use of a chauffer and private car provided by an equity firm for which he lobbied.
Malkin covers the other tax cheats in the administration as well: people like Treasury Secretary Tim Geithner and Killefer. But cheating on taxes isn’t the only thing that hampered Obama’s early appointees. Ethical lapses and questionable associations and writings, missed or ignored by the Obama’s vetting team, doomed people like Richardson, Jon Cannon and Charles Freeman.
Malkin also covers the sordid history of Michelle Obama and her brass knuckle, Chicago-style thuggery. And Vice President Joe Biden—portrayed as just “Average Joe” by the media—is unable to evade Malkin’s telling research.
Good ole’ train-ridin’ Joe—who never heard a folksy personal story he couldn’t steal for his own—is neck deep in insider sweetheart deals that have enriched him and his family. But he’s not alone in the Obama administration on that account. And Malkin fleshes them all out.
Malkin is an award-winning investigative journalist who exposed government corruption in Seattle for the Seattle Times. She knows how to dig out the dirt and graft, and she took on both Republicans and Democrats while in Washington Sate.
She backs up her work in Culture of Corruption with extensive footnotes that take up 75 pages. That is why, in television appearances discussing politics and her book, she is personally attacked by defenders of Obama while the facts presented in her book go unchallenged.
Malkin can be seen regularly on Fox News—where she is a contributor—and her writings appear on her blog, www.michellemalkin.com. Watching her commentary and reading her blogs you can see that she is not afraid to challenge those in power, Republicans and Democrats alike.
Those who are unwilling to accept that the current commander-in-chief is completely different from the Hope and Change, larger-than-life presidential candidate on display during the campaign, need not buy this book. But if you are interested in learning the truth about Obama and his associates, as well as learning exactly how things work in Washington, D.C., then this is one book you’ve got to read.
According to new research, enriching one’s diet in folate—also known as folic acid or vitamin B9—may reduce the odds of developing colorectal cancer in women.
The results were reported by a Reuters article which said a team of researchers from South Korea discovered that females who ate the most folate lowered their risk of getting the disease by about two-thirds, compared with those who consumed smaller amounts of the vitamin.
However, they did not find the same correlation when it came to men’s intake of folic acid.
The researchers stress the significance of the results which suggest that a simple dietary modification may help cut the risk of the disease that was diagnosed in more than 140,000 Americans in 2005.
Folate is known to support red blood cell production and help prevent anemia and homocysteine build-up in the blood. It’s also important for proper neurological function and is believed to prevent osteoporosis-related bone fractures and some forms of dementia, according to WHfoods.com.
In additional to nutritional supplements, folic acid can also be found in romaine lettuce, spinach, asparagus, calf’s liver, parsley, broccoli, cauliflower, beets and lentils.
In a closely watched ballot on Nov. 3, voters in Maine rejected the law legalizing gay marriage that had been signed by Governor John Baldacci on May 6.
The president of the conservative group Family Research Council, Tony Perkins, praised the 53 percent to 47 percent result, saying it expressed a disapproval of the policies of the Democratic-led legislature "who failed to protect the rights of families and children by refusing to protect the institution of marriage."
However, same-sex marriage advocates have described the vote’s outcome as "a setback for all of us," in the words of Elbridge James, director of the Maryland Black Family Alliance, which is an advocacy organization of straight African-Americans.
In addition, Betsy Smith, executive director of Equality Maine, stressed the vote was "about treating gay and lesbian families with dignity and respect under Maine law," and expressed her disappointment that Maine voters "chose not to do that, [and it is] difficult mostly because of the families who today continue to go unprotected," quoted by South Florida Blade.
Meanwhile, Governor Baldacci suggested the issue will be revisited as he vowed to continue to work to ensure that all Maine residents are treated equally.
The Senate Environment and Public Works Committee passed the Clean Energy Jobs for American Power Act on Nov. 5th in a vote that its Republican members all but boycotted.
The only Republican that showed up to explain the reasons for their absence was Senator George Voinovich of Ohio. The GOP has demanded a deeper analysis than the one provided by the Environmental Protection Agency in order, Voinovich said, "to have the best information available as we debate and amend the bill that will have consequences for every person in the country."
Democratic Senator Barbara Boxer of California, one of the bill’s sponsors, has been criticized by the Republicans for moving ahead with the vote. But supporters such as activists from the Sierra Club called the legislation "an important step toward a clean energy economy," that will make the U.S. "more energy independent [and create] new jobs with safer, cleaner energy sources."
The bill, which is co-sponsored by Senator John Kerry of Massachusetts, proposes to reduce greenhouse gas emissions by 20 percent from 2005 levels by 2020, and by 83 percent by 2050. It also offers tradable permits to polluters that would ease their transition away from fossil fuels.
According to media reports, opponents of the bill are looking for a "Plan B" that would include more incentives for nuclear power, renewable fuels and domestic drilling to win support of moderate Democrats and Republicans.
GOP members have also said the Democrats’ proposal will impose a massive energy tax on consumers and businesses alike.
Continuing economic uncertainly and a weakening dollar have contributed to a sustained upward march in gold prices, which reached a new high on Wednesday.
Gold futures for December delivery briefly hovered at a high of $1,119.10 an ounce on the New York Mercantile Exchange in morning trading, before falling back and settling at $1,114.60, which represented an increase of $12.10 from Tuesday’s closing, according to the Associated Press.
The development comes as the Federal Reserve announced it would keep interest rates low to aid the sluggish economic recovery, sending the dollar to a 15-month low.
This, coupled with government economic stimulus measures, has rekindled fears of inflation and prompted investors to seek safety in commodities such as gold.
"If [the DXY U.S. Dollar Index Future] fails or extends lower we could easily see gold push on to new highs above the $1,150 level," said James Moore, analyst at TheBullionDesk.com, quoted by TheStreet.com. His sentiment was echoed by experts such as Jim Steel, senior vice president and metals analyst at HSBC, who spoke to the Wall Street Journal.
Meanwhile, the WSJ reported that gold got an additional boost last week on news that India’s central bank bought 200 metric tons of the 403.3 tons the International Monetary Fund put on the market.
The AP says gold prices are up 26 percent from last fall.
Vitamin B12 deficiency is a common side effect of gastric bypass surgery, but according to a new study supplementation with probiotics may help patients avoid the problem.
The research was completed at Stanford University School of Medicine where scientists enrolled 44 individuals who had undergone a weight-loss surgery. Their results suggest that patients who received a probiotic supplement everyday for three months following the procedure had higher levels of vitamin B12 than the control group.
Vitamin B12 is a key compound that ensures healthy metabolism, proper formation of red blood cells and the well-being of the central nervous system
In addition, the researchers found that the treated patients experienced a nearly 48 percent weight loss compared with a 38.5 percent loss in those who received a placebo.
Statistics suggest that nearly 66 percent of adult Americans are overweight.
Probiotics are beneficial bacteria strains that are known to aid in digestion. They can be found in yogurt and other cultured milk products as well as miso, some juices and soy beverages or nutritional supplements.
They say you can just buy just about anything, even love. But the truth is you can only rent a bull market and the lease on this one is about to run out.
After devastating losses that pushed the Dow Jones Industrial Average to 6,440 in early 2009, the Dow broke above 10,000 last month for the first time in 53 weeks. All thanks to President Obama and his bagmen at the Federal Reserve.
You see, President Obama and Federal Reserve Chairman Ben Bernanke have already injected more than $1 trillion in new money.
Part of this has been in the form of bank bailouts. More has been given to Detroit automakers. And finally, Washington has inserted a whopping $850 billion directly into the U.S. banking system. It is this final act that will wreak the greatest havoc on the U.S. stock and bond markets.
When the credit crisis hit last year the Fed began “running the printing presses.” We are talking about the creation of hundreds of billions of dollars, so presses aren’t really running. Instead, the Fed has created all this money with the touch of a key-stroke. Soon this mountain of money will spill over into the economy and the markets.
The graph above shows the Fed’s unprecedented creation of U.S. bank reserves.
In his Nov. 2, column, Robert Murphy of PrisonPlanet.com explained: “The United States has a ‘fractional reserve’ banking system, meaning that if you added up all of the checking account balances for the customers of a given bank, the total amount of deposits would far exceed the amount of cash reserves in the vaults of the bank.”
As a result, said Murphy, all this fresh Fed money will soon be lent out at a multiple. A conservative estimate is five times the amount injected. That means that the $850 billion in new bank reserves will be transformed into more than $4 trillion in new money. That would take M1 money supply from $1.7 trillion to $6 trillion in just the next few years!
To read all of Murphy’s story, click here.
Even before the avalanche of new money, M1 has risen 50 percent since January 2001 (see graph M1 Money Supply).
With all this fresh cash on the bank’s books, M1 could easily double to more than $3 trillion in the next two years. That would make M1 money supply almost 10 times higher than it was when Ronald Reagan took office.
We haven’t seen this kind of excess monetary growth since the stagflationary 1970s. It was bad for stocks and bonds then and it will be just as bad for them today.
A Short History of Stagflation
Between 1970 and 1981, M2 money supply tripled. A record amount of liquidity was being injected into the economy by the Fed. But all this money wasn’t helping an economy that was just limping along.
From the beginning of 1971 to the end of 1979 the gross domestic product (GDP) rose by just one-third—from $3.9 trillion to $5.2 trillion (in constant dollars).
As the amount of money in the economy vastly exceeded the goods and services being produced, inflation was inevitable.
The consumer price index for the 1970s rose by a staggering 6.5 percent each year. By 1980 a 1970-dollar that had been stuffed in the mattress would buy you just 52 cents worth of goods and services. It marked the end of dollar stability and the post-war economic boom that fueled a bull market in stocks.
In January 1950, the Dow Jones Industrial Average was under 200. In January 1966, it breached 1,000 for the first time. Over the next few years, the Dow moved sideways, twice testing, but never again breaking above the magic 1,000 point level.
Stocks fell into a funk. Money supplied by the Fed was not producing real gains and the stock market reflected this.
In April 1980, the Dow was trading at 759. That might not seem too bad compared to its 1966 apex, but factor in inflation and the 1980 Dow, measured in 1966 terms, was really trading at $329. In real terms the Dow had lost two-thirds of its value in 14 years.
Bond investors also did poorly. In the late 1970s prices on 30-year Treasury bonds fell more than 25 percent as the yields-to-maturity on the bellwether 30-year Treasury bond climbed from a rate of 7.75 percent in 1977 to 14.7 percent in 1981.
The end result was a massive renunciation of paper as investors began switching out of dollars and buying real assets.
Yet while many Americans lost their savings in Big Board stocks and bonds, some investors made incredible gains in precious metals.
Pitfalls and Profits
I first began investing in gold when I was just a teenager and it was selling for $35 per ounce. I kept that gold until it topped out at $840 and corrected back to the $650 per ounce range. So even though I didn’t get out at the top, I did get an 18-fold profit.
If that sounds like ancient history and something that can’t be repeated, don’t be so sure. Nine years ago last month I started writing Outstanding Investments. I told subscribers then to buy gold, silver and platinum as well as precious metal equities. At the time gold was selling for less than $280 per ounce.
Today bullion is trading back over $1,050 per ounce and I have been bullish on the precious metals throughout the decade. I still believe that bullion prices could very well double in the next two to three years. Given the excess of Obamabucks, I can see gold trading for more than $2,000 per ounce by the end of 2012.
And don’t be surprised to see silver rising to $80 per ounce (versus $17 today) and platinum to more than $3,000 per ounce.
Action to Take
It is imperative that you get out of Big Board stocks and all long-term debt instruments including Treasury notes and bonds. Look for a major correction to come in the Dow, the S&P and the NASDAQ in early 2010. I wouldn’t be surprised to see the markets hit new lows. At the same time, bonds are just as susceptible to huge losses as I expect interest rates to go up. I urge you put your money into cash in the form of three-month T-bills.
A T-bill is simply a short-term debt obligation backed by the full faith and credit of the U.S. government. The key to a bill is that it’s very short-term (and pays an incredibly small interest return). It has a maturity of less than one year and is sold in denominations of $1,000. You can buy maturities of one month, three months or six months. I like the three-months T-bills because you are not locked in very long but you don’t have to constantly roll them over.
Three Ways to Buy T-Bills
- Go to your local bank and ask to buy Treasury bills. This may be the easiest option because you already make periodic trips to your bank.
- Call your investment broker. Tell him or her that you want to purchase three-month T-bills and roll them overuntil further instructions.
- Buy Treasury bills directly from Uncle Sam. The Treasury Direct Website will guide you through this process and give you lots of information as well. You can access that site at: www.treasurydirect.gov.
I also urge you to buy some physical gold. If you are just starting out, I suggest you buy 1-ounce U.S. American Eagle coins as well as 1-ounce Canadian Maple Leaf and South African Krugerrand coins.
Myers’ Energy and Gold Report
PS—Next week I will be writing the first of a two-part series on energy. If you think wind power is the answer to tomorrow’s problems you will want to read Part I. It will include why fanciful presumptions by the Obama administration are, at best, ignorance, and at worst, the purposeful deceit of the American public. In Part II, I will tell you the core truth about America’s dwindling petroleum reserves and I will give you a new energy stock pick that should be in your portfolio.