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We live in a financial world turned upside down, a world rapidly moving into the safety and security of Gold. As a result, Gold increased in value by 24% last year and ended the decade more than quadrupling in value.
Nowhere was the worldwide demand for Gold more obvious than when India shocked the world as their Central Bank announced they had purchased more than half of the International Monetary Fund's allocation for Gold sales.
Gold rolled past $1,200 an ounce with that announcement. From the $258 in March 2001, Gold had quadrupled in price across the decade... and we remain convinced that the best gains are still ahead of us!
If the outstanding profits created in the current Gold Bull Market are not enough to convince you of the need to own Gold, then consider carefully the driving forces that have caused Gold to double in price and double again.
Central Banks Diversify Out of Dollar into Gold: Prior to India's Gold buying announcement, China's Central Bank formally reported it doubled its Gold holdings since 2003 to a total exceeding 600 tons. China also has TV ads airing, urging their citizens to buy Gold, now that it's legal to own Gold again. Even Russia is now a net buyer, not a seller of Gold. Clearly, the flight-to-safety has begun out of U.S. Dollars and into Gold by Central Bankers around the globe.
Money Market Funds Poised to Move Into Hard Assets: Gold markets (and also Silver) tend to act as an alternate form of security during times of financial crisis. Investors have begun to move into Gold and Silver to protect their wealth before there are growing inflation fears. When the Federal Reserve cheats savers out of interest by holding down money market rates to near zero, smart investors move from weak currencies to a stronger currency, like precious metals. If we're going to be paid nothing for savings in the bank, many people prefer to reduce their inflation risks and take advantage of the higher returns in Gold and Silver. This flight-to-safety into hard money remains in the very early stages. Today, nearly $1 Trillion Dollars remains parked in money market funds poised to move into safer, hard assets if traditional assets have as little as a hiccup.
Gold Soared in Value: Clients who purchased $100,000 worth of Gold on January 2, 2000 have watched their investment multiply to $374,677. Gold has had a remarkable decade of success, as did Silver– both have enjoyed a decade of huge gains while U.S. Stock Market indexes all lost money. (Past performance is no guarantee of future value.)
Gold is the Ultimate, Alternative Investment: Over the past decade, the DOW Industrials lost 8.9%. The S&P 500 was down 29% and the NASDAQ lost almost half of investors' life savings. While Wall Street was getting richer, the investor class was taken to the cleaners. Clearly, something is very, very wrong. The poor performance of Stocks has left institutional investors, mutual funds, hedge funds, state retirement pools, and other money managers with few choices but to seek alternative investments. As a result, precious metals are just now being included in traditional portfolios that never held them before. This new approach to investing accounts in part for Gold's rise of 24% in 2009 and Silver gains of 54% last year. The ever-increasing acceptance of precious metals bodes well for the next decade of gains.
Gold is Insurance for Your Portfolio: We have always recommended Gold first and foremost as insurance against financial risk. Over five years ago, we began warning of a Sub-Prime Mortgage Crisis, a possible banking meltdown, and a likely Stock Market Crash. Our advice was to include Gold, up to 15%, as a better way to balance and diversify a risky Stock and poor performing Bond portfolio. Over the long-run our strategy has been proven to be sound and quite profitable. Gold has proved its strength and ability to preserve wealth even during the worst crisis since the Great Depression. However, if the crisis were to end tomorrow, we would continue to hold both Gold and Silver until there are dramatic improvements in the political and economic environment. It's quite possible the worst is yet to come for the investor class in America.
Gold as a Hedge Against Inflation: But, Gold has always performed the best after the Government has created excessive paper dollars and unleashed inflation. Today, inflation is nowhere in sight yet, but we all know it's coming. Washington has no other way to extract money from wealthy Americans to pay its debt– except with higher taxes while we're alive, death taxes, and years of high inflation.
Gold Remains A Stealth Investment: Quietly hidden away in the back of millions of safety deposit boxes, investors hold Gold Coins and Silver Dollars they purchased a while back. Sitting in the dark, out of the limelight, precious metals have far outperformed 99% of all traditional investments. Despite these remarkable gains, the vast majority of investors are just learning about the importance of holding Gold and Silver. Gradually, as more members of the investor class learn all the facts, we expect the demand for physical Gold and Silver will continue to rise, further multiplying prices from today's levels.
Gold is the Anti-Dollar, Anti-Government Investment: At this writing, the U.S. Dollar has lost almost 98% of its value since 1913. The Federal Government has used, abused, and destroyed much of the buying power of the U.S. Dollar. As a result, Gold serves as the best form of Anti-Government money you can own today. Neither the U.S. Congress nor any single Government on the planet controls the value, strength, or buying power of Gold. Never has that been more important than during this time when inflation fears are growing after the Federal Reserve increased the Dollar money supply by 120% during the banking crisis.
U.S. Treasury Dept. Signals $5,468 Gold:
In times of crisis throughout mankind's history, Governments have attempted to devalue the buying power of their currency. Through the creation of excess fiat paper money, money not backed by Gold, our Government plans to strip wealth from the investor class and those who hold U.S. Dollars. China, Japan, India, Russia, Europe, and the oil-producing Arab nations are fighting back. China has suggested including Gold in a basket of currencies to replace the Dollar. But, what is the real value of a U.S. Dollar and what would Gold be valued at in a future currency? Let's consider that currently the U.S. Government holds about 286.9 million ounces of Gold in Fort Knox. It has printed about $1.569 trillion worth of paper dollars. If each dollar were backed by Gold, Gold would need to be priced at $5,468. That won't happen and we're not predicting it. We use this illustration to show just how out of balance the U.S. Dollar is relative to Gold.
Gold has $6,192 Potential Based on Past Bull Market: During the 1970s, the U.S. was plagued by excessive debt, massive Government spending on the War on Poverty and the Vietnam War. Politicians, who were unwilling to raise taxes or reduce spending, resorted to printing excessive money and let inflation pay down our debts. (Sound familiar?) Gold responded by multiplying in value 24 times from 1971 to January 1980– it took another decade for the American economy to recover from the ensuing unemployment and double-dip recessions that hit with massive waves of inflation. Today, the Federal Reserve has already inflated the U.S. money supply by 120%. Most growth was in less than 120 days during the banking crisis. The unprecedented series of bailouts and stimulus programs have seen little success, but we will guarantee they will eventually create waves of inflation worse than the 1970s as the Government again attempts to strip wealth from investors and the middle class alike.
Inflation is a Certainty
Since inflation is our worst fear and Gold's best friend, it's distinctly possible for Gold to have another 24-fold increase before the current Bull Market ends. Tracking from the 2001 low of $258 an ounce, Gold has the potential to multiply to $6,192 before politicians come to their senses. Again, we're not forecasting unreasonable numbers, just using common sense and past history to show you exactly how rewarding precious metals can be during a financial crisis.
More Economic Weakness Ahead
We would love to tell you that the U.S. economy has turned around, there will be no more foreclosed homes, all 15.4 million Americans out of work will find jobs this year, and that the consumer-driven economy is booming again.
The facts are very different than the distortions and downright untruths coming out of Washington. The U.S. economy is in the worst condition since the Great Depression. Home foreclosures will peak between now and 2012, high unemployment will continue. In 2009, a total of 140 banks and 31 credit unions failed, costing the FDIC $38 Billion last year. That tops the entire five year S&L crisis of 1987 to 1992 which totaled only $29.6 Billion. Today, the FDIC is running out of money, but they still have over 500 U.S. banks on the watch list– and more banks are closing every week.
The truth is that the consumer economy, which accounted for 70% of GDP before the crisis, is dead. America's economy cannot be stabilized until we put people back to work making things to sell to the rest of the world. Just as after the Great Depression and again after World War II, millions of Americans will go through years of hardship until the free market economy is revived.
Wealthy Americans Are Under Fire
In the meantime, the investor class in America will be under attack by Washington. They need more and we will be the target for higher taxes while we're living, higher death taxes, and the Government's ultimate tax– inflation.
We can only hope and pray that this list of reasons to own Gold and Silver is persuasive enough to encourage you to learn more about precious metals.
The investment world has turned upside down and you will definitely want to reconsider how to avoid losses, protect your wealth, and increase your profits in the years ahead. No longer can any of us afford to ignore the 24% gains of Gold and the remarkable 54% rise in Silver last year.
A core holding of 15% to 20% of your liquid assets in a variety of anti-dollar holdings, including Gold, Silver, and commodities are recommended today. If you would like to purchase up to $5,000 in Gold or Silver, you can
For those of you who have questions or would like to lock-in prices on $5,000, $10,000, up to $1 Million Dollars, today– please call us at 1-800-668-8771. Questions? Gold and Silver Specialists are on call from 9am till 9pm at Austin Rare Coins & Bullion.
Our firm has served investors, collectors, and fellow coin dealers for over 21 years. In that time, we've never had one outstanding complaint with the BBB. We currently maintain an A+ rating which is a reflection of our expert advice, high quality products, low prices, and excellent service. If there's any way we can help you, that's why we're here. Please call.
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Disclaimers: Austin Rare Coins & Bullion has prepared information on this site for the private use of our readers. It should not be taken as personal financial advice. The information herein is obtained from a variety of sources that we believe to be reliable, but we cannot guarantee the accuracy or that information has not been condensed or may be incomplete. All opinions expressed by the editors of The Austin Report and those expressing opinions are subject to change without notice. We are not financial advisors. The information about future predictions, projections, or financial advice could prove to be unprofitable. This firm is specifically in the business of selling Gold, Silver, platinum and rare coins to the public and offers its opinions from that viewpoint. We generally make available news and opinions that relate positively to our markets and do not seek to present a balanced view of the investment markets. We advise that you seek out information from a variety of news sources before making any investment decisions. It’s important to always remember that past performance is no guarantee of future value. These products may not be suitable for every individual as the value of Gold, Silver, and rare coins go down as well as up in value.
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