A Publication of Austin Rare Coins November 2008
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Should You Buy Gold Today? • Is it safe to by Gold? • If I buy Gold today, will I be glad I did 5 or 8 years from now? • Are my current investments better than Gold? • Is it worth the effort to move money into Gold?
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How much Gold should I buy—and from whom? Inflation, Housing Bust, Slow Economy, Dollar Destructions Let's begin by discussing the safety and profitability of Gold. In the year 2000, the Austin Report made this case for Gold: We warned of higher inflation ahead, the burst of the housing bubble, a slowing economy, the destruction of the U.S. Dollar, and the need for investors to diversify their portfolios. We sensed that the 21st Century would be a decade when investors would need wealth insurance; in the form of Gold. The Gold would be necessary for safety, security, and higher profits. Gold Has Tripled in Value Clients who bought Gold from us in January of 2000, watched a $10,000 investment more than triple in value. Naturally, they're very happy with the decision to use Gold to balance and diversify their portfolios. Perhaps you've also considered Gold, but put off making a positive decision. As you reconsider Gold, let's compare the major U.S. Stock indexes to Gold.  So far in 2008, the DOW is down 15%, the NASDAQ has lost 15%, and even the S&P 500 is a loser, of 14%. Meanwhile, even after the recent correction, Gold is still up 11% in 2008. It makes one reconsider if Gold in the safety deposit box isn't a lot better than cash in a CD earning a pitiful 3%. That's one path many of our clients have taken– moving cash money into physical Gold. While there's no guarantee you'll get your money back and earn high returns, the odds are in Gold's favor. Frankly, we just don't see many better alternatives to owning Gold right now. The 11% gains this year are impressive but well below the average 33% annual gains we enjoyed from 2002 to 2007. As the Economy Worsens, Gold Should Do Quite Well The economic reports get more gloomy every week. Inflation is rising, but it's still just begun to rip through world's economy. Higher food prices don't help and they've created food riots in areas hit with shortages. Oil prices have topped $145 per gallon. We're afraid that as long as gas is over $3.00, stagflation is virtually guaranteed– at $4.00 we are in recession land. Corporations worldwide are feeling the pain. Profits are falling. Companies are going belly up long before the U.S. is in an "official" recession. Look at these names forced to declare bankruptcy in 2008: Sharper Image, Bombay Furniture, Lillian Vernon, Frontier Airlines, Linens n' Things, and Levitz have fallen into bankruptcy. Employees were fired by the thousands. Stores are closing in malls. The consumer is borrowed to the hilt and tapped out.  Sub-Prime Mortgage Crisis Won't End
Anytime SoonMeanwhile, home prices are falling at record rates. Home foreclosures were up 50% in May dumping even more cheap housing on a sagging market. Banks are now feeling the double-whammy of what happens in a spiral down. A weak economy creates more and more unemployment. That creates more home foreclosures. Home prices fall further and the banks find themselves in phase two of the liquidity crunch– even before we're in a recession. Please don't be fooled by the media. The sub-prime mortgage crisis has several years (not months) to work itself out. Want proof? A few weeks ago, Lehman bankers told us they were doing just fine, no need to raise capital. A few days later, Lehman stopped lying and admitted that they must raise $6 Billion Dollars immediately or go bust. Never before have our government and business leaders been permitted to lie to Americans in this way. We got the same bunch of lies days before Wall Street banker Bear Stearns went bust. Believe me when I say this- Wall Street Banks are hanging on for dear life. They're on life support coming from the Federal Reserve's biggest intervention in America's private banking system since the Great Depression.  Consumer
Sentiment Falling Into Recession Many of us are worried– with just cause. In fact, one look at the Michigan Consumer Sentiment Index for the first quarter shows Americans believe we are in a recession. What is fascinating to us is that the last time Consumer Sentiment fell this low, Gold hit an all-time high of $850 in January of 1980. Today, Gold is trading over that figure. There is definitely a correlation between falling consumer confidence and rising Gold prices. Since the U.S. official reports show we are not in a recession yet, we can only surmise that the Government isn't telling us the whole truth about the credit crisis and the worst is yet to come for the U.S. economy. Whether we are in stagflation or recession, the fact remains that our retirement funds are not growing the way they used to with traditional investments of stocks and bonds. When the Federal Reserve took extreme and aggressive action to counteract the sub-prime and credit crisis, they dropped interest rates from 5.25% to 2.0%. That killed any chance of interest on CDs or Money Market Funds yielding returns anywhere near the inflation rate. The U.S. Conference Board Consumer Confidence Index for May forecast inflation at 7.7% for the next 12 months. If that opinion is correct, money earning 4% minus 7.7% inflation means you should expect to lose 3.7% on buying power for every dollar you keep in a CD. Thank you very much Mr. Bernanke! At the same time, the major U.S. Stock Markets are volatile and falling anywhere from 9% to 15%. Maybe your stock broker is a genius and you're doing better than the averages, but you've probably lost money, lots of money in stocks in 2008. And we feel the worst may be yet to come. You see, a major stock sell-off could be triggered any day, by any bit of bad news. It won't take much. Owning stocks right now gets riskier every day. That's where holding Gold comes in to help you during times like this. Gold is Superbly Qualified to Protect Your Portfolio Before this decade began, the Austin Report started preaching the benefits of Gold. We talked of uncertainty, how the government is not telling us the truth, and how they even began to hide certain statistics we counted on for analysis. It left us all with a feeling of bewilderment and uncertainty. Uncertainty is the primary reason to invest in and hold precious metals. Gold is not about getting rich quick. Gold has always been about saving and protecting wealth from taxes, politicians, inflation, recession, and the destruction of the U.S. Dollar. Gold protects from a sudden collapse of the Stock Market. Gold has an inverse relationship to the major U.S. Stock Indexes. That means, as Stocks decline, Gold can (and in recent years has) soar dramatically. Gold is the anti-dollar. When the Dollar falls and loses buying power, the price of Gold rises and recaptures the paper loses. As a safe haven investment, Gold offers wealth insurance and lower risk. One other point we'd like to make on diversification: One slight change of adding Gold into a stock portfolio would have increased returns dramatically since January of 2000. Further, Gold would have lowered the risk while protecting long-term savings against inflation and a falling dollar. Put Everything You Own into Gold? – No! You might be thinking, I should sell all my stocks and bonds today and buy Gold. After all, a $100,000 Gold investment in the year 2000 would be worth over $300,000 today. Friends, that is not what the Austin Report is advocating. Having 100% of your money in any one sector is a mistake. Just as bad a mistake is owning no precious metals. The idea breaks all the rules of diversification while increasing your risk. Instead, there is a better, safer approach we recommend at Austin Rare Coins & Bullion. For some time now, we've advocated a core holding of 5% to 10% of your liquid assets be locked away in physical Gold coins. These are legal tender Gold coins you hold in your safety deposit box. We feel that it takes physical Gold to protect against the worst case scenario. In an unthinkable crisis, the first thing the government would do is seize all the Gold held in ETF's and Gold Funds since they know the exact location of the Gold. When individuals own and hold Gold, it's a different story. In a crisis, Gold can be easily transported or stashed away. It can be exchanged privately and quietly among friends and relatives. Or your legal tender coins can be sold quickly in the world Gold markets. Gold has a high level of liquidity. In the past, Austin Rare Coins & Bullion has urged our clients to let us buy back their Gold. We pay more and you can trust us. We like to make it easy to sell your Gold in a hurry.  Buying Gold Today is Like Buying "On Sale"The final question we examine is "When is the right time to buy Gold?" Thanks to the Summer lull and recent price corrections, you now have a second chance to lock-in Gold. Our Gold Analysts feel Gold is at a very attractive price selling around $900- $940 per ounce, but it may not last long. At current levels, we feel strongly that Gold will outperform the major U.S. Stock Indexes, CD's, Money Market Funds, or real estate this year and well into 2009. As we approach the election, we have reason to believe that insecurity, fear, the probability of higher taxes, and more uncertainty will continue to wreak havoc with U.S. Stocks and get the price of Gold headed right back to $1,000 an ounce. Insist on Private, Non-Reportable Gold What is the best way to buy Gold? We always recommend private, non-reportable Gold coins. If you follow our simple procedures developed over the past 19 years we've been in the Gold business, privacy will be no problem. When you buy the right Gold, we will not be required to report your Gold purchases to the IRS or any government agency. Most importantly, what other dealers either don't know or won't tell you, is that you have a choice of the kind of Gold coins you acquire. Gold bars are never the best way to go because we are required, by law, to report many items you sell back to us later. Buying the right Gold today can avoid all those problems. Acquire Physical Gold & Store It Safely Laws change, but we are very well versed on how to easily keep the Government out of your personal business. This does not mean you can sell your Gold and not pay taxes on the profits. It means that while you own Gold, while you hold your Gold safely stored away, current laws do not require us to voluntarily tell the Government who has purchased Gold from us. Trust us when we say that Austin Rare Coins & Bullion knows the business. Unlike pretend coin dealers and jewelry stores, we are a real physical company located in Austin Texas. Our credentials and reputation are as solid as they come. We're members of PCGS,NGC and we support ICTA. In addition, we have never had one outstanding complaint with the Better Business Bureau or BBBonline since our firm began business in 1989. Austin Rare Coins buys and sells millions of dollars worth of Gold, Silver, and U.S. Rare Coins every month. We're one of the best known dealers on the internet. We know Gold. We have Gold Experts only a phone call away. Our team is on call seven days a week from 9am till 9pm to answer your questions about Gold. If you waited to buy Gold we urge you take a few minutes and call us at 1-800-928-6468. |
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Questions? Call a Gold Specialist at 1-800-928-6468
Austin Rare Coins, Inc. Serving Investors & Rare Coin Collectors since 1989 7200 North Mopac • Austin TX 78731
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