The Austin Report

A Publication of Austin Rare Coins, Inc. April 2008

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Stocks Falling as Precious Metals Soar

Do you own enough Gold and Silver?

Seven Events That Virtually Guarantee Rising Gold Prices in 2008

The 21^st Century has been THE CENTURY for gold and silver, so far. Gains have been nothing short of remarkable for precious metals since 2002. The profits from '02 to '07 averaged 33% annually. Despite this success, we continue to feel that Gold remains in a “Stealth Bull Market.” The high flying profits are quietly passing most people by.

That implies that the second phase of this bull market, where there’s a mad rush of investors into gold, is still ahead of us. Frankly, we’d love to see continued year-over-year gains for gold exceeding 25% for the next several years. While we’re in the second phase of this bull market, we feel you can still tally up the best gains– even if you’re a bit late discovering that gold is in a powerful, long-term bull market.

Gold Making New Highs Daily – The demand for gold has been strong around the world including China, Asia, India, Russia, and by U.S. investors. In 2008, Gold has been back in the headlines hitting new highs day after day.

The World is Changing – A massive undertow is pulling down the once great U.S. empire and with it the world’s reserve currency is losing its stature. China’s economic growth engine comes from a billion people and India’s masses who are just now participating in the Industrial Revolution simultaneously with the Electronic Age. This Mega-Trend shift in world powers began at the turn of year 2000 and should last some 20 years. The world is changing and Americans must look to the future changes. The coming pressure on commodities cannot be overstated. These fast growing nations are sure to bid-up prices on the world’s limited supply of food, water, oil, commodities, and yes–silver and gold. Likewise, investors must also shift their perspective.

Federal Reserve Drops Interest Rates – In the near meltdown of the financial markets the Fed made an unprecedented turnaround in injecting $400 Billion Dollars into the world's banking system. At the same time, they dropped interest rates half a percentage point then and again to 2.25%. Oil hit an all-time high, the dollar hit an all-time low, and gold made a new high at $1,000. With lower interest rates and a slowing U.S. economy spiraling downward with housing, investors will be seeking alternative investments like gold and silver to provide alternatives to volatile Stock Markets and poor interest rates.

Massive Government Spending – The level of government spending by the Republican Bush administration has been unbelievable. Iraq is a financial black hole costing the U.S. $500,000 a minute. The new economic Stimulus Plan of $168 billion to be distributed to taxpayers this year means more paper dollars will be printed. Alan Greenspan warned us recently that, “Uncontrolled government spending can produce high inflation and economic devastation.” Both are headed our way thanks to out of control politicians.

The Death Knoll for the Dollar – For the past 36 years, the U.S. Dollar has been falling in value. What’s left of an already weak U.S. Dollar appears to have been sacrificed in late August 2007 to avoid a recession. We appreciate that the economy teeters on the brink, but the longer we delay the market’s natural healing mechanisms, the sicker the patient will become. To kill the U.S. Dollar now is great for our gold business, but an event we cannot morally support or explain. Even ex-Federal Reserve Chairman Alan Greenspan surprisingly said recently that the Euro could replace the U.S. Dollar, noting that the dollar is slightly ahead but doesn’t have much of an advantage anymore.

Inflation Will Rise – Long-term, the Federal Reserve has turned its back on inflation. The confirmation is the sudden decline in interest rates. This highly inflationary development is the single most positive event that will drive up precious metals in 2008. While the U.S. government does a good job of disguising inflation through the manipulation of data, the prices at the gas pump do not lie. With oil topping $110 a barrel recently, we expect to see above $3.00 gas prices close to $4.00 early in 2008. This bodes poorly for the U.S. consumer and people living on fixed incomes.

Sub-Prime Mortgage Crisis Not Over – After the near implosion of the credit markets over sub-prime mortgages, investors appear to have forgotten about the problem completely. We believe that the worst has yet to unfold. The housing bubble has burst. A slowdown in new housing sales can only lead the U.S. down a road toward recession and at the least stagflation– a term created to describe an economy that is stagnant but still growing with higher inflation.

Summary
After the dramatic turnaround for gold and silver in recent weeks, you’d think we would be all smiles at Austin Rare Coins & Bullion. Demand for gold, silver, and U.S. Rare Coins have brought in waves of new investors like we haven’t seen in years. When people are moving a half a million dollars to a million dollars at a time into the gold and silver market, they are motivated by fear and uncertainty. As a result, they are buying precious metals, not out of greed but to avoid losing money.

The past year has left us perplexed as to the future of our monetary system. The Sub-Prime Mortgage Crisis confirms again how loosely regulated our banking system has always been, and still is today. There’s a very good reason why we lost the entire Savings and Loan industry in the 1980’s– greed and mismanagement. The same end result appears headed the way of the mortgage vultures who blitzed us with advertising in recent years. They relentlessly begged unqualified borrowers to build and buy homes they simply could not afford, resulting in a potential 3.5 million foreclosures.

For the short-term, lower interest rates will be a blessing for many stocks both in the U.S. and abroad. The flooding of the world with money and credit liquidity has stopped a recession for now, but at what cost to our futures? No one knows for sure. But we can almost guarantee high inflation is coming– mark my words!

Also, watch for continued fears and panic sell-offs in stocks. Learn to expect the unexpected declines. If you can’t stand the wild roller coaster ride, then sell some stocks, park your money on the sidelines, and take a break. One great defensive place to park your money is in gold. It’s easy to buy today and has high liquidity to sell back at any time. The recent profits speak for themselves.

As it has throughout history, gold always act like financial insurance during times of war, rising inflation, financial uncertainty, and monetary disruptions. Gold serves its role as the “money of last resort” when all other paper currencies fail. Make a note: The more gold you own, the better you’ll sleep at night.

In conclusion, we leave you with this neat and simple formula for financial success in 2008 courtesy of The Aden Forecast-

High Oil = Large Trade Deficits = A Weak U.S. Dollar = High Inflation = Rising Gold Prices

Buy gold and silver. Tuck them away for the rainy days ahead.

Questions? Call a Gold Specialist at 1-800-928-6468

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Austin Rare Coins, Inc.
Serving Investors & Rare Coin Collectors since 1989
7200 North Mopac • Austin TX 78731

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.