The Secret Currency: How a Federal Gov't Gold Glitch Allows You to Make a Fortune
By Dr. Steve Sjuggerud, Ph.D.
One investment which most Americans know nothing about is one of the secrets behind some of the world's richest families.
I'm going to show you how to take advantage of it personally... and very soon... with amazing results.
We call this investment "the secret currency." It is beyond the reach of any government or corporation. And many of the world's wealthiest families have used it for generations to grow dynasties.
The secret currency is a form of gold.
But it's not your typical gold investment.
It has nothing to do with mining stocks, mutual funds, options, futures, or bullion. Instead, this is a kind of currency used for centuries by the richest families to profit on financial windfalls created by governments around the world. This secret currency is not old-fashioned or obsolete. In fact, look through the rolls of the richest people in the world and you'll find dozens of families using this investment to both grow and safeguard their wealth. For example...
The Rothschilds (at one time, the wealthiest family in the world)
The Onassis family (Greek shipping magnate Aristotle married Jackie Kennedy after JFK died)
The Hunt family of Texas (H.L. Hunt made his billions as an oil wildcatter)
The DuPonts (whose descendants today run the second biggest chemical company in the United States)
The Morgans (JP was one of the richest railroad men of the last 100 years)
The Adams family (famous for producing two U.S. presidents)
The Hopkins family (Johns gave money to build the university and the world-famous hospital, which both bear his name in Baltimore)
The Green family (Hetty Green was once the wealthiest person in the world wealthier than Bill Gates today)
The royal Farouk family (which produced the last two kings of Egypt)
This investment is like gold, only better with the potential for much higher returns.
- From 1972 to 1974, this investment rose 348%, according to an index that keeps track of its market as a whole. At the same time, stocks dropped 34%, according to the S&P 500 stock market index.
- From 1976 to 1980, while the stock market plummeted 35%, according to the S&P 500 index, the investment I want to tell you about realized 1,195% profits.
- Then, more recently, between 1987 and 1989, investors who took advantage of the secret currency saw profits of 665%. Stocks, meanwhile, went on a roller coaster ride up and down dozens of times (sound familiar?) during this period.
The last time the Salomon Brothers brokerage firm included this vehicle in its annual investment survey, the secret ranked No. 1 over the prior 20-year span, with an annual return of 17.3%. In other words, it was the single most profitable thing you could do with your money over the previous 20 years.
It beat stocks, bonds, gold, silver, artwork, diamonds, U.S. Treasury bills, real estate, and oil, according to an article in the Chicago Tribune.
I can understand why you may believe I'm exaggerating the power of this secret currency to safeguard and grow your wealth.
After all, you may have never heard of it before. Most investors haven't. But the truth is, you can use the secret currency to make as much money as you want. The problem is, no one else is likely to tell you about it. Why should they?
But if this investment is good enough for the world's wealthiest families the Rothschilds, DuPonts, Morgans, Adamses, Hunts, etc. I think it's good enough for you and me.
I want to show you how to make as much money as these folks have made at least on a percentage basis.
I believe you could double your money with this investment. A 500% or 1,000% return wouldn't be surprising. The last time the conditions were even close to this good (in 1987), investors made 665% profits.
These kinds of gains are possible all because of a glitch in the system, created by the U.S. government. I'll get into all the details in a bit, but first let me explain why gold is the safest place for your money now...
WHAT WE'RE CERTAIN OF... IT'S A NO-BRAINER
For me, the starting point is always the same... What is certain? What is known? What can we bank on? And is there an outstanding way to profit that nobody has already gobbled up?
One thing we're certain of right now is that the Fed is going to do its best to prevent deflation (falling prices). The Fed has repeatedly stated it will print money as much as necessary to head this thing off. In an effort to calm any fears, the government has been as explicit as possible that it would rather overshoot in this process.
The obvious result is more paper dollars out there. And the next result is that a paper dollar is worthless. Consider this scenario... Say the supply of gold stays roughly the same. But say the supply of dollars out there increases dramatically. What should happen? It should cost more paper dollars to buy an ounce of gold. And that is exactly what's been happening. Gold has risen from a low around $260 an ounce to over $1,300 an ounce in the last dozen years.
Chances are the Fed will be "fighting" this battle for a while. And therefore, chances are gold will be an excellent place to profit from this fight in the years to come.
So I went looking for the best way to get into gold right now... the way that will give us significant upside potential, but will keep our downside risk limited. It's actually hard to find...
We could own gold outright. But if we're right in this Fed scenario, we'd like a little more bang for our buck. We could buy gold futures, but they're risky why risk losing more than our initial investment if we don't have to? The next logical choice might be shares of mining companies like Newmont Mining, but mining shares are risky, too. I had to dig deeper.
The secret currency is the supersafe way to get into gold and still have big upside potential...
To understand this investment and how it works, we have to back up a little bit...
Before 1933, gold literally was money... gold coins could jingle in your pocket. After 1933, President Franklin D. Roosevelt actually made it illegal for U.S. citizens to own gold or gold coins, upsetting two centuries of stable money...
For most of the 200 years before 1933 (going back to England), an ounce of gold was worth $20.67. Major governments had actually committed to giving you gold for paper money if you demanded it.
FDR changed all that. A month into his new presidency, he ordered all U.S. citizens to immediately exchange all their gold for paper money. His next move was to issue an executive order raising the price of gold from $20.67 to $35, which devalued the U.S. dollar by 69%. In essence, any savings U.S. citizens had were now worth nearly 69% less, by government decree.
Americans were forced to liquidate their investment holdings. Those who failed to do so faced a 10-year jail term, a $10,000 fine, plus a penalty of twice their investment's value. This glitch in the gold system lasted 41 years. Americans were not allowed to invest in gold coins again until December 31, 1974, when President Ford finally relegalized it.
Now, less than 80 short years after FDR trashed the gold standard, we need more than 1,300 paper dollars to buy an ounce of gold.
Today, our government wants to pull off what FDR did. It wants to squeeze out of a rough period of debt by creating a massive inflation. The massive devaluation of the dollar worked for FDR Industrial production rose by 60% and unemployment fell from 25% to 14% from 1933 to 1937. Our current government plans to do the same, devaluing our money to stimulate the economy. We can sit back and watch, or we can take advantage of the glitch and pocket gains of 100% or more...
THE SECRET CURRENCY OF RARE COINS
What I want to tell you about is a way to invest in rare gold coins.
Before you dismiss this idea, remember that this is an investment the most powerful and wealthy families in the world have used for generations.
But it's not just any coins I want to show you how to invest in... It's a very specific group of gold coins.
Let me explain...
Before Franklin Delano Roosevelt, there was Teddy. Teddy had a thing for coins. He passionately hated America's coins, calling them "artistically of atrocious hideousness." America had become the most powerful nation on Earth. And the President felt that our most valuable coins should be a reflection of our status. So he sought out the foremost sculptor of the day, Augustus Saint-Gaudens...
"Dear Mr. President..." Saint-Gaudens replied to Teddy. "Well! Whatever I produce cannot be worse than the inanities now displayed on our coins, and we will at least have made an attempt in the right direction..."
Though in poor health, Saint-Gaudens delivered. He designed the gallant $20 "Double Eagle" gold piece, a design that today is nearly unanimously considered the most beautiful coin of all time. It was Saint-Gaudens' last work. He died and never saw the fruits of his labor.
The coins were minted from 1907 until 1933, when Teddy Roosevelt's cousin Franklin Delano Roosevelt made it illegal for individuals to own gold and melted down many of these gorgeous coins. After gold ownership was banned in 1933, private ownership of gold was not allowed in the U.S. until 1974.
While the entire 1933 series of Saint-Gaudens Double Eagles was supposedly destroyed by FDR, 10 of the coins somehow sneaked out of the mint. Over the years, nine have been recovered and destroyed by the Secret Service. The government seized the 10th coin in New York and made arrests, but the government case fell apart and a compromise was met. The coin would be auctioned, with the proceeds split half and half between the government and the other party. This 1933 Saint-Gaudens $20 Double Eagle sold for $7,590,000, the highest price ever paid for a coin.
A Saint-Gaudens $20 gold piece would have an intrinsic value of about $1,300 today, since it contains nearly an ounce of gold, and an ounce of gold is worth about $1,300.
Of course, coin enthusiasts will always pay more than meltdown value for Saint-Gaudens $20 gold pieces as they are considered to be the most beautiful coins in the world. But right now, we can own a piece of history, and we can own real money with real gold, for a small premium over the meltdown value.
WHAT KIND OF UPSIDE POTENTIAL
ARE WE TALKING ABOUT?
"With modest investment in the right coins in the early 1970s you could cash out and buy a house by 1980, and many did." David Hall, Collectors Universe
Rare coins have experienced a few roaring bull markets since gold ownership became legal again. Coin prices (as measured by the CU 3000 Index) were up 1,195% in the 1976-1980 bull market in coins. In other words, a $10,000 investment would have risen to $129,500 in value.
In the 1987-1989 bull market, coin prices (as measured by the CU 3000 Index) rose by 665%. Coins like the Saint-Gaudens in pristine "Mint State" condition (coins graded "MS65" by the coin grading service PCGS) were big winners.
Then in 1989, the bottom fell out. Coins were in a horrendous bear market for the next 14 years, which brought the Saint-Gaudens to ridiculous bargain levels. As you can imagine, after 14 years of misery, there were a lot of bitter people in the coin business. After 14 years of people getting burned, it reached the point where "investor" was a dirty word...
That's why a few years ago, I flew out to visit the headquarters of the largest coin dealer in America, and stated my intentions... to learn about its business as a potential coin investor and to possibly tell thousands of potential investors about it. The dealer wouldn't see me. The next week I went to one of the country's major coin shows, and again I approached the same coin dealer, again genuinely stating my intentions to invest in coins. Yet again, he wouldn't see me, as an "investor." How ridiculous is that?
THE MARKET THAT GOT SO BAD, THE FTC WON'T
LET IT BE CALLED AN "INVESTMENT"
After the market skyrocketed to its peak in 1989, a bunch of unscrupulous operators entered the coin business, talking about coins as a can't-lose "investment," promising high returns, even guaranteeing profits, and fleecing lots of people in the process. The Federal Trade Commission (FTC) stepped in, putting a halt to the scamsters, and the bottom fell out of the market. The FTC was extremely active in shutting dirty operators down in 1992 and 1993.
By 1994, just five years after their peak, coin prices were down about 80%. The bad taste in people's mouths lingers. We're not much higher than those 1994 lows now. (See the chart below.) The FTC has put out a guide to investing in coins to help protect you: http://webharvest.gov/peth04/20041020114015/
Today, the politically correct lingo is "collector/investor." But I'm not interested in collecting, at least not yet...
When it comes to gold coins, there are basically two types... rare ones and common ones.
The common gold coins are called "bullion coins," because a one-ounce gold bullion coin generally sells at about the same price (or at a small premium to) an ounce of gold. Famous bullion coins include South African Krugerrands and Canadian Maple Leafs.
The rare gold coins are called "numismatic coins." These coins, trade based on their rarity, scarcity, and collector demand. Though gold may be at $1,300, a rare and highly prized one-ounce gold coin can easily fetch tens of thousands of dollars.
Then there is a third type of gold coin... The "hybrid coin," I call it. And this is what I like. These coins have characteristics of both of the types above, but they're not really either. The typical Saint-Gaudens is a prime example of the hybrid...
Saint-Gaudens dating from 1924-1928, for example, have a high collectible value, yet they are easy to buy and sell. Like bullion coins, there are enough of them to go around, plus they contain just under an ounce of gold.
BUYING AT THE BEST POSSIBLE PRICE
There are many ways to buy these coins. If they have been graded and sealed by the grading service PCGS, it is OK to buy them sight unseen. So you can buy them through your local dealer, or try your luck on eBay (I typed "Gaudens" into eBay recently and more than 1,000 items came up).
The question is: What is the right price? There are many coin price guides out there. And for each price guide, you'll find a wildly different price. Price guides fall into two categories... "retail" price guides and "dealer" price guides.
"Retail" is the asking price, like what a car dealer would ask for a used car. "Retail" is generally a pipe dream for a dealer... particularly when it comes to easy-to-find coins like the 1924-1928 Saint-Gaudens.
I'm willing to pay a 50% premium above the price of gold for the MS63s, 70% above the price of gold for MS64s, and a 100% premium above the price of gold for the MS65s. You can find the current price of gold on www.kitco.com. Look for "live spot gold" on the left.
Here's our simplified table to keep everything easy to follow:
As of 10/2010
† with gold at $1,300
Note: If prices are high when you get this, just wait. They should fall back in range soon.
Remember: Don't pay more than the "buy-up-to" price.
At the end of this report, I've provided a list of dealers you can buy these coins from.
WHAT WE HOLD IN THE
TRUE WEALTH PORTFOLIO
I first recommended buying gold coins in my True Wealth newsletter back in June 2003. I recommended three different coins... All of them soared by over 100% in the time they were on our recommended list.
One of them performed so well, it is in the "Hall of Fame" at my publisher, Stansberry & Associates. It's one of the top-10 best-performing recommendations in the history of ALL the newsletters that Stansberry & Associates publishes. That particular coin rose 273% in value.
In the January 2010 issue of True Wealth, I recommended selling all of our coins. The price of gold had hit its all-time high between the previous issue and that one. We caught the peak and sold as a downtrend started.
I summed my thoughts up in that issue: "I bought when [gold] was cheap and ignored. And I'm selling when gold is up hundreds of percent and it's popular. Sell your gold coins now, while the gold market is hot enough to sell into."
Our timing was right. Gold coins like the ones I recommended fell 20%-25% soon after.
What does that mean for new readers? Well, as I write, the prices of these coins have fallen back below the "buy up to" prices you'll find in this report. That means they're good values, given today's gold price.
And in the October 2010 issue of True Wealth, we added the MS65 Saint Gaudens to our model portfolio. Our upside potential is unlimited – and historically, rare coins have soared in gold bull markets.
In the long run, the dollar could fall dramatically and gold could therefore rise dramatically. And the coins I tell you about above could rise even more dramatically than the price of gold.
A Rational Reason to Buy Gold
Gold rises in times of fear... the old saying goes. And it is true. But how exactly do you measure fear? It's tough because fear is not rational. However, right now there is an outstanding and very rational reason for the price of gold to continue rising for a long period of time. It has nothing to do with fear. It's simple. It could lead to extraordinary profits. And I'll share it with you today.
No Chicken Little Here
Most gold writers push the fear buttons... "The world is going to hell in a handbasket – you'd better own some gold," they say.
I try to stay out of the fear crowd. I'm agnostic when it comes to investments... I don't love gold or love stocks. I just want a good buy. And right now, there is an excellent rational reason to buy gold. You can leave fear out of it.
Gold is attractive now because it's attractive... fear or no fear. Let me explain...
Money Flows Where It's Treated Best
Gold pays no interest. It's just a lump of yellow metal. So if the bank is paying you 7% interest on your cash, then chances are you'll prefer to have your money in the bank. It makes sense... because due to compound interest, in 10 years you'd have doubled your money in the bank. But if you'd held gold instead, you'd still have the same lump of metal. But consider this... Imagine if the bank was paying zero percent interest... then which is more attractive, paper dollars or gold? In this case, both pay no interest. And in this case, a rational investor would choose gold. The gold is still the same lump of metal, but a government could print money and make the paper money worthless. It can't print gold. Money flows where it's treated best. If there are high interest rates, then gold does poorly, as money flows where it's treated well. If interest rates are low or zero, then money flows toward gold. Gold can't compete with high interest rates. But it is extremely competitive with zero-percent interest.
"But wait," you say. "How did gold run from $100 to $800 in the late 1970s?"
The "Real" Deal... Considering Inflation
If you're just looking at the current interest rate, you're not getting the whole picture. You have to consider inflation as well, to get to the "real" interest rate. For example, banks might pay you 1% interest. But inflation may be 2%. So the "real" interest rate – the interest rate AFTER inflation – would actually be negative 1%. And that explains it all... Right now, investors lose money to inflation by putting it in the bank. When faced with -1% interest in cash, or 0% interest in gold, the smart money is choosing to get out of cash and into gold. Back in 1979, short-term interest rates were 8%, but inflation was 13%. That means your "real" return was negative 5% a year on your cash. Gold went from $100 to $800 in no time.
Then, at the end of the decade, Fed Chairman Paul Volker drove short-term interest rates through the roof. By 1981, short-term interest rates were 15%, and inflation was back into the single digits. That means investors got an outstanding "real" return on their money... and gold tanked, back into the $300-plus range by 1982.
The Present Situation Is Like the 1970s
Back in the 1970s, the "real" return on cash (the return after inflation) was negative. So money flowed out of cash and into gold. Today, for the first time since the late 1970s, we're seeing the same thing. The "real" return on cash is negative.
It's gold time. No fear-mongering necessary.
THE COIN DEALERS I RECOMMEND
These are the coin dealers I recommend you start with. You can simply call these guys on the phone, tell them you are one of my readers, and explain what you want to do.
I've been working with these guys for few years now, and they are all good to work with.
I do not receive any compensation for recommending these guys. These dealers all have good reputations and decades of experience.
David Hall Rare Coins
P.O. Box 6220 Newport Beach, CA 92658
Phone: 800-759-7575 or 949-567-1325
Dana Samuelson and his team
American Gold Exchange
P.O. Box 9426
Austin, TX 78766-9426
Asset Strategies International
1700 Rockville Pike, Suite 400
Rockville, MD 20852
Phone: 800-831-0007 or 301-881-8600
MORE INFORMATION ON GOLD
The very best book on gold is Peter Bernstein's The Power of Gold: The History of an Obsession. This is not about investing in gold, it's really the story of gold throughout history, and Bernstein is a fabulous storyteller. Definitely a worthy read.
If you're just curious about gold and not really close to doing anything, the World Gold Council is a great place to learn more – www.gold.org. The council has nothing to sell you. I believe it's a non-profit entity – funded by gold companies – that simply exists to increase awareness and knowledge of gold.
Both Van Simmons and Dana Samuelson have excellent websites with prices and information. Visit Van's websites at www.davidhall.com and www.pcgs.com. Dana's website is www.amergold.com.