| "body"> | | | | Roman Empire. The end of the Roman Empire. |
| If looks and feel have anything to do with it, rare | | | | Among his comments, the US is suffering from |
| gold coins would beat stocks every time. They're | | | | "declining moral values and political civility at home, |
| charming, beautiful, have a nice heft to them and, | | | | an over-confident and over-extended military in |
| because they've been around for a while, | | | | foreign lands and fiscal irresponsibility by the |
| represent an intriguing chunk of history. | | | | central government." He's so serious that he even |
| But there are other reasons, timely reasons, to | | | | refused to sign off on the government's "books." |
| add more gold coins than stocks to your portfolio | | | | Yikes again. |
| today...although making an assertion like that can | | | | How does this relate to gold and stocks? When |
| come perilously close to blasphemy to traditional | | | | high profile members of our own government |
| stock investors. Ignore the available clues at your | | | | come right out and warn us of the coming |
| own peril, though. For instance... | | | | "economic tsunami," it's time to find refuge in gold. |
| Clue #1:Call Options Point to Higher Gold. This | | | | Clue #5:Inflation, Inflation and More Inflation. |
| analysis is from Prieur du Plessis and Adrian | | | | Despite all the government statistics in the world, |
| Douglas. In short, these two men observed that | | | | we all know that inflation is off and running. We |
| the December 2007 gold call option contracts | | | | know that every time we fill our tanks. And |
| were sizeable indeed, currently numbering some | | | | somewhere in the back of our minds, we know |
| 122,000. What's more, they outnumbered the | | | | that rising energy prices have to be bad for the |
| puts 2 to 1. | | | | economy, that it affects everyone and anyone |
| Based on this "positive gold surge," both du Plessis | | | | who sells anything. That intuition is, not surprisingly, |
| and Douglas believe gold is on the threshold of a | | | | rooted in fact. According to the Federal Reserve |
| big price jump. It's not the first time Douglas | | | | Bank of Dallas, "nine of the ten post-World-War-II |
| believed this way. In November 2005, he | | | | recessions were preceded by sharply rising oil |
| predicted a surge in the gold price from its $460 | | | | prices." |
| level, based on a similar build-up of gold call | | | | With the Fed rushing to defer a recession by |
| options. Two months later, gold was $100 higher. | | | | cutting rates, we also know, somewhere in our |
| Next... | | | | psyches, that the dollar will only be further |
| Clue #2:Gold Demand is Still Heading Higher; Gold | | | | weakened, maybe dangerously so, from it's |
| Supply is Still Heading Lower. The situation here | | | | current historical weakness with each of these |
| has only worsened. According to a recent World | | | | cuts. And the bottom-line of all of this change is |
| Gold Council report, world gold demand is running | | | | inflation. We'll be needing more dollars to buy what |
| 30% above a year ago while supply continues to | | | | yesterday's dollars used to buy. |
| head south. The world's largest gold producer, | | | | You've undoubtedly heard the adage, "In 1911, an |
| South Africa, hit an 84-year low despite gold's | | | | ounce of gold could buy a very nice suit. Today, it |
| soaring prices. And the world's top gold producers | | | | still can." That's by way of saying that gold keeps |
| witnessed nearly a 20% reduction in output since | | | | abreast of inflation. It did so in 1911. It still does |
| 2001. | | | | now, almost a hundred years later. Which is what |
| Needless to say, higher demand and lower supply | | | | makes gold the weapon of choice for fighting |
| leads to higher prices. | | | | inflation. |
| Clue #3:"Triple Threat" from the Housing Dilemma. | | | | But Why Just Stay on the Defensive with Gold? |
| Harvard economist Martin Feldstein warned that | | | | In 1995, a Penn State economist, Dr. Raymond |
| we face a triple threat from the housing | | | | Lombra, did a study he presented to Congress. |
| downturn. According to Bloomberg's September | | | | This 40-page report "proved" that rare coins, |
| 2nd reporting of his Jackson Hole speech, | | | | including rare gold coins, were among the top |
| "Feldstein outlined a ``triple threat'' from housing: a | | | | performing assets over the last 25 years (and |
| "sharp decline" in home prices and construction; | | | | that included stocks). He also reported that "rare |
| higher borrowing costs and a "freeze" in credit | | | | coins dominate gold bullion as a diversifying asset." |
| markets stemming from sub-prime mortgage | | | | These "numismatic coins" do that by reducing |
| losses; and fewer home-equity loans and | | | | volatility while providing improved returns. |
| refinanced mortgages, leading to less consumer | | | | Lombra's most recent 2003 study found much |
| spending. | | | | the same situation, From 1979 to 2003, rare |
| The overall effect will, needless to say, have | | | | coins, like rare gold, earned the highest average |
| scary consequences. "The economy could suffer | | | | annual rate of return and beat gold bullion as an |
| a very serious downturn," he added. More reason | | | | investment and inflation hedge. |
| to diversify into the shiny stuff. | | | | But whether you prefer taking a more aggressive |
| Clue #4:America's Going the Way of the Roman | | | | position with rare gold coins over stocks or simply |
| Empire-Comptroller General, David Walker. Yikes. | | | | want a proven financial haven, the timing may be |
| You know you're in trouble when the guy in | | | | right for gold. And that may be an |
| charge of government accountability, finds | | | | understatement. |
| "striking similarities" between the US and the | | | | |