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Winter, 2011

Gold owners are a group of people we have come to know very well in our nearly 40 years in the business. Contrary to the less than flattering picture sometimes painted by the mainstream press, the people we have helped become gold owners (and that group numbers in the many thousands) are among those we rely upon most in our daily lives -- our physicians and dentists, nurses and teachers, tradesmen and building contractors, business owners, attorneys, engineers, scientists, clergy and university professors (to a name a few.) In other words, contrary to what some in the mainstream press believe, gold ownership in the United States is pretty much a Main Street proposition.

The question becomes: Why have so many Americans become gold owners?

In the first edition of The ABCs of Gold Investing: Protecting Your Wealth Through Private Gold Ownership, I warned about the disturbing trends at work in the American economy and how someday they could wreak havoc on the average investor's portfolio. It is a coincidence that The ABCs of Gold Investing was released at about the same time William Strauss and Neil Howe released The Fourth Turning (1997) -- in retrospect one of the most important books of the era.

In that book Strauss and Howe warned:

"The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation, and empire."

If Strauss and Howe wrote the script for the prolonged economic, political and social crisis which was about to unfold, The ABCs of Gold Investing suggested a means to weathering it. Gold at the time was trading in the $300 per ounce range and a good many Americans took advantage of the low price to diversify their portfolios. Needless to say, gold lived up to its billing and became, as The ABCs suggested it would, the ultimate asset of last resort for millions of investors.

Since the crisis of 2008, the atmosphere of crisis has calmed, but the policies which created the crisis have not been put to rest. In fact, as so many analysts have pointed out, the cure pretty much looks like what caused the disease in the first place. So much so that Neil Howe (the same of Strauss and Howe fame) recently warned:

"The [political] bickering and gaming continue as the new recession has hugely speeded up the disaster deadline -- like turning on all the boilers in the Titanic's engine room while the iceberg looms. We're in real trouble.  Let me further add that it's not just happening to us, but to every other major economy in the developing world."

This sense of impending crisis, and fear of an even more disastrous global financial breakdown, explains why gold is still under accumulation on a global basis even as the price has risen. It explains why people like George Soros, Eric Mindich and Paul Tudor Jones, managers of three of the largest hedge funds in the world, recently made financial page headlines with massive gold bullion acquisitions. It also explains why economic policy-makers globally have begun to talk about reintroducing gold as an important balance sheet asset for central banks. Those two factors -- hedge fund acquistions and official sector interest -- are likely to become central factors in the gold market in the years to come.

In the end, though, it was Mainstreet that led the way on gold and it will be Mainstreet that will carry it in the future. I would like to express my gratitude to those of you who have chosen to do your gold business with USAGOLD-Centennial Precious Metals. If I were to update "The ABCs of Gold Investing" today, the message would be no different than it was 14 years ago:

Seek peace of mind. Add gold coins and bullion to your portfolio as a solid, unassailable protection against the gathering storm. If I were to change anything at all, it would be to elevate, if posible, the overall sense of urgency. It has been a long journey, but as Neil Howe suggests above, that journey is far from over.

Onward,

Michael J. Kosares