Author Archives: USAGOLD

DMR–Gold the outlier as the commodities complex led by oil moves higher

DAILY MARKET REPORT

Gold dithered around the $1290 mark today – down $2 on the day and in a continuation of the same trends that have kept it in a downward pattern for the past several days, i.e., a firmer dollar and rising bond yields. Silver is up 5¢ at $16.45.

While gold dithered, Brent crude oil prices breached $80 per barrel in overnight trading. Oil’s upside got another boost when Total, the French oil company, threatened to pull out of Iran unless the EU took measures to protect it against U.S. sanctions.  Financial Times interpreted the move as putting a “dent in EU hopes” of saving the nuclear accord with Iran.  Total is the largest foreign investor in Iranian oil production.

Brent crude is up 52.15% on the year and 8.7% over the past month, largely on MidEast concerns.  When one analyzes what is going on in the commodity markets – the CRB is up 13% over the past year – gold, comes up as the outlier.  It is up only 3.3% over the past year.  “The geopolitical noise and escalation fears are here to stay,” Julius Baer’s Norbert Rücker told Reuters yesterday. “Supply concerns are top of mind after the United States left the Iran nuclear deal.”

In its Morning Briefing today, Seeking Alpha says, “Government borrowing costs are continuing to grind upwards. The 10-year Treasury yield has broken through 3.1% – its highest level since July 2011 – as higher oil prices point to increased inflation following yesterday’s upbeat U.S. retail sales numbers.”

Perhaps the outlier is due for a turnaround. . . . .

Quote of the Day
“Thanks to almost a decade of unprecedented market interventions by global central banks (which have collectively acquired assets totaling over $20 trillion), everywhere you look there is repression of yields, repression of market volatility, and their side effects of exploding asset valuations (to heights not seen since shortly before past historic crashes), financial-engineered debt, leverage, stock-buybacks, cryptocurrency-insanity, ‘short volatility’ and all manner of reckless yield-chasing investment schemes. This is an age of massive artificial economic imbalances and systemic risks.” – Mark Spitznagel, Mises Institute

Chart of the Day

Chart courtesy of Statista.com

Chart note:  We thought this chart would be an appropriate follow-up to comments made yesterday by Goldcorp chairman, Ian Telfer. “We’re right at peak gold here,” he said, “Are we not looking for it? Are we bad at finding it? Or have we found it all? My answer is we found it all.”  As you can see current global gold mine production in 2017 was 3150 tonnes.  Meanwhile, in a report issued this morning by the World Gold Council, it predicts physical demand will increase in the years to come the result of economic growth and a rising middle class particularly in China and India.  To that we would add growing demand for gold internationally as a safe haven.  Global gold demand was 4108 tonnes in 2017 and  got as high as 4738 tonnes in 2011, according to the World Gold Council. Scrap and above-ground inventories – both inconsistent sources – made up the gap.

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How to choose a gold firm


How to choose a gold firm
A quick guideline for beginning investors

It is surprising how many prospective investors simply dive into gold and silver investing without much in the way of a consumer inquiry. That lack of simple due diligence has ended up costing a good many investors thousands of dollars, and sometimes even hundreds of thousands, before the damage is detected.

Here you will find some brief but valuable guidelines to help you choose the right gold and silver company.

It might be the most important decision you will make on the road to becoming a gold and silver owner.

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.
Choose USAGOLD – reliably serving physical gold and silver investors since 1973.
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“Silver technicals so ridiculously positive, you may wonder if there’s catch”

USAGOLD SPECIAL OFFER

“Note how in the previous couple of cycles (early and late 2017) the speculators’ net positions got close to zero but then bounced back quickly to the more normal net-long. But in the current cycle they’ve been net-short for most of the past two months. This has flummoxed industry analysts and led to some silver-to-the-moon predictions which, based on the rising volatility in the broader financial markets, are at least plausible.” – CommodityTradeMantra.com

You can order directly online HERE or
Call us at the ORDER DESK
1-800-869-5115 x100

by Jonathan Kosares, USAGOLD

Once upon a time, investors would routinely ask the question ‘What’s the best 5-year investment out there right now?’. And while this question is still important to some, for most, the same instant gratification impulse-based emotions that dominate daily life are now governing investment strategies. Quite simply, if an investment isn’t all over the place, it isn’t ‘exciting’ enough. Look no further than the crypto-currency craze. I’ll concede, reflecting on a ‘five year investment’ doesn’t get my heart pounding. But then again, I, for one, prefer my investments not keep me awake a night. So to me, this question, that has been notably absent in our current investment analysis climate, is the very question everyone should be asking right now, and quite ironically, if the answer does what it could, it might be just the thing that ultimately gets your heart really pounding…

So let’s do that…let’s ask that question… ‘What’s the best 5-year investment out there right now?”

Well, the stock market is stagnant after peaking out in January – and downside remains the path of the least resistance. We may very well be staring down a landscape much like the 2001-2011 period in which stocks, after a large rise, tracked lower before getting clobbered in 2008. Stocks did subsequently rise again, but ultimately ended an entire decade at the same level as the peak achieved in 2001. Property is arguably fully valued in most markets, if not a bubble again, stoked by yet another cheap-credit/leverage induced boom over the past five years. With interest rates rising, it’s hard to see a world where property value increase continues unabated. The bond market is stuck in ‘no-man’s land’, teetering on the brink of a true bear market. It’s going to be a long time before yields are sufficient to attract capital simply to earn interest, and yet still far too low to make any meaningful money playing the premiums in bond funds.

You can probably guess where this is headed…Gold, of course, but even more so of late, and the subject of this offer, Silver.

The current ratio of gold to silver of nearly 80:1 is within throwing distance of most undervalued condition in the market’s history. Even a return to the historic average of 62:1 would have remarkable implications for the silver price. In fact, widely read technical analyst Clive Maund called the current silver market ‘The most bullish set up for silver that I have ever seen.”

I’ll routinely sit down with clients and run a few hypotheticals (a picture is worth 1000 words) – I think you’ll quickly see why so many have ended these conversations with a single word, “Wow”.

Bond king Jeffrey Gundlach recently said he wouldn’t put it past gold to rise $1000 per ounce in the near future. BOA/Merril Lynch recently predicted a rise to $1450 or higher by year’s end. Many others have predicted rises anywhere from $1500-$1900 per ounce. So for the sake of this presentation, let’s pick a gold price of $1600 per ounce. I don’t think you’ll have much argument from anyone that $1600 is certainly possible, if not this year, in the next five.

Here’s what silver would do if:

The ratio improved to is historical average of 62:1
Gold $1600 divided by 62 = spot silver price of $25.80
(That’s a 50+% increase from current prices)

The ratio improved to it’s bull market level average (2010-2012) of 50:1
Gold $1600 divided by 50 = spot silver price of $32
(That’s basically a clean double from current prices)

And last, the ratio improved to its bull market peak of 34:1 (May 2011)
Gold $1600 divided by 34 = spot silver of $47
(That’s roughly triple current prices)

Wow.

And if you really want to make your head spin, run some hypotheticals at $2000 gold…

Which leads us to our May offer…handsomely discounted Silver American Eagles (40¢ per ounce) offered at the current cycle low spot silver prices, making this the best accumulation opportunity in silver eagles this year. And that’s not an exaggeration. Only 5000 coins available at this price. Free Shipping on orders of 500 ounces or more.

Here is a graph displaying the divergence between gold and silver as it has developed over the past year.

You can order directly online HERE or
Call us at the ORDER DESK
1-800-869-5115 x100


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“Silver technicals so ridiculously positive, you may wonder if there’s catch”

USAGOLD SPECIAL OFFER

“Note how in the previous couple of cycles (early and late 2017) the speculators’ net positions got close to zero but then bounced back quickly to the more normal net-long. But in the current cycle they’ve been net-short for most of the past two months. This has flummoxed industry analysts and led to some silver-to-the-moon predictions which, based on the rising volatility in the broader financial markets, are at least plausible.” – CommodityTradeMantra.com

You can order directly online HERE or
Call us at the ORDER DESK
1-800-869-5115 x100

by Jonathan Kosares, USAGOLD

Once upon a time, investors would routinely ask the question ‘What’s the best 5-year investment out there right now?’. And while this question is still important to some, for most, the same instant gratification impulse-based emotions that dominate daily life are now governing investment strategies. Quite simply, if an investment isn’t all over the place, it isn’t ‘exciting’ enough. Look no further than the crypto-currency craze. I’ll concede, reflecting on a ‘five year investment’ doesn’t get my heart pounding. But then again, I, for one, prefer my investments not keep me awake a night. So to me, this question, that has been notably absent in our current investment analysis climate, is the very question everyone should be asking right now, and quite ironically, if the answer does what it could, it might be just the thing that ultimately gets your heart really pounding…

So let’s do that…let’s ask that question… ‘What’s the best 5-year investment out there right now?”

Well, the stock market is stagnant after peaking out in January – and downside remains the path of the least resistance. We may very well be staring down a landscape much like the 2001-2011 period in which stocks, after a large rise, tracked lower before getting clobbered in 2008. Stocks did subsequently rise again, but ultimately ended an entire decade at the same level as the peak achieved in 2001. Property is arguably fully valued in most markets, if not a bubble again, stoked by yet another cheap-credit/leverage induced boom over the past five years. With interest rates rising, it’s hard to see a world where property value increase continues unabated. The bond market is stuck in ‘no-man’s land’, teetering on the brink of a true bear market. It’s going to be a long time before yields are sufficient to attract capital simply to earn interest, and yet still far too low to make any meaningful money playing the premiums in bond funds.

You can probably guess where this is headed…Gold, of course, but even more so of late, and the subject of this offer, Silver.

The current ratio of gold to silver of nearly 80:1 is within throwing distance of most undervalued condition in the market’s history. Even a return to the historic average of 62:1 would have remarkable implications for the silver price. In fact, widely read technical analyst Clive Maund called the current silver market ‘The most bullish set up for silver that I have ever seen.”

I’ll routinely sit down with clients and run a few hypotheticals (a picture is worth 1000 words) – I think you’ll quickly see why so many have ended these conversations with a single word, “Wow”.

Bond king Jeffrey Gundlach recently said he wouldn’t put it past gold to rise $1000 per ounce in the near future. BOA/Merril Lynch recently predicted a rise to $1450 or higher by year’s end. Many others have predicted rises anywhere from $1500-$1900 per ounce. So for the sake of this presentation, let’s pick a gold price of $1600 per ounce. I don’t think you’ll have much argument from anyone that $1600 is certainly possible, if not this year, in the next five.

Here’s what silver would do if:

The ratio improved to is historical average of 62:1
Gold $1600 divided by 62 = spot silver price of $25.80
(That’s a 50+% increase from current prices)

The ratio improved to it’s bull market level average (2010-2012) of 50:1
Gold $1600 divided by 50 = spot silver price of $32
(That’s basically a clean double from current prices)

And last, the ratio improved to its bull market peak of 34:1 (May 2011)
Gold $1600 divided by 34 = spot silver of $47
(That’s roughly triple current prices)

Wow.

And if you really want to make your head spin, run some hypotheticals at $2000 gold…

Which leads us to our May offer…handsomely discounted Silver American Eagles (40¢ per ounce) offered at the current cycle low spot silver prices, making this the best accumulation opportunity in silver eagles this year. And that’s not an exaggeration. Only 5000 coins available at this price. Free Shipping on orders of 500 ounces or more.

Here is a graph displaying the divergence between gold and silver as it has developed over the past year.

You can order directly online HERE or
Call us at the ORDER DESK
1-800-869-5115 x100


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Posted in Today's top gold news and opinion |

Now available in the clear. . . .

SPECIAL REPORT

The case for gold in the era of financial virtual reality
On the holodeck the markets are telling us something
but we know not what


NEWS & VIEWS
Forecasts, Commentary & Analysis on the Economy and Precious Metals
May, 2018


We invite your subscription at no charge or obligation.
Monthly newsletter

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Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. The following vignette first appeared in our monthly client letter in April 2015. It is titled “Caveat Venditor” (Let the seller beware) and it tells why the prudent investor might think twice about parting with his or her gold even if a small investment had grown to be worth millions. Though hyperinflation, or inflation at any level,  seems a distant threat at the moment, this nugget of wisdom is one to file for future reference.

Caveat Venditor

Gillian Tett (Financial Times): “Do you think that gold is currently a good investment?”

Alan Greenspan (private citizen): “Yes. Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.” – Council on Foreign Relations meeting, November, 2014

Let the seller beware! The German citizen/investor who put away a few rolls of 20 mark gold coins (.2304 tr ozs. shown below) in 1918 would have done so at 119 marks per ounce. By early 1920 the previous rapid inflation had suddenly German money given way to deflation. Had that gold owner decided to cash in on gold’s significant gains thinking runaway inflation was over, a 100,000 mark investment would have made him or her a millionaire.

The glow, however, would have quickly worn off. By late 1921 the runaway inflation had resurfaced but now with a vengeance. Gold shot to 4,000 marks per ounce. By mid-1922 gold reached 10,000 marks per ounce and the wholesale price index went from 13 to 70. By late 1922, the roof caved in. Gold traded at 134,000 marks per ounce. In January, 1923, it cracked 1,000,000 marks per ounce. By midyear, it broke the 100 million marks per ounce barrier and at the peak of the hyper-inflationary breakdown, it sold for over 100 billion marks per ounce.

The individual who thought he or she had the cat by the tail and cashed-in his or her golden chips during the 1920’s deflation became a millionaire. In short order though, that millionaire became a pauper as wave after wave of hyperinflation washed over the German economy. One moral from this somewhat frightening tale is that becoming a millionaire or even a billionaire on one’s gold holdings was inconsequential. Another is not to give up one’s hedge until there is ample evidence that it is no longer needed. Momentary nominal profits can be illusory.

Caveat venditor!


Trailer note – From The Nightmare German Inflation by Scientific Market Analysis: “Those who held funds in dollars, pounds or other stable currencies, or in gold, saved their capital. The government set up rigid exchange controls as the inflation proceeded. As usual under such conditions, a black market flourished. The ones who fared best were the small minority who had the foresight to exchange marks into foreign money or gold very early, before new laws made this difficult and before the mark lost too much value.”

The currency image (top left) illustrates the rapid depreciation in Germany’s paper money with single notes going from a 20 mark value in 1918 (the paper equivalent of one 20 mark gold coin) to a 20 million mark value in 1924. Fast forward to 2015, nearly one hundred years later, and we find that all currencies are being deliberately devalued against one another in an on-going global currency war. That hedge is no longer available. Only gold stands outside the fray. Perhaps that is why former Fed chairman Alan Greenspan recently said, “Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.”

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Common IRA rollover mistakes

GOLD/SILVER IRAs

Investopedia/Mary Hall/3-29-2018

“Have you thought about rolling your traditional IRAs from one financial institution to another? Maybe you’re looking for higher returns, more investment selections or better service. If you roll over your traditional IRA, there are some common mistakes you should avoid. ‘IRA rules can be tricky and some have even changed over the years, so you need to be careful, otherwise you could pay income tax and penalties,’ says Dan Stewart, CFA, president, Revere Asset Management, Inc., in Dallas, Texas. In this article, we’ll give you an overview of IRA rollover rules and discuss how to avoid breaking them.”

USAGOLD note 1:  We have a steady stream of new clients who come to us for help with rollovers from existing retirement plans into gold and silver inclusive IRAs. The rules can be confusing and somewhat cumbersome, but they are not difficult to manage. The link above will guide you through the most common, out-of-the-gate stumbling blocks.

USAGOLD note 2: Beyond the mistakes investors make with the mechanics, we continue to receive inquiries from investors who have included graded modern gold and silver bullion coins in their plans at hefty premiums wanting to know if we can help them with what turned out to be a bad situation. At about the time that these investors receive their first evaluation from a trust company, they discover too late that they paid far more for their gold and/or silver than they should have.  Don’t let that happen to you. For the best results, we continue to strongly advise IRA investors to stick with the ungraded, ordinary gold and silver bullion coins (pictured above) that sell at standard market prices.  You will be glad that you did.


We are happy to help with your questions and get you started on the right track.

ORDER DESK.
1-800-869-5115
Extensions #100
8am to 7pm weekdays.

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.
Choose USAGOLD – reliably serving physical gold and silver investors since 1973.

 

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How to invest in gold

For newcomers – A step-by-step approach to help you start right


Helpful guidelines to including gold coins and bullion
in your investment portfolio

Some complicate investing in gold, but in reality it is a relatively simple process. The following guideline is the result of our experience helping thousands of investors make their initial gold investment. If you have questions at any point along the way, we welcome your telephone call. We think you will find our low-key, no-hassle approach conducive to your making good decisions about gold and silver ownership.

1. Develop a good sense of the role you would like gold to play in your overall portfolio. For beginners, our Q&A section, What you need to know before you buy your first ounce of gold, provides a quick and helpful introduction to gold ownership. This page is well worth your time. It will help you avoid some of the costly mistakes often made by first-time investors.

* If you would like to gain a more comprehensive introduction to buying gold coins and bullion, we offer the widely-read book, The ABCs of Gold Investing: How to Protect and Build Your Wealth With Gold. This well-received ownership guideline is also available online through Amazon.com, Barnes & Noble and at most bookstores.

2. Decide how much of your overall portfolio should be committed to gold and silver coins and bullion. Investopedia, the well-known investor website, says: “An investor who fears that the U.S.’ trillions of dollars in debt and penchant for economic bubbles* point to a long-term downward trend for stocks and the U.S. dollar may devote 25% or more of his or her portfolio to metals and mining**. However, most traditional investors with more optimistic outlooks keep their exposure to this sector at less than 10%.” Similarly, we suggest a diversification between 10% and 30% depending upon your level of concern about the economy.

* Related: Two former central bank leaders speak out on gold’s portfolio role in the modern economy [LINK]
** Gold stocks should not be viewed as a substitute for real gold ownership in the form of coins and bars. Instead, stocks should be viewed as an addition to the portfolio after one has truly diversified with gold coins and bullion.

3. Match your portfolio choices to your objectives. Our two most popular portfolio inclusions at this time are contemporary gold bullion coins and historical gold coins (the low-premium, bullion-like variety that track the gold price). In fact USAGOLD’s overall volume is split roughly 50%-50% between the two groupings. Each plays a particular role in the portfolio. The reading material suggested in step one offers details in this regard, or we invite you to contact our trading desk to be referred to one of our experienced consultants for details.

4. Choose the right gold firm. You can probably imagine the horror stories we have heard over the years. It is surprising though how so many of these bad experiences could have been avoided with a simple background check at Better Business Bureau reviews or by spending a little time with the right reading material like the suggestions made above.

Check not only its rating but the number of complaints lodged against a gold dealer and how those complaints were handled. A consistent record of complaints can be a warning sign even if the company has managed to keep an A+ rating.

Ultimately, your choice of a gold firm can mean the difference between success and failure as a gold owner.

* Related: Please see Where to buy gold – A quick guideline for choosing the right gold company.
Note: USAGOLD has been awarded the Better Business Bureau’s Gold Star Certificate, its highest accolade. In addition, the firm has been rated A+ by the BBB with zero consumer complaints. The firm has been accredited since 1991. We invite you to see our reviews at the BBB site. [LINK]

5. Make an informed decision. This website offers a significant amount of information on gold ownership to help first-time investors. It also offers news, opinion and constantly updated market information to keep you posted after you become an owner. We invite you to browse and get to know us.

Placing your first order with USAGOLD

1. Prepare a list of questions you would like to have answered by one of the firm’s expert gold ownership consultants.

2. Contact our Order Desk (1-800-868-5115, Ext#100) for current pricing and to have your questions answered.

3. Lock-in your order over the phone. It will be followed by an e-mail confirmation invoice for your records.

4. A second option is to visit our Online Order Desk where you can choose from a full assortment of investment items including modern gold and silver bullion coins and bullion bars, historic fractional gold coins and historic U.S. gold coins. At our Online Order Desk, you can order confidently anytime day or night and on weekends.

5. Remit payment by wire or personal check.

6. Sit back and relax while we fulfill your order. In our nearly 45 years as a gold firm assisting thousands of clients, we have never failed to honor an agreed-upon price or to deliver metal as ordered in a timely manner.

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Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. Most first appeared in our monthly client letter, but this one comes from the first chapter of The ABCs of Gold Investing – How To Protect and Build Your Wealth With Gold.  First published in 1996, it is a timeless story about gold’s ultimate value and it is called. . . . . .

Asset Preservation: Why Americans Need Gold

“The possession of gold has ruined fewer men than the lack of it.” – Thomas Bailey Aldrich

The incident is one of the most memorable of my career. Never before or since has the value of gold in preserving assets been made so abundantly clear to me. It was the mid-1970s. The United States was finally extricating itself from the conflict in South Vietnam. Thousands of South Vietnamese had fled their embattled homeland rather than face the vengeance of the rapidly advancing Communist forces.

A couple from South Vietnam who had been part of that exodus sat across from me in my Denver office. They had come to sell their gold. In broken English, the man told me the story of how he and his wife had escaped the fall of Saigon and certain reprisal by North Vietnamese troops. They got out with nothing more than a few personal belongings and the small cache of gold he now spread before me on my desk. His eyes widened as he explained why they were lucky to have survived those last fearful days of the South Vietnamese Republic. They had scrambled onto a fishing boat and had sailed into the South China Sea, where the U.S. Navy rescued them. These were Vietnamese “boat people,” survivors of the final chapter in the tragedy of Indochina. Now they were about to redeem their life savings in gold so that they could start a new business in the United States.

Their gold wrapped in rice paper was a type called Kim Thanh. These are the commonly traded units in Hong Kong and throughout the Far East. Kim Thanh weigh about 1.2 troy ounces, or a tael, as it is called in the Orient. They look like thick gold leaf rectangles 3 to 4 inches long, 11⁄2 to 2 inches wide, and a few millimeters deep. Kim Thanh are embossed with Oriental characters describing weight and purity. As a gesture to the Occident, they are stamped in the center with the words OR PUR, “pure gold.”

It wasn’t much gold—about 30 ounces—but it might as well have been a ton. The couple considered themselves very fortunate to have escaped with this small hoard of gold. They thanked me profusely for buying it. As we talked about Vietnam and their future in the United States, I couldn’t help but become caught up in their enthusiasm for the future. These resilient, hardworking, thrifty people now had a new lease on life. When they left my office that day, there was little doubt in my mind that they would be successful in their new life. It was rewarding to know that gold could do this for them. It was satisfying to know that I had helped them in this small way.

I kept those golden Kim Thanh for many years. They became something of a symbol for me—a reminder of the power and importance of gold. Today, when economic and financial problems have begun to signal deeper, more fundamental concerns for the United States, I still remember that Vietnamese couple and how important gold can be to a family’s future. Had the couple escaped with South Vietnamese paper money instead of gold, I could have done nothing for them. There was no exchange rate for the South Vietnamese currency because there was no longer a South Vietnam! Wisely, they had converted their savings to gold long before the helicopters lifted U.S. diplomats off the roof of the American Embassy in 1975.

Over the years, I have come to understand and appreciate the many important uses of gold—artistic, cultural, economic, and industrial. Gold is unsurpassed for jewelry and as a high-tech conductor of electricity. Gold has medical applications in dentistry and in treating diseases from arthritis to cancer. Gold plating is used in computers and in many other information-age technologies. In nanotechnology, it is used in a variety of cutting-edge medical diagnostic devices. As for its engineering uses, gold can be found in automobile anti-pollution devices, in jet engines, in architectural glass, and in a number of space applications. All of these pale, though, when compared to gold’s ancient function as money, as an asset of last resort and an unequaled store of value.


You can order The ABCs of Gold Investing here.

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‘Why buy gold’ pages


Why Gold Why Now
Visual Capitalist Jeff Dejardins’ classic pictorial on why you should own gold
Black Swans Yellow Gold
How gold  performs during periods of deflation, chronic disinflation, runaway stagflation and hyperinflation
The Essential Argument for Gold Ownership in Eleven Straight-Forward Charts
With economic fundamentals lining up in gold’s favor, it’s not a case of IF but WHEN.

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.
Choose USAGOLD – reliably serving physical gold and silver investors since 1973.

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Posted in Today's top gold news and opinion |

Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. Most first appeared in our monthly client letter. Here is a short entry first published in 2011 [and revised in May, 2017] about gold’s gold’s historic undervaluation at today’s gold price. It’s called. . . . . .

A sovereign tale of gold’s historic undervaluation
Oil, gold and a hoard of British sovereigns stashed in an old piano

“British officials are trying to trace the owner of a trove of gold coins worth a ‘life-changing’ amount of money found stashed inside a piano. A coroner investigating the find on Thursday urged anyone with information to come forward. . . Anyone wanting to make a claim has until April 20, when coroner John Ellery will conclude his inquest.” – Associated Press, London, UK

The above notice was originally posted in the public interest at USAGOLD’s online daily newsletter. Unfortunately, as you have just read, the coroner’s due date is passed. Thus, if you happen to be the frugal individual who stashed that life-changing amount of money in the piano (a total of 913 old British sovereigns in hand-stitched pouches) and neglected to make your claim, you are now officially out of luck.

When I first read about the gold hidden in the piano, put away no doubt for a rainy day, I was reminded of the settlement between King Ibn Saud of Saudi Arabia and a consortium of oil companies on rights to that country’s vast oil riches in the early 1930s. That too involved a stash of British sovereigns – 35,000 of the roughly one-quarter ounce gold coins.

British sovereigns happen to be one of the most sought-after, accumulated and stored pre-1933 gold coins in the world, so it is no surprise that forgotten hoards of the coin turn up every once in a while, nor is it a surprise that Ibn Saud would have asked to be paid in these highly liquid, universally acceptable gold coins. We sell many thousands of this item annually. Some go into safe deposit boxes. Some get buried out on the property. Some get stashed in the piano. Most are kept in the event of a social, political or financial breakdown, or some other unexpected calamity, against all of which the gold British sovereign has been a direct hedge for centuries.

At the time of Saudi Arabia’s oil concession, British sovereigns were valued at $8.24 each, or $288,365 for the 35,000 coin lot. The price of oil in 1933 was about 85¢ a barrel. A British sovereign, as a result, could buy 9.7 barrels of oil. Today those same sovereigns would bring a little less than $10.5 million at melt value ($298 each/$1265 per ounce gold price) and a barrel of oil is selling for about $52.

Thus, today a British sovereign can buy a little less than six barrels of oil — a statistic that gives you an inkling of gold’s current under-valuation. For gold to buy the same amount of oil now that it did in 1933, the price would have to go to $2150 per ounce. It may be no coincidence, and it certainly reinforces the notion of gross undervaluation, that the inflation-adjusted price of gold in 1980, when gold traded at $850, would be in the vicinity of $2400 today.

[Editor’s note: Things have changed since this piece was published in May, 2017. At present, with gold at $1325 per ounce, those same sovereigns would bring a little less than $11 million at melt value ($312 each) and a barrel of oil is selling for about $62.  As a result, a British sovereign today can buy five barrels of oil. For a British sovereign to buy 9.7 barrels of oil, the spot price would need to be at $2567 per ounce!]

Daniel Yergin, renowned expert on the oil industry, offered this interesting historical anecdote on the logistics of making that payment to Ibn Saud in his Pulitzer Prize winning book, The Prize – The Epic Quest for Oil, Money, and Power:

“The only remaining problem was how to obtain that much gold. Because America had just gone off the gold standard, Socal’s efforts to dispatch the gold directly from the United States were turned down by Assistant Secretary of the Treasury Dean Acheson. But finally, the Guaranty Trust’s London office, acting on behalf of Socal, obtained thirty-five thousand sovereigns from the Royal Mint, and they were transported on a ship belonging to the P&O line. Care had been taken that all the coins bore the likeness of a male English monarch, and not Queen Victoria, which it was feared, would have devalued them in the male-dominated society of Saudi Arabia.”

Had Ibn Saud known that he was sitting on a massive pool of oil that would make Saudi Arabia one of the most important pieces of real estate in the world, he might have asked for more. He did however understand the ultimate value of a paper promise, hence the payment in hard, yellow metal. Legend has it that he counted all 35,000 British sovereigns himself. To this day, the Gulf kingdoms becomes squeamish whenever it appears the Fed is printing too much paper currency. With that in mind, I would not be surprised to learn that those 35,000 British sovereigns still reside in the monarchy’s treasury.

Original publication date: June, 2011; revised May, 2017

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‘What kind of gold to buy’ pages


Standard Portfolio Selections
AImages, Specifications and Histories for top investor portfolio inclusions
What you need to know before you buy your first ounce of gold
Some initial guidelines from one of America’s top gold experts
Should I buy a gold ETF ?
Why gold coins and bullion are the better option for most investors.

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.

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Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. Most first appeared in our monthly client letter. Here is a short entry first published in 2015 about the relationship between a client and a gold firm. It’s called. . . . . .

A telephone call from an old client and friend

I had the happy occasion recently of receiving a telephone call from an old client and friend – a physician safely retired near the sea and alongside one of the South’s oldest golf clubs. It was good to hear from this student of the markets – one of life’s steady and thoughtful practitioners. McHoots probably would have counted Doc, as I will call him, a friend, since he thinks much like the character so skillfully described by Mr. Wodehouse (See above “Approaching gold. . .” Part 2). Back at the turn of the century, Doc foresaw much of what would happen economically in the United States and purchased what he considered enough gold to see him through it.

Vanity Fair’s Matthew Hart offers this masterfully written overview of those early years of the 21st century:

“An ounce of gold cost $271 in 2001. Ten years later it reached $1,896 – an increase of almost 700 percent. On the way, it passed through some of the stormiest periods of recent history, when banks collapsed and currencies shivered. The gold price fed on these calamities. In a way, it came to stand for them: it was the re-discovered idol at a time when other gods were falling in a heap of subprime mortgages and credit default swaps and derivative products too complicated to even understand. Against these, gold shone with the placid certainty of received tradition. Honored through the ages, the standard of wealth, the original money, the safe haven. The value of gold was axiomatic. This view depends on a concept of gold as unchanging and unchanged—nature’s hard asset.”

It was in that time frame, when gold was stuck in the $300 to $400 per ounce price range (a time not unlike our own), that Doc transferred roughly $500,000 of his net worth into gold coins. His goal, like most of our clientele, was not to become wealthy through gold ownership, but to protect the hard-earned wealth he had already attained. After we had exchanged the usual pleasantries, the conversation turned once again to the subject of gold and the reason for his call.

“I still have all the gold I purchased from you,” he said simply. “Every ounce of it. It’s now worth well-over $2,000,000. I want to thank you again for your book and your advice. It made a great difference to me as you may have gathered.”

(Ed note: At the interim top – the $1896 Matthew Hart mentions above – Doc’s holdings reached a value well over $3,000,000!)

“That,” I said, “is the kind of story we enjoy hearing around here, Doc. I’m happy for you. Happy gold could help you like it did.”

“We had some very interesting conversations back in the day,” he said with a chuckle, “and gold did for me what we thought it would, what you said it would.”

I mentioned to him that the book to which he referred, “The ABCs of Gold Investing – How to Protect and Build Your Wealth with Gold,” was now in its third edition and still introducing people to the advantages of owning the metal and advising readers how to go about it. The conversation then drifted to other of life’s pursuits for both of us and ultimately to the purpose of his telephone call – a fresh gold transaction. We completed our business and I left the conversation with a strong sense of satisfaction. We get a steady stream of phone calls like Doc’s, but it is always good to hear real-life tales about gold’s role in preserving our clients’ assets.

The fact of the matter, though rarely discussed, is that gold ownership has as much to do with personal philosophy as it does finance and economics — though by that I do not mean to diminish the importance of financial markets, or politics for that matter, in our everyday lives. Things, though, do need to be kept in perspective and gold helps toward that goal — once one understands its true nature. In many ways, gold ownership, as Doc would likely attest, is a rational portfolio decision that suits the times, but it is also a life-style decision. As Richard Russell, the venerable purveyor of the Dow Theory Letters puts it, “I still sleep better at night knowing that I hold some gold. If or when everything else falls apart, gold will still be unquestioned wealth.” And one that helps you spend a quiet summer enjoying family and friends no matter what happens on Wall Street or in Washington D.C.

Editor’s note: It is fitting to end this retrospective with Doc’s story. We’ll let it speak for itself.

Original publication date: July, 2015

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‘Where to buy gold’ pages


How to choose a gold firm
A quick guideline for beginning investors
The best place to buy gold and silver
Some initial guidelines from one of America’s top gold experts
USAGOLD’s philosophy and mission statement
Quality service and pricing since 1973
Online Order Desk
A secure, e-commerce portal where investors can buy gold and silver anytime

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.

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Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. Most first appeared in our monthly client letter. Here is a short entry first published in 2012 the result of our many years experience working with first-time gold investors.  It’s called. . . . . .

Gold in five easy lessons

1. Don’t buy it because you need to make money; buy it because you need to protect the money you already have.

2. Don’t look at price as a barrier; look at it as an incentive.

3. Don’t buy its paper pretenders; buy the real thing in the form of coins and bullion.

4. Don’t fall prey to glitzy TV ads; do your due diligence instead.

5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.


We invite you to sign-up for FREE immediate access to our monthly client letter + e-mail notification on all future publication dates.


 

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Gold ramps higher in Asia trading

Up almost $8 at $1336.30. Silver up 12¢ at $16.67.

Dollar lower. Japanese yen up sharply.  China traders back from New Year break. Shanghai gold market open.

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‘How to buy gold’ pages


How to buy gold coins and bullion
A step by step approach to help you start right
What you need to know before you buy your first ounce of gold
Some initial guidelines from one of America’s top gold experts
What you need to know before you launch your gold and silver IRA
Hedging economic uncertainty in your retirement plan

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.

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Maple Leaf offer

If you scroll down the page, you will see an interesting offer of gold Canadian Maple Leafs. . . . . .

As of this post, we are now over two-thirds sold out.  If you have an interest, we invite you to call the Order Desk (1-800-869-5115)  or order at the Online Order Desk. When these 100 coins are sold out, the premium will return to normal levels. Only 28 coins left. . . .

With thanks to all who have participated. . . .

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Online Order Desk Special Offer

Canadian Maple Leaf
Fineness: .9999 / Actual Gold Content: 1.0 troy ounce / Face value: $50

Solid Gold.  Solid Opportunity. 

SPECIALLY DISCOUNTED to move quickly.
Only 100 available.  First-come, first-served.
Only $25 over spot (equates to 1.85% over melt value).
Unprecedented bullion coin pricing.

Order online directly. Or by phone.

New to USAGOLD? Questions?

Please call our ORDER DESK  – 1-800-869-5115, Extension # 100

* To complete your registration, please go to our sign-up page linked in the menu bar at the Online Order Desk.

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Exclusive offer to Online Order Desk registrants sold out. . . .

It was actually sold out by the open of business today, but with everything going on in the markets, we didn’t get around to posting this announcement until now.

Many thanks to those who participated in this special offer and congratulations on your timing!

If you have not registered as yet to use the Online Order Desk, we invite you go to our sign-up page so you will be in a position to purchase when we e-mail and post the next offer. Quite often our special offers sell out quickly as was the case with yesterday’s sale of Dutch 10 guilder queens.

We will keep you informed of future offers.

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Exclusive Offer – Online Order Desk registrants only

Online Order Desk Special Offer
Dutch Queen 10 Guilder

Netherlands / Queen Wilhelmina /.1947 troy ounces / Minted – 1892-1933 / Uncirculated grade

You can own this historically-important, elegant and scarce old world gold coin at a price comparable to what you would pay for a modern bullion coin – a solid opportunity. First-come, first-served.

Only 300 available at this special pricing –– 8% over melt value. Online Order Desk registrants only *

New to USAGOLD? Questions?
Please call our ORDER DESK to place your first order – 1-800-869-5115
, Extension # 100

* To complete your registration, please go to our sign-up page linked at the top the Online Order Desk entry page.

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Upcoming release of an important edition of our client letter


Next week we release the February issue of our client letter. 

The feature article this month is titled:

Gold takes center-stage in dollar scare
Not strong, not weak but strategically benign
by Michael J. Kosares

From that article. . . .

“In the end, the international FOREX markets will determine the dollar’s value against other currencies, but that journey will be influenced by other players on the stage, i.e., central banks and governments, including the U.S. government and the Federal Reserve, whose main interest in each instance is the value of their currency. More specifically, their interest lies in the value of their currency against all others especially their largest trading partners.
It is there, on the ultimate battleground of the political economy, that the plots and subplots can become as twisted and complicated as the intricacies of a John LeCarre novel. Note, for example, the couching of terms in the following two statements delivered during the Davos conference late last month. . . .”

If you are not a subscriber and you would like to be, we invite you to sign-up at this link.  We make the newsletter available to our current and prospective clientele as a free service and we welcome your participation. You will receive notification of the February edition’s publication by e-mail.  In the meantime, you will have open access to the January edition.


Mr. Kosares is the author of The ABCs of Gold Investing: How To Protect and Build Your Wealth with Gold and the founder of USAGOLD.
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Gold sideways today, but breaking above long-term trendline

EARLY REPORT

Gold is sideways in early trading today – up $2.20 from yesterday’s close at $1329.00.  Silver is down 3¢ at $16.99.  Both metals seem to be stabilizing at these levels after the past few days of downside related mostly to profit-taking after the strong run-up since mid-December.  Currencies, particularly the Japanese yen, are moving up against the dollar this morning – a trend that might push the metals higher before the day is done.

“Gold bugs,” says Tumblr’s Dana Lyons, “might just get their opportunity to finally move the needle here soon, however. At least, they have a potential catalyst close at hand, based on the chart of the GLD. How so? The fund is presently testing the Down trendline stemming from its 2011 all-time high. Should the GLD be successful in breaking out above that trendline (presently near 127), it may open the way for further, perhaps considerable, gains in the near-term.” (See our nearby Chart of the Day)

Chart of the Day

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Are we heading for another developing world debt crisis?

The Guardian/Larry Elliott/1-14-2018

“Global interest rates are rising. Poor countries are finding it tough to pay back money borrowed from banks in anticipation of a commodity windfall that never materialised. Stir in some dirty dealing that has seen funds stolen and what do you have? That’s right: the makings of another debt crisis.”

USAGOLD note:  Quietly while the focus of attention has been the status of U.S. debt, the compressed yield curve, the end of the U.S. bond bull market, etc. another potentially serious crisis is brewing in the emerging world, particularly in Africa.  If the bubble pops, it will likely catch the markets and policy-makers by surprise.

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Apple’s repatriation drives dollar higher, gold down

LATE REPORT

Gold finished down $11.50 today at $1326.77 reacting almost immediately to the announcement that Apple would repatriate $250 billion in overseas cash. Silver finished down 19¢ at $16.96.  Prior to Apple’s announcement, gold was moving along nicely attempting to recapture the $1340 mark and silver was back over $17.

So why would Apple’s announcement influence the price of gold?

There  is a school of thought in the financial markets that says corporate repatriations will drive up the dollar because overseas holdings will need to be converted to dollars before their return.  There’s another school of thought that says those funds are already in dollars so repatriations will not drive up the greenback’s value. It has to be one, the other, or something in between.  Today the first school was dominant and the second was left scratching its head.  But tomorrow’s another day. . .

If you are looking for more on gold, please scroll.  A wealth of information awaits. . . . . . . .

Quote of the Day
“Now that the tax bills have passed both houses of Congress, ‘dollar bulls have started banging their drums’ again, analysts at Unicredit said. However, they said this attitude is misguided because the vast majority of the earnings that companies will repatriate are probably already in dollar-denominated securities in the United States. ‘Even a significant wave of repatriation might not lift the dollar directly, as some of the largest U.S. corporations already hold a lot of cash in dollar-denominated assets,’ said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.” – Gertrude Chavez-Dreyfuss and David Randall, Reuters (12-8-2017)


Why choose USAGOLD as your precious metals broker?

REASON #1 –– RELIABILITY

USAGOLD has always attracted a certain type of investor — one looking for a high degree of reliability and market insight coupled with a professional approach that emphasizes guidance and individual needs over high-pressure sales tactics. It is not uncommon for sophisticated gold owners to comment how happy they were to find us after their experiences with other gold firms. From the first point of contact through the delivery of your orders, we think you will find, as have many thousands of clients before you, that you have chosen a firm with your interests in mind.

For the other six reasons. . . .

 

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Martin Feldstein: Stocks will face downward pressure from rising interest rates

NewsMax/Rob Williams/1-17-2018

“An excessively easy monetary policy has led to overvalued equities and a precarious financial situation,” Feldstein wrote in The Wall Street Journal. “The Fed now faces the difficult challenge of trying simultaneously to contain inflation and reduce the excess asset prices—without pushing the economy into recession. Feldstein doesn’t say how much the market may decline in discussing how expensive stocks are in relation to historical norms.”

USAGOLD note:  Feldstein, a Harvard economist, was chairman of the Council of Economic Advisors under President Ronald Reagan.

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Quick Update: Gold’s intra-day $11 drop

Gold began its roughly $11 descent from today’s highs ($1340) about the time news broke on Apple’s repatriation of its $250 billion overseas cash pile.  Someone, or better put, someone’s algo read it as dollar bullish . . . . .MORE in tonight’s LATE REPORT. . .

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Davos World Economic Forum: Risk Report says systemic collapse possible, but will the word “gold” be uttered publicly?

World Economic Forum/The Global Risks Report 2018/

“When a risk cascades through a complex system, the danger is not of incremental damage but of ‘runaway collapse’—or, alternatively, a transition to a new, suboptimal status quo that becomes difficult to escape. For example, even though a runaway collapse of the global financial system was averted a decade ago, the global financial crisis triggered numerous economic, societal, political and geopolitical disruptions. Many are still only poorly understood, but they shape a ‘new normal’ that in turn will create its own disruptions, spillovers and feedback loops in the months and years ahead.

As the pace of change accelerates, signs of strain are evident in many of the systems on which we rely. We cannot discount the possibility that one or more of these systems will collapse. Just as a piece of elastic can lose its capacity to snap back to its original shape, repeated stress can lead systems—organizations, economies, societies, the environment—to lose their capacity to rebound. If we exhaust our capacities to absorb disruption and allow our systems to become brittle enough to break, it is difficult to overstate the damage that might result.”

USAGOLD note: Next week we have the Davos conference.  President Trump will address the gathering on Friday (1-26-2018), its final day.  Needless to say, his presence there has already generated considerable controversy, so this year Davos will get its fair share of attention in the mainstream media.  As you might have gathered, conference organizers have a long list of risks to occupy their attention (as covered in the Risks Report linked above) culminating with the dangers to our financial systemic outlined briefly above. One doubts that the word “gold” will be uttered publicly in this context, but as we have come to find out over the past year, a good many of the participants are, in fact, gold owners. The subject no doubt will be raised in a conversation or two held privately.

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Gold continues to give ground early

EARLY REPORT

Gold continued to give ground today in a continuation of the profit-taking/position rejiggering that began yesterday.  It is trading at $1333 and down almost $8 on the day.  Silver finds itself in similar straits, down 16¢ at $17.06.  An attempt to recover during Asian trading hours last night failed at the $1344 level for gold and $17.28 for silver. The London market was relatively quiet.

Undergirding the precious metals markets are general concerns about the overall health of the financial markets going forward. Reuters reports this morning that “In the longer term, gold will be supported by risk that global share prices could fall from record highs and strong growth around the world could stoke inflation. ‘Concerns regarding (share price) overvaluations and the possibility of rising inflation have reignited interest in gold,’ Standard Chartered analysts said.”

Chart of the Day
Last night we mentioned gold’s strength in terms of the Japanese yen.  For the curious among our readers,  here is the two-year chart for gold in yen from our friends at Gold Charts ‘R’ Us.  Note the spike that began in mid-December.

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Gold, silver register muted reaction to stock market’s “wild flip-flop” (at least for today)

LATE REPORT

Gold finished down $3.39 on the day at $1339.05 recovering some of the loss it experienced earlier in the day.  Silver finished 20¢ lower at $17.24. The most important news of the day, of course, is the Dow Jones Industrial Average’s harrowing 283-point reversal. CNBC followed the day with an appropriate headline: “Stock market’s wild flip flop comes as warning signs build”.  As for gold and silver, the reaction to events on Wall Street was muted at best, at least for today.

Quick update:  Gold is showing some spunk in the overnight (Asia) market, now trading at $1344.  Silver is trading at $17.30. The price of gold in yen is up sharply.

Quote of the Day
“Money, again, has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper. To trace the history of the most prominent of these delusions is the object of the present pages. Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (1841)


From the January edition of USAGOLD’s News & Views:

“In studying the chart, it is difficult to ignore the possibility that we may have come to an inflection point for gold. As you can see, the DJIA price line went vertical in the last five years of the cycle beginning in the sixteenth year. As mentioned earlier, gold’s secular bull market is now going into its 16th year. There is a possibility, given a convergence of dynamic events, that gold’s price line could follow the DJIA template – a turn of events that could make 2018 a critical year for the gold market. At the same time, it could turn out that gold’s cycle will be more protracted and the entire time line stretched. If the market does roll into the mania phase, the verticality, as suggested by our chart, will take a good many by surprise. In either case, at the very least we are likely to be in for a very interesting five-year period.”

If you would like to see that chart (and the accompanying in-depth commentary) which compares the 1980-2000 bull market in stocks to the current secular bull market in gold, we invite you to subscribe to our monthly newsletter.

FREE SUBSCRIPTION
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As a bonus,  you will also receive immediate access to our in-depth investor information packet  – The SafeHaven Investor
(Six articles of interest to current and would-be gold owners)

 

 

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