rwr0056 the great gold bonanza of 2012 final

7/31/2019 RWR0056 the Great Gold Bonanza of 2012 FINAL

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Copyright 2012 by Real Wealth Report

Published By: Weiss Research, Inc.Publication Date: February 2012

RWR0056

My mission is to empower investors and consumers with unbiasedinformation and guidance to protect their savings, build their wealth,

and prosper in good times or bad.

All rights are reserved. Permission to reprint materials is expresslyprohibited without the prior written consent ofReal Wealth Report.

The accuracy of the data used is deemed reliable but not guaranteed.Theres no assurance the past performance of these, or any other

recommendation, will be repeated in the future.


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The Great Gold

Bonanza Of 2012!Doub le , Tr i p le And Quadru p leYour Money I n The Grea t Go ld

Bonanza Of 2 01 2

Larr y EdelsonEditor, Real Wealth Report


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If youd been among the exclusive handful of investors who actedquickly on my buy and sell signals for gold stocks sinceJanuary 2001, you could have made a bundle:

* Your Ang loGold (AU) and N e w m o n t M i n i n g ( N EM ) shareswould have jumped 31% and 105% respectively ...

* Your Tocqu ev i l le Gold Fund ( TGLDX) would have earned you81% gains ...

* Your Agn ico-Eagle ( AEM) shares would have more than doubledyour money, earning you a 144% payday in just over a year ...

* Your two plays on Nor t hga t e M ine ra l s (NXG) would have

earned you 197% and 272% gains, and ...

* Your Glam is Gold ( GLG) shares would have earned you atotal after-commission windfall of 553% enough to turn a$50,000 investment into $326,500!

Now, we all know that past performance is no guarantee offuture results, and temporary setbacks in gold are alwayspossible sometimes sharp ones.

But its precisely those setbacks that open up grand buyingopportunities.

Indeed, Im convinced were about to make all those astonishinggains look like a drop in the ocean when gold soon explodeshigher in its next leg up:

Up through the $2,000 an ounce barrier ... on to $2,500 ... thento $3,000 ... then to $5,000 ... and by probably 2016, to my newlonger-term target of as high as $7,700 an ounce!

And as a subscriber to my Real Wealth Report, I want you toprofit along with me AND the other members of my services!

You may not think of yourself as a gold investor. Thats okay.This report isnt really about gold. Its about making more moneythan you ever dreamed of. And who wouldnt like to do that?!


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Plus, despite my forecast for lower gold prices in the veryshort-term ...

I Be l ieve The Great es t Go ldBu l l Mark e t Of Our Li fe t im es

Has A Lon g W ay To Go

Some people I talk to wonder if theyve missed the boat in gold.They fear theyve waited too long to buy gold stocks and missedone of the most profitable bull markets ever.

Balderdash! Right now, every indicator I use is telling me:

It is NOT too late to profit from soaring gold prices!

The next leg up in this great bull market in gold WILLSOON BEGIN!

The gold stock profits weve seen so far are just a tasteof the profits to come!

And Im going to show you why in this report. In it, I give you allthe reasons why I believe skyrocketing gold prices are virtuallylocked in for the next few years.

I introduce you to gold stocks and other gold investments thatgive you the potential to multiply your money over and overagain in the months and years ahead.

But let me start by telling you why Im more excited about gold andnatural resources now than Ive been in nearly three decades ...

First, because they are firmly grounded in real wealth theexact opposite of the flimsy, no-assets, no-earnings, high-debt,smoke-and-mirrors, B.S. companies Wall Street loves to push offon you.

In contrast, I insist on investing only in real companies with realassets, that spin off real profits, and that deal with tangible value things that consumers, corporations and entire nations musthave to survive.


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Stocks like these give you something no high-tech start-up orpie-in-the-sky puff job can: REAL ASSETS, relative stability andenhanced safety in the worst of times like we have now withthe financial crisis that's engulfed the world and the massive,unprecedented sovereign debt crisis that is going to shake theglobe to the core plus virtually unlimited profit potential!

Second, becauseevery indicator I watch is telling me, If youwant to own the stocks that are destined to leave the Dow, S&P500 and NASDAQ far behind, you must take advantage of anysignificant dips in gold stocks to buy.

A n d t h i r d , because ve ry s imp ly pu t , t h e re i s no be t t e r w ay t o p ro t ect you r w eal t h and t o p ro f i t f rom w ha t Bei j i ng

and Wash ing ton a re do ing t o t h e value o f you r m oney v ia ongo ing deva lua t ions o f th e U .S. do l la r !

Although I work intensely in the entire natural resource market, Icut my eyeteeth on the gold market 33 long years ago. In theearly 1980s, I even gained fame as one of the worlds largestgold futures traders.

Dont get me wrong. I have never been one of the perpetuallybullish gold bugs you hear about. In fact, when gold supplies

skyrocketed and demand cratered in the late 1980s and 1990s, Itold everyone whod listen to stay away from the gold market.

But now, all that has changed.

In the next few pages, youre going to see why. Youre going todiscover how virtually all the factors that have depressed goldprices central bank selling, speculative selling (the carrytrade), forward-selling by mines, and soaring supplies arenow history.

And, in their place, youre going to discover how dwindlingsupplies, skyrocketing U.S. government deficits plus enormousnew demand from countries such as China point to an ongoingcrash in the purchasing power of the dollar, soaring gold prices,and skyrocketing gold stock prices as far as the eye can see.


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Par t I

Seven Pow er fu l D r i ve rsBeh ind The Go ld Bon anza

I count about a dozen fundamentals forces that should power goldand gold investments much higher in the months and years ahead.

But the seven below are the most powerful ...

Force # 1 : Go ld supp l i es are sh r i nk ing . The U.S. GeologicalSurvey a division of the Department of the Interior announced last year that there are now fewer than 50,000 tonsof proven gold reserves left in the ground worldwide.

Even our own U.S. government is now warning that the world willrun out of in-ground supplies of gold within 20 years. And thiscomes from some of the top government geologists in the world!

South Africa and Australia had the steepest production declines.South Africas production dropping to its lowest level in 86 years,while Australias gold production hit 19-year lows. And mineproduction has the potential to fall even further as the creditcrisis continues to impact mining companies.

Adding to the supply crunch:Big miners are simply not findingworld-class deposits. Why? Its simple ...

Force # 2 : Exp lo ra t i on l ag - t im e leads t o supp l y -dem andgap . Global nonferrous-metals exploration spending has been onthe rise since hitting bottom in 2002, but the lack of pastspending has caused a large exploration and development gap.

While there may be an increasing pipeline of new mining projects

in the planning stages, the lack of major projects and the timeconstraints inherent in the business will hamper global suppliesfor years to come.

What's more, over the past several years, some mining companieshave spent little to discover new sources, opting instead toincrease reserves through merger and acquisition activities.


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Other fundamental forces that will drive gold higher include ...

Force # 3 : The U.S. do l la r i s on a s l ipper y s lope . Since July2001, the greenback has plummeted as much as 31% againstother major world currencies, and theres plenty of room for thedollar to keep falling.

And a massive U.S. government debt of $14.8 trillion, bailoutcommitments and guarantees from the U.S. Treasury and theFederal Reserve equaling almost $12.2 trillion, a massivespending budget of almost $4 trillion, and other governmentfinancial obligations is going to help push the dollar even furtherdown the slope.

Plus, as many of you already know from just listening to thenews, China, India, Japan, Russia and a host of othercountries are now calling for a new reserve currency.

Plus , as I ve m ade abundan t l y c lear t o a l l w ho w i l l l i st en

t o m e , Wash ing ton and Be i j i ng a re dead set , t oge the r , t o deva lue th e U.S. do l la r even fu r th e r !

And because gold is priced in dollars, as the dollar goes down,gold almost always goes up.

Fo r c e # 4 : Savvy i nv est o r s a re cl amor ing f o r go ld . One ofthe major factors pushing gold higher is fund and physical goldbuying. As the global financial crisis has worsened, investorshave fled to the safe-haven of gold.

In 2011, 127.7 metric tonnes of gold flowed into ExchangeTraded Funds (ETFs). As of December 2011, the total holdings inETFs was 2,357 metric tonnes, worth a record $119.4 billion.

ETFs and similar products are now listed in exchanges in fivecountries, and they are a great way for investors to buy and sellgold without taking delivery of the metal.

Investor demand for physical gold bars and coins was up18% in the second-quarter 2011 compared to the previousquarter year over year.


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This increasing demand for the yellow metal in a time ofshrinking supplies will put serious upward pressure on prices.

Fo r c e # 5 : I n c r ea se d d e m a n d f r o m d e v el o p i n g n a t i o n s.Both India and China have a cultural affinity for gold, and weresending both those countries more of our money all the time.

Not only has China consistently thumbed its nose at doomsayerswho periodically predict its economy is about to collapse ... itseconomy actually turns out to be bigger than anyone thought.

Meanwhile, India is no slouch. Its economy grew by 11.1% in2010 and is expected to grow 7.6% in the 2011 calendar year.While thats the slowest pace in eight years, its still a strong

growth rate against the backdrop of a worldwide financial andcredit crisis and shows the resilience of the Indian economy.

The bigger China and Indias economies become, and the richertheir people get, the more gold theyre going to buy. There areliterally hundreds of millions of people joining the consumerclass, and they are going to want a lot of everything, preciousmetals included.

Force # 6 : Ch ina and I nd ia a re l i be ra l iz ing t he i r go ld

m a r k e t s . The reopening of Chinas gold market to investmentafter 50 years of Communist suppression is one of the greatforces driving gold today.

In 2007, China overtook the United States as the second-largestgold consumer in the world. Consumer demand reached 706metric tonnes in 2010 9% higher than 2008.

Meanwhile, investment demand jumped 22% higher andjewelry demand reached 491.2 tonnes, or 21% higher than theprevious year, very impressive considering an overall globalincrease of 6%.

China consumes more gold than it produces this couldnt bemore bullish for gold, in my view. And demand for the yellowmetal in China looks very promising this year and going forward.


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In fact, in a recent report, the World Gold Council (WGC)forecasts that gold consumption in China could double in thecoming decade as a result of rising demand for jewelry, hard-asset investments and industrial uses.

Whats more, China has reported its boosted its gold reserves byalmost 75% to 1,054 metric tonnes, becoming the world's sixth-largest holder of gold. I expect China to continue to build its goldreserves, which will also be very bullish for the yellow metal.

Meanwhile, India is the worlds largest consumer of gold in tonnageterms, accounting for about 33% of global gold jewelry demandand about 31% of global net retail investment (gold bars and coins).

Plus, both India and China want to compete with the New Yorkand London markets in setting the price of gold.

My opinion: These new players in the game will help gather upmore investors in Asia, funneling their money into the worldmarkets and boosting the demand for gold globally. Its as simpleas that.

And speaking of up-and-coming nations with lots of cash ...

Force # 7 : Pe t rodo l l a r s con t i n ue pou r i n g i n t o go ld . Goldisnt the only commodity thats been moving up for the pastcouple of years. Oil has as well, hitting a record $145.27 perbarrel in July 2008, then swooning, is now firmly trading in the$90-$100 range.

Just a small fraction of those petro funds rushing into goldmarkets are enough to keep the gold freight train running atuncontrollable speeds.

Moreover, recently, the World Gold Council (WGC) launched anew gold ETF based in Dubai, aimed at Middle Eastern investorsas it follows Islamic laws. Its the first such ETF of its kind.

I believe gold is about to enter its most powerful bull marketphase yet and these are just some of the forces that will helppower gold higher in the coming year.


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Next, before we look at my top five gold and precious metalsstocks that I think have the potential to double, triple and evenquadruple your money in the next two to three years I want togive you the guidelines I use in selecting the top gold miningcompanies ...


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Par t I I

Your Qu ick Gu id eTo Go ld Stock Pro f i t s

With these seven powerful gold drivers behind you, youd think itwould be okay to just throw a dart at the wall and buy almostany gold or natural resource stock thats publicly traded oreven some that are not publicly traded.

Warning: Not all gold stocks are created equal!

Buy the wrong gold company, and you could miss out onsignificant profit potential. Or worse, you could wind up sidelinedwith a deadbeat loser. So here are the kinds of companies I

wouldnt touch with a ten-foot pole:

Small, start-up gold mines that are heavily promoted by high-powered marketers with glitzy brochures, expensive direct mailcampaigns, fancy conference booths or aggressive telemarketing.If the company has to spend that much money to create pizzazz,its unlikely to be anywhere near as good as it sounds. Dont fallfor it. They are usually too risky.

Small-cap mining companies that have been heavilyrecommended on the Web and in general circulation publications.These may have been good buys before they were popularized.But by the time theyve been recommended for a while, investorshave probably driven their share prices far above their truevalue. If Im right about the gold market, you could still makemoney on these. But theyre unlikely to be bargains.

Mining companies of any size that are heavy sellers of theirgold production in the futures markets. In a weak gold market,

this may be a prudent strategy for them to lock in their salesprices ahead of time. But in todays environment, all it does isremove or cap your profit potential.

Alta Gold Company, Aurora Gold, Jumbo Mining Company, ReaGold, and hundreds more tiny little gold companies have allgone bankrupt, often due to mismanagement and hedging their


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gold, costing investors tens of billions of dollars. And thats just inthe U.S.! Hundreds of other small mining exploration companiesaround the world have fleeced investors out of billions more!

Quest ions To Ask Your Brok erBefo re Buy ing M in ing S tocks

As always, selecting stocks is as much an art as it is science and the same applies to gold shares, even in a bull market forgold: To maximize your gains and minimize your risk, you mustbe selective.

Whether youre doing the research on your own or with theassistance of a broker/adviser, here are the key questions to ask:

1 . Do e s t h e m i n i n g c om p a n y h a v e t o o m u c h d e b t ? You dontwant a firm thats loaded down with too much debt. This isespecially true as interest rates begin to rise again a naturaloutcome from the same inflationary forces that are helping todrive gold prices higher.

As a general rule of thumb, I look for mining companies thathave less than 50 cents in long-term debt per dollar ofstockholders equity, as my more conservative measure, and

certainly less than 50 cents in long-term debt when compared totheir total potential gold resources.

2 . Does t h e com pany engage i n heavy f o rw ard se ll i ng? LikeI explained above, if theyre selling their future gold productionat todays prices, that alone wipes away or at least limits your profit potential.

After all, whats the point of buying into a companys bullionproduction to ride the bull market in gold when that same

company just turns around and sells most of its production attodays prices?

Best answer to this question: No forward selling whatsoever.

Acceptable answer: Forward selling is limited to 20% of production.


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3 . W ha t i s t he company s ave rage p roduc t i on cos t pe rounce o f go ld? In todays market, I feel it should be no morethan $750 an ounce. If its a bit higher, its not a deal killer. Butits a good benchmark to consider.

4 . I s i t expand ing i t s r esou rce base? Since new explorationcan be expensive, I favor companies that are actively engaged inbuying proven gold properties and smaller mines.

5 . Does i t h ave expe r i enced m anagemen t ? I want to seeindividuals that demonstrate not only solid, prudentmanagement, but also a talent for thinking outside the box.Especially when it comes to the acquisition of hot properties andcreating financing that does not dilute down existing

shareholders much.

6 . Mo st i m p o r t a n t q u e st i o n : I s i t a g o o d v a l u e? In the goldmining world, P/E ratios are not the key metric. They are indeed,almost meaningless.

Although I certainly dont ignore them, the more importantmetrics I look at relate to proven and possible gold resources inthe ground.

For example, I want to find companies where the marketplacehas undervalued those reserves by a substantial amount.

These are just my very basic criteria. And importantly, there canbe exceptions to each one of them, depending upon other criteria.

For instance, I have no problem looking at a gold company thathas more debt than I would like to see, provided it also has morepotential gold resources, and is sitting on properties other blue-chip miners might be interested in acquiring, or joint venturingwith the company.

But in general, the above represents my basic rules of thumbwhen looking at gold miners. I think they should be applied byyou as well in your own research.


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Par t I I I

Five Go ld Stock s I m ey ing fo r buy s !

# 1 : Go ldco rp I nc . (GG)

Go ldcorp I nc . ( GG) , the worlds second-largest gold producer,is based in North America and is a low-cost, debt-free, unhedgedgold producer with operations in Canada, Argentina, Mexico andAustralia. Its primary asset is the Red Lake Mine in Canada.

Based on the latest 2011 data ...

The companys sales increased 48% to $1.3 billion.

Its proven and probable gold reserves increased 23% to 60.1million ounces.

GG produced a record 2.52 million ounces of gold at cashcosts of $1,240 an ounce.

Over the next five years, GG expects to increase its goldproduction by 50% to 3.5 million ounces of gold while decreasingits already low cash costs thanks in part to a well thought outdevelopment pipeline. This should help boost profits and thecompanys share price even higher!

In addition to its recent acquisitions of Canplats Resources andthe El Morro project, Goldcorp expects to invest an additional$130 million in exploration this year to further increase reservesand resources.

Please re f e r t o t he regu la r m on t h l y i s sues o f Real Weal t h Report f o r p rec i se t im ing o f w hen t o buy GG.

# 2: Agn ico-Eag le M ines Ltd . (AEM)

Agn ico-Eagle Min es Lt d. ( AEM) is a Canadian-based goldproducer with operations in Canada, Finland and Mexico. Its anextremely well-managed mining company, is one of the worldslowest-cost producers, and pulls about 320,000 ounces of goldout of its main property per year.


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Agnico has a long, stellar reputation ofnot hedging their goldreserves or production, meaning it can fully participate in goldslong-term bull market.

The company has proven its ability to find, develop, and minegold over the course of almost three decades. In 2010 it startedproduction at its new Meadowbank project, marking the start-upof its fifth new mine in less than two years.

Recently, AEM approved a growth project at its Pinos Altos mine.Its also adding on to its LaRonde mining operation, which beganproduction in 2011 According to AEM, these projects combinedhave the potential to boost output by about 50% over the next

five years.

For the first nine months of 2011, gold production hit a record757,668 ounces at cash costs of $553 an ounce.

In 2010 the companys gold reserves totaled a record 21.3million ounces, up from 18.4 million in 2009.

Whats really special about this company is that it doesnt dilutedown its profits by advance selling gold in the futures markets at

todays prices (hedging).

Instead, it recognizes, as we do, that gold prices are going to bea lot higher in the future. Because it does no advance selling, itstands to reap 100% of the profits from golds skyward surge!

Please re f e r t o t he regu la r m on t h l y i s sues o f Real Weal t h Report f o r p r eci se t im ing o f w hen t o bu y AEM.

# 3: Go lden Star Resources Ltd . ( GSS)

Gold en Star Resou rces Ltd . ( GSS) is a mid-sized miningcompany with operating mines on the Ashanti Gold Belt in Ghana.

It has 2.36 million ounces of reserves overseas on a propertythat has already produced more than 11 million ounces of the


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precious yellow metal. GSS took advantage of the recentdownturn in commodities prices to acquire property at low prices,thus becoming the largest mining property holder in the AshantiGold Trend.

For the first nine months of 2011, GSSs gold revenues increased7% over a year earlier to $352 million.

But heres what really gets me excited about this stock and whyI believe its likely to start doubling in value virtually any minute:

The company continues to develop its properties and operationsat Bogoso/Prestea and Wassa. Its also identified several jointventure opportunities with Brazil.

Please re f e r t o t he regu la r m on t h l y i s sues o f Real Weal t h Report f o r p rec i se t im ing o f w hen t o buy GSS.

# 4: K in ro ss Go ld Corp . ( KGC)

Kin r oss Gold Cor p. ( KGC) is based in Canada and is the third-largest gold producer in North America. KGC operates eightmines located in the United States, South America, and Russia. Italso maintains a no-hedging policy.

The company reported strong results in 2011, including ...

A 45% increase in sales to $1.1 billion.

Production of 647,983 ounces of gold an increase of 13%over Q3 2010. Its annual proven and probable gold reserves nowstand at 62 million ounces, an increase of 22.5% over 2009.

Gross profit margin averaged $683 per ounce in 2010, an

increase of 29% year-over-year, compared with a 25% year-over-year increase in the average gold price.

Please re f e r t o t he regu la r m on t h l y i s sues o f Real Weal t h Report f o r p rec i se t im ing o f w hen t o buy KGC.


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Last, but not least . ..

# 5 : Yam ana Go ld ( AUY)

Yam ana Go ld ( AUY) is a leading Canadian-based gold miner

with gold production, gold development stage, and explorationproperties in Brazil, Argentina, Chile, and Mexico, and Colombia.

The company has seven producing mines and six projects in thedevelopment stage.

Gold production for full year 2011 is expected to beapproximately 1.14 million ounces and is projected to increase to1.3 million ounces in 2012, as four development stage projectscome on line. By 2014, production should reach 1.7 million

ounces, a 49% increase over 2011.

Yamana owns 17.6 million ounces of gold, worth almost $30billion at golds current price. Plus, it produces gold at less than$200 an ounce, making it one of the lowest-cost producers onthe planet.

Please re f er t o t h e regu la r m on t h l y i s sues o f Real Weal t h Report f o r p r e ci se t i m i n g o f w h e n t o b u y A U Y.


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Par t I V

Esse n t i al I n f o r m a t i o n I W a n tYou To Have On The Go ld Mar k e t !

As promised when you signed up as a member of my Real WealthReport, I also want you to know how to buy gold bullion at hugediscounts or even free. Its easy when you learn how to buy goldlike an insider!

I also want you to have the information you need to avoid thebiggest rip-offs when buying bullion coins ... the best way to buygold in absolute privacy ... my confidential short list of golddealers ... unreported discounts from top gold dealers ... andmuch more, all FREE!

Look. All too often, investors jump into the precious metalsmarkets thinking that because metals are such tangible assets,they cant possibly get ripped off. After all, an ounce of gold is anounce of gold, they say.

But nothing could be further from the truth! The precious metalsmarkets are fraught with intricacies ... hidden charges ...

conflicts of interest ... and outright fraudulent gold dealers.

This is especially true in an environment of rising prices, like thebull market we now have in precious metals. It seems that whenprices are rising, theres no shortage of greedy operators oranalysts out there who think they can skim a few more bucks outof your pocket to line theirs.

Meanwhile, with this handy guide you can learn how to doexactly the opposite ... how buying gold smart ly could easily

hand you some of t he biggest profit s, ever! The answer: Justfollow the easy- to- read section that follows ...


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The Bas ics On Ho w To Detec t Coun t er f e i t Go ld . . .Avo id Rot t en Dea lers .. . And Get t he Most Go ld

For Your Money , A ll On Your Ow n! You know what happens when any market is red hot: All toooften, even some of the savviest investors can get caught up inthe emotions of the time ... fall for deals too good to be true or,end up buying at the wrong time and on the wrong terms.

At the same time, hot markets often bring out the worst in otherpeople, who love nothing more than to prey on unsuspectinginvestors, and fleece them, left and right.

Weve seen this happen time and time again, in everything from

tech stocks and real estate to art and other collectibles even inthe latest cell phone to hit the market.

And right now, and for the foreseeable future, we are seeing it inthe gold market.

For instance, in October 2009, Chinese-made counterfeit goldcoins started hitting the market, ripping off untold thousands ofinvestors out of tens of millions of dollars via online gold auctionsand even at flea markets.

In fact, in the recent past, more than 1 million fake coins areestimated to have been sold in the U.S. alone.

Even legitimate replica type gold- and silver-plated coins havebecome a hotbed for scams. For instance, Coin Wor ld, a respectedweekly hobby publication, recently reported that up to 99% of the

replica items sold into the U.S. market do not contain therequired COPY markings to make them legitimate replicas.

So how do you avoid buying fake gold or silver coins?

How do you avoid the inevitable gold and silver scams that areout there now, and that could become even more commonplacein the months and years ahead as the price of precious metalsskyrocket higher?


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How do you maximize the amount of gold you can buy when youdo buy?

Thats what this report is all about. So lets start right off with ...

How To De t ect And Avo idCoun ter fe i t Go ld Bu l l ion

Few people seriously consider the problem of counterfeits. Yetliterally millions of counterfeit gold coins were made during the1950s, 1960s and 1970s.

And now, with todays hot silver and gold markets, millions moreare hitting the marketplace in flea markets across the country,on eBay, Amazon, and more.

But anyone who ignores this problem is very foolish. Think aboutit: When you buy an Australian Nugget or a British Sovereign ora Canadian Maple Leaf, or even an American Eagle, how do youknow whether its real or counterfeit?

In fact, even ...

A Sm ar t Coun t e r f e i t e rCou ld Beat Most Of

The Dea le rs Out There Truth be told, most people cant spot a counterfeit. Most donteven check. And most dealers cant help, either. A smartcounterfeiter could beat more than 90% of the dealers out there.

Heres a possible scenario for a counterfeiter who wanted tounload bogus gold on dealers. He calls up posing as an individualinvestor and buys five kilo bars a large but not uncommonpurchase and takes delivery.

Next, the counterfeiter takes an impression of all the markingson the genuine bar the hallmarks, numbers, and so forth.

He then makes fakes with a tungsten core and a 0.999 goldexterior. Since tungsten has the same density as gold down to


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three decimal places, the bogus bar weighs the same, looks thesame and has the same markings as the pure gold bar.

The counterfeiter now waits a respectable period of time, saysix months, and then resells the bars to the same dealer hebought from.

He ships back the bogus bars that look, weigh, and arehallmarked perfectly. He includes a copy of the original purchaseslips showing the weight, hallmark, etc.

Now the counterfeiter has his five genuine kilo bars, while thedealer has five bogus kilo bars. So, you might ask, Whatdifference does it make to anyone other than the dealer? Plenty.

Because that dealer thinks he has genuine gold bars, and hesgoing to sell them to you in perfectly good faith.

But the fact that hes acting in good faith isnt going to do youany good if you go to some other dealer who checks out the goldbars which is exactly what you should expect when theres acrisis and standards are tightened.

The problem is, too many dealers fail to take adequateprecautions against counterfeits when they buy back from

clients. If the bars look right and feel right, all the dealer will dois put them on a scale. But unlike fakes made with base metals,the tungsten fakes will weigh out perfectly and be the right size.

So the counterfeiter has a perfect setup.

Theres a one in a thousand chance that the dealer might checkthe bar have it assayed and find out its counterfeit. Thenwhats he going to do?

If the dealer calls the counterfeiter, hes just going to say, Hey,thats not my responsibility. You sold this stuff to me. Look,heres the code. Heres your original invoice. You sold me dudbars in the first place thats your own fault. The dealer willhave to pay up and take the loss.


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But nine times out of 10 the dealer wont spot the problem andwill, in good faith, turn around and sell those same bars, whichare now bogus, back to the public.

A Ma jo r W ho lesa ler W as St uck W i t h

$3 . 5 M i l l i on W or t h Of Coun t e r f e i t Go ld A counterfeiter can do the same thing with gold coins. Years ago,one of the oldest, largest and most experienced wholesalers inthe world got stuck with $3.5 million of counterfeit gold. Theywere stung.

Sure, they were covered by insurance. But if one of the worldsoldest, largest and most experienced wholesalers gets stuck withbogus gold, what chance does the average investor have?

Think of it another way: If you were a counterfeiter of gold, whatretail business would you want to be in most of all? Selling goldcoins and bars.

Remember: A retailer works on a 2% margin.

If you take one out of 10 bars, melt that one down, and replaceit with an identical bar made of bogus metal, your gross margin

will go from 2% to 12%.

You just increased your margin 500%! Just think of thetemptation some dealers face.

Do you think that all the gold dealers out there are so saintlythey all could resist a temptation like this?

A Deale r Bough t 5 0 Doub le Eag les For $ 50 ,000And La ter Foun d They Migh t Be Coun ter fe i t

So He Sold Them To The Pub l ic

Heres another true story. A dealer bought 50 St. GaudensDouble Eagles at $1,000 apiece. He then took them over toanother dealer.


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The second dealer looked at them and, trying to be as polite ashe could, said something like, Well, Im not really sure aboutthese coins. Im not sure that theyre really what you think theyare ... which was a very nice way of saying that he thoughtthese coins were counterfeit.

In fact, he thought all 50 of them were bogus. Now, the dealerhas 50 of these coins. He has $50,000 invested in them.

If he turns them in as bogus coins, hell get melt value out ofthem if they were real gold counterfeits. So hed have gottenmaybe $400 each. Hed lose $30,000 on that transaction.

Now, it wasnt l00% certain these were counterfeit coins. So,

what do you think this dealer did? He sold them to the public.

How To Buy Go ld Bars AndBu l l ion Co ins Safe ly Avo id ing Coun ter fe i t s

All this doesnt mean you cant buy gold safely. You can. Takegold bars, for example. These are the easiest gold investmentsto counterfeit.

But the best way to protect yourself is to buy bars from the

refiner. If I bought a Johnson Matthey bar and Johnson Mattheytold me it was the original bar, straight from their refinery, howcould I not trust that?

If I were dealing with Englehard, Id be happy to accept their bars.

But I wouldnt buy a second-hand bar. You never know where itsbeen. The closer you buy to the source, the safer you are. Ifpossible, always buy direct from the source.

Tips On Det ect in g Coun ter fe i tGold Bu l l ion Coin s Bullion coins are much harder to counterfeit than bars, becausethe designs are more intricate. And the smaller size meanscounterfeiters have to make more of them, in order to make asmuch money as they would counterfeiting a bar.


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Theres more labor cost involved. Still, even with gold bullioncoins, counterfeits can be a problem.

Now, gold is much heavier than any of the base metals. Anycounterfeits made with base metals will show up right away.

If the fake is the same dimension as the regular gold coin saygold on the outside and lead on the inside it will besignificantly lighter.

Just touch it, pick it up. Even if youre not used to dealing withgold coins, you can tell how light it is.

If its the right weight, a base metal counterfeit will either be

wider or thicker and youll be able to see the difference. So youcant make a gold plated base metal counterfeit of a gold bullioncoin that will not be obviously wrong in weight, diameter or width.

There are two ways a counterfeiter can get around thoseproblems. One is in gold coin jewelry, where the coins arealready made up in a chain.

A great number of counterfeit gold coins were minted in Beirutbefore the civil war there. These coins were minted to rip people

off with gold coin jewelry and they were very successful. Ifyou want gold coin jewelry, its better to buy your own coins andgive them to a jeweler you can trust to make the jewelry for you.

The second way a counterfeiter can pass the coins off is by usingtungsten. As I mentioned earlier, this metal has the same densityas gold, but its very hard to work with.

Until recently, a tungsten counterfeit would show up obviouslyas a counterfeit because the strikes were so poor. Now, withbetter technology, tungsten counterfeits are almost impossibleto detect visually.

But because the condition of a bullion coin doesnt matter, youcan use the ringing test to see if its real or not.


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If you have a good, solid hardwood desk and you dont mindseeing nicks in it youll find that each type of gold coin has itsown distinctive ring.

Just drop it casually onto the desk and its very easy to hearwhether its gold. The ear can be trained very easily. If you dropa tungsten coin, youll hear a very different ringing sound than ifyou drop a gold coin.

In a moment, Ill tell you how to start getting the best deals youcan on gold bullion coins, but first, one more important warningfor todays hot gold market ...

Avo id Lim i t ed M in t ageProof Edi t i on s Of TheseCom m on Bu l l ion Co ins

This is a very popular rip-off in todays precious metals markets.The gist of the rip-off: That certain so-called mint state and

limited edition bullion coins are worth much more than acommon bullion coin.

Thats hogwash. Bullion coins are not rare coins. So dont fall forthose types of sales pitches. Always question the investment

value of limited mintage proof editions of common bullion coins.

Proof coins are struck with multiple strikes from the mint die togive greater detail on specially polished and chemically cleanedplanchets. This gives the surfaces of these coins a mirror-likeappearance that is aesthetically appealing.

Proof coins are usually sold for a huge premium over theirnormally minted cousins. The premiums for these coins usuallyrun between 100% and 200%. Up until 1986, most of the people

buying these coins were collectors more than enough reasonto pan these coins as an investment.

But despite the terrible track record of modern proof coins like theKrugerrands, British Sovereigns, and assorted world gold issues,the Chinese government began an elaborate advertising programin the United States to sell limited mintage proof pandas.


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Watching the proof panda market run up in price to premiumsover their intrinsic melt value of 200%, 500% and even 1,000%,I observed that most of the people buying these coins wereinvestors and speculators. There were virtually no collectorsbehind the demand. And the firms selling them were hugetelemarketing giants that specialized in volume sales and saleshype. It just didnt make sense.

These coins were bullion coins, not rare coins. And I can tell you,any government that decides to mint a limited edition coin is notproducing a rare coin.

Theyre producing a modern piece of junk and are concerned onlywith the profits. The governments and marketing firms that sell

them dont seem to care the least bit about the losses investorseventually incur.

If you want to buy a rare coin, buy a truly rare coin.

If you want to buy bullion, stick with low premium bullion coinsand stay away from the limited edition ... proof ... or mintstate claims on all of the following, at minimum: Proof pandas,proof Krugerrands, proof U.S. eagles, proof sovereigns, and proofAustralian Nuggets.

How To Ca lcu la te The Prem iumOver Spot For Gold Coin s

The key to intelligent price comparisons in bullion investments,of course, is to reduce all of the investments to a commondenominator the price per troy ounce. Calculating the premiumover spot then helps put price differences into perspective.

The first step in calculating the premium of an investment is to

divide the selling price by the number of ounces of pure gold.That gives you the cost per troy ounce.

Example: An Austrian Philharmonic bullion coin contains 0.9999troy ounces of pure gold. The selling price of the Philharmonicdivided by 0.9999 gives you the price youre effectively payingfor the gold content, in a price per ounce basis.


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For instance, a selling price for the coin of say, $1,800 divided by0.9999 = $1,800.18, which represents the actual dollar amountyoure paying for the gold content in that Philharmonic (with spotgold trading at $1,612.00.)

The next step in calculating the premium is to subtract the spotprice of gold from the cost per ounce; divide the remainder bythe spot price; and convert to a percentage. To express thismathematically, the formula reads ...

Premium = [(cost per ounce spot price) spot price] x 100

Example: [($1,800.18 $1,612.00)/$1,612.00] X 100 = 11.67%

Put another way, you are paying a premium of 11.67% OVER theprice of gold to buy that bullion coin.

So once you have this nifty little formula, you can have all sortsof fun sniffing out rotten investment offers on your own.

My Gu ide l in es For Prem ium sOn Com m on Go ld Co ins

There are two things to watch out for when it comes to premium.

First, if a dealer tries to sell you coins at more than 2% overaverage premium levels for a particular coin, Id go elsewhere.Period. Youd be paying too much.

Second, Id also avoid any dealer offering a premium significantlyunder those levels because theres something fishy if a dealeris deliberately losing money.

However, premiums can change for a host of reasons. When theAmerican Eagle first came on the market, it had a premium much

lower than what most dealers are charging today.

The reasons these relationships change are because benchmarkschange over time. The obvious example is the fall in thepopularity of the Krugerrand and the subsequent fall in itspremium as a result.


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Another obvious example is the market and simple supply anddemand factors. With a hot market, premiums dealers chargenaturally go up.

Its easy to check premiums. The daily price of gold is publishedin just about every newspaper in the world.

Business papers, like TheWall Street Journaland LondonsFinancial Times, carry the prices of major gold coins as well. Youcan get a quick approximation of the premiums every day if youwant, just by dividing the coin price by the spot bullion price.

The Best And W ors tBul l io n Coin s To Buy

When investing in gold, not only must you watch where you buy,but what you buy as well as. You can get dramatically more foryour money every time you buy, simply by buying the rightinvestment and avoiding the wrong ones.

With gold at $1,612 for example, 100 1990 gold pandas, thebullion coin issued by the Chinese, would cost you $240,000.

But that same $240,000 would buy 133 Austrian Philharmonics.

So you would get an extra 33 coins, containing a tiny tad lessthan 33 ounces of pure gold.

The extra gold you get is a dramatic addition to your portfolio its like a free bonus you get for investing intelligently.

Alternatively, you could simply buy 100 ounces of gold in theform of Krugerrands for roughly $166,830 and pocket thedifference a healthy $73,170.

The philosophy of buying gold bullion is simple: If you areinterested in getting the most gold for your money, the object isto buy as close as you possibly can to the spot price.

That means buying gold investments with as low a markup aspossible over bullion content.


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Below are some examples but wait for my signals in RealWealth Report to buy.

The Tw o Cheapes t W aysTo Buy Gold Bu l l ion Coin s

The Austrian 100 Corona and Hungarian 100 Korona are typicallyamong the least expensive bullion coins (over spot) to buy.

These coins are a beautiful reminder of the Austro-Hungarianempire. Theyre both the same size, weight, and alloy, but theyhave different designs.

Because of their rock-bottom premiums over spot, these coinsare an absolutely super way to invest in gold bullion.

The only problem is that they arent as well known in NorthAmerica as the American Eagle or Canadian Maple Leaf. TheAustrian 100 Corona is better known than its Hungariancounterpart and more liquid.

Still, in North America, neither is known outside hard-money circles.

So they are unsuitable for core holdings. Core holdings are

bullion coins and bars that you put away in a safe place andhope you never need to touch. Essentially, its your hedgeagainst the unexpected: An economic collapse, runawayinflation and so forth. It gives you something to turn to wheneverything else fails.

Anot her Exce l len t BuyI n Go ld Bu l l ion Co ins

I have found that the South African Krugerrands can give adecent amount of gold for your dollar. Currently, you can buythis gold coin for about 3.5% over spot.

Once a dominant bullion coin of the world, the Krugerrand hasfallen from a premium of 5.2% over spot in 1983, when it wasnear its peak.


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The reason for this low premium is because President RonaldReagan banned their import to the U.S. in 1985.

This import ban was lifted by President George H.W. Bush in1991. But the six-year ban and the political storm surroundingSouth African products reduced their desirability.

Still, everyone knows the Krugerrand today. It is synonymous inthe public eye with one ounce of gold and, therefore, itsextremely liquid.

At this low a premium to the spot price, there is little downsidepremium risk, despite what a few dealers would like you to believe.

When the importation of Krugerrands was banned in 1985,investors were bombarded with advertisements from dealerswarning that severe losses were likely to befall Krugerrandowners. Some were warning that it would fall in price to l0%below spot.

These ads then preyed on investors fears to try to get them toswap Krugerrands for Maple Leafs, Double Eagles, or whateverthe dealer happened to be pushing. We warned investors thatthis was pure poppycock ... and we were right on target.

In 1985, we said: We know of no example in modern times ofany gold coin of Krugerrand purity no matter how unpopular that has fallen nearly as much. As soon as a coin begins to tradeat a discount to spot, it gets snatched up by refiners pushingthe price back up.

Despite the fact the ban is over, we still hear of brokerswho tell their clients that Krugerrands are dangerous. Itscomplete nonsense.

The only reason a dealer would suggest switching yourKrugerrands or recommending another product is pure profit.Krugerrand swaps can generate as much as an 8% net return fora dealer between his buy and sell spread. And those who pushother products are often receiving a higher net commission forthose recommended products.


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So, if you own Krugerrands, sit on them. They still haveinternational liquidity. Theyll always be worth the price of thegold thats in them.

And for new gold holdings, the Krugerrands represent a cheapway to buy a single ounce of gold. But wait for my buy signal.

Tw o More Ba rga ins I n Go ld Co ins Here are two more gold coins that have come way down inpremium over the past few years: The Mexican 50 Peso and theU.S. Gold Medallion.

For beauty, I find the Mexican 50 Peso to be one of the mostattractive bullion coins ever minted. Thats why they make

wonderful gifts.

The U.S. Gold Medallions are interesting for another reason. Asofficial issues of the U.S. government, they qualify as collectiblesin the broad world of numismatics. The mintages, however,particularly of the one-ounce size, are quite small in comparisonto mintages of like-sized coins.

Indeed, the last coins of the series the one-ounce gold Helen

Hayes and the half-ounce John Steinbeck had mintages of only35,000.

The earlier coins in the series had higher mintages averagingaround 500,000 per year but thats still small compared withthe issues of most bullion coins.

We cant guarantee it, but we think its quite likely that someday maybe 10 or 20 years from now these U.S. Gold Medallionsmay develop numismatic premium themselves.

Either way, what do you have to lose? If they dont develop anumismatic premium, youve simply purchased an ounce of goldat a bargain price. If they do develop a numismatic premium,youll get numismatic value for bullion prices.


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Pandas : Beaut i f u l , Bu t I f You r e Not Care fu l ,You Get S ign i f icant ly Less Gold For Your Mon ey

Pandas are Chinese-minted, one-ounce gold coins. Their designand mintage figures vary from year to year.

And the premiums for each years issues can vary, too. And yougenerally get significantly less gold for your money when youbuy Pandas.

Also, many dealers of Panda coins are taking advantage of thecurrent euphoria over anything having to do with China.

As a result, theyre charging outrageous premiums. I love thesecoins. But wait for my specific recommendations in Real WealthReportbefore you buy.

Frac t ion al Gold Coins In addition to the coins listed above, there is also a variety ofgold coins available in much smaller sizes, enabling you to buygold in relatively small increments of less than one ounce. Thedrawback has always been price: The smaller the coin, thegreater the premium.

Thus, as you buy smaller and smaller denominations, you getprogressively less and less gold for your money, because thepremium is higher. However, friends in the industry who favorthese smaller denomination coins set forth two counter arguments:

1. Much of the premium is recovered upon resale.

Right now, that is true. About half the extra premium isrecoverable, on average.

But thats due in large part to subsidies from the issuinggovernment that may or may not be in effect when you go tosell. Plus, this premium can vanish if the plastic is damaged.

The market for the full ounce gold coins is far broader, deeperand more liquid than for the fractional gold coins. When you go


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to sell three years from now, you may even have to accept anadditional discount with the smaller coins rather than recoverpart of the premium lost on purchase.

No matter what, youre clearly a lot better off with l00 ounces ofgold in Krugerrands or Coronas than with only 68 ounces of goldin the 1/20 ounce pandas.

2. In an economic catastrophe the smaller gold coins would beeasier to spend or swap for groceries, gas, etc.

Here our friends may be right. But they may also be wrong. Itsnot inconceivable that in an economic catastrophe, the full ouncecoins because of their wider distribution would be equally

easy (or easier) to spend.

But theres no way to know for sure. So we can see some wisdomin holding a smattering of the smaller gold coins in your coreholdings, along with your full ounce coins.

How To Save Money OnLarg e Gold Bu l l ion Pur chases

If youre a big hitter, this section is about how to buy gold

bullion just like major industrial users.

Even at the best-priced dealers, you can expect to pay 30 to70 an ounce over spot when you buy l,000-ounce gold barsfrom a good delivery brand, like Engelhard or Johnson Matthey.

However, if youre prepared to invest substantial sums at onetime, you can save almost that entire fee. You can buy gold at

just pennies more than the actual spot price.

You can do this by buying a spot month gold futures contractfrom your regular commodities broker and taking delivery of it.

For example, with gold, the contract will be for 100 ounces ofgold and the commissions run between $40 and $100 whichworks out to less than $1 an ounce.


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The problem is that 100 ounces of gold can cost more than mostinvestors want to lay out at one time. For instance, at $1,612gold, to take delivery of one futures contract would involve$161,200 (100 ounces X $1,612 an ounce). It also involvesbuying and taking delivery of a futures contract. Not somethingI recommend except for the largest of investors.

A Be t t e r A l t e rn a t i ve :Buy D i rec t From A Who lesa le r

If you want to buy gold bullion or coins in large quantities atwholesale prices, you can do it through a good wholesaler such as Manfra, Tordella & Brookes (www.mtbcoins.com).

However, before you rush off and place your orders, there are

a few restrictions you should be aware of.

First, most wholesalers require minimum purchases of theprecious metals.

Second, most are not set up to service small retail accounts.They are not going to give you advice, nor will they try to helpyou make a decision or give any other brokerage-type services.If you have a question about what to buy, how much, when and

so forth, dont go to them.

Third, most require payment in advance, before they can evenlock in a price. The advance can be sent in the form of a bankwire, cashiers check, or a certified check.

Note that ingots and bars are available in sizes ranging from assmall as 1 gram of gold to 10 and 100 ounce bars. Naturally,the smaller the ingot or bar, usually, the higher the premiumyoull pay.

The Ki lo Bar 32 .15 Oun ces Of Gold The kilo bar is the unit of choice in almost all international goldtransactions. And a kilo bar, at $1,800 an ounce gold will run youmore than $57,870.


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But there are pros and cons to investing in kilo bars. First, thepositive side. Each of the bars carries a serial number.

Have your dealer record the serial number and hallmark on yourconfirmation slip. File it somewhere away from where you storethe bar. If the bar is stolen, you are in a much better position todeal with the insurance company by having a readily identifiablenumber to cite, as opposed to reporting that X number ofunidentifiable coins were stolen.

Also, youre in a much better position to claim your propertyshould the police ever recover it. So the serial number is adesirable feature of buying kilo bars.

On the negative side, theyre a relatively unattractive way to holdgold. Theres nothing beautiful about a kilo bar, compared withthe artistic engravings available by buying coins. In addition,bars arent divisible.

Youre stuck with 32.15 ounces in one unit. If you ever need tosell some gold, the advantages of the coins are obvious.

But the far more important problem with the kilo bar is liquidity.Plus, dealers dont like them because they are prime candidates

for counterfeiting. Coins are struck; bars are molded.

Its a lot more difficult to counterfeit coins because of theengraving dies, machinery, etc., than it is to make bogus barsthat only have to be poured into molds and stamped with therefiners hallmark, serial number, fineness, and other easilyreproduced data.

Now, to one of the most important subjects of all when it comesto gold bullion ...

Safeguards For I nves to r s To He lp Pro t ectAga inst Deale r Fraud Or Bank ru p t cy

Once youve decided to go ahead and buy a gold investment youve determined that the basic offer is fair youre still notcompletely in the clear.


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First, not all dealers do cash-and-carry. For obvious reasons,they dont like to keep much gold on hand.

Second, when you pick up your gold, you have to walk out withit. Then youre at risk until you reach a secured storage spot.

Third, you have to travel perhaps to another city or state.Travel takes time, and time is a cost.

And fourth, if you live in a sales tax state, it may cost you quite abit extra.

For these reasons, we recommend sight drafts over cash-and-carry.

3. Segregat ion o f f un ds , fo r p r o tec t ion o f c l ien ts . This is abasic rule if youre not buying with a sight draft or cash-and-carry.

When you send a firm funds to purchase gold, you dont wantyour money used to finance loans to corporate officers, poshoffices, real estate ventures, corporate jets, etc.

But unless the dealer segregates investment funds in a trustagreement to protect clients, thats what may happen. Yourfunds are mingled with the operating capital of the company and

may be used for the firms own purposes whatever they are.

If the firm goes belly-up before you get your gold, youll probablybecome just another general creditor along with the localstationery firm or furniture shop and with just as few rights.But if the firm segregates client assets in a trust agreement,those assets are much safer from general creditors. And youllprobably get your money back.

How do you find out if your gold dealer segregates? Its oftenhard to do. Dealer literature generally ignores this point. Accountexecutives tend to gloss over it with a facile: Wait a minute,while I run down to the vault and see if its there, or a simpler,

Dont worry.

Dont take the account executives word. Go right ahead andworry. Its your gold and your funds that are at risk not theirs.


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If he or she wont give you a flat-out unequivocal statement onsegregation and then have it backed up in writing on companystationery by a corporate officer that dealer probably doesntsegregate. Move on to another firm. That leads us to our nextprotection ...

4. Take possession . If you have gold in non-segregatedstorage with any dealer or broker, get it out immediately. Yourfunds are being mingled with the operating capital of thecompany. And as I just mentioned, if the companys operationsare suspended (for any reason), or if the company goes belly-up, its tough luck for you.

Thats what happened to tens of thousands of investors on April

27, 1983 when International Gold Bullion Exchange (IGBE) filedfor bankruptcy.

IGBE did not segregate client assets. So those tens of thousandsof investors who had not taken delivery of their metal beforeIGBE went bankrupt were all out in the cold. They were lumpedtogether as general creditors along with commercial creditorssuch as the gas and electric company. They later received afraction of their money back, because the firm did not segregate.

Although there are concerns even if your dealer segregates, youcan afford to walk not run to the phone. There is less risk toyour assets and therefore less urgency.

Nonetheless, our recommendation is: Get it out. Segregationagreements are filled with legal complexities. Many have neverbeen tested in the courts.

Whether the protection they offer you would hold up under legalassault by general commercial creditors of your dealer is notknown. So, keeping this in mind, I always advise investors totake possession of their precious metals if at all possible.

5 . Sho r t de l i ve r y t im e . This is another good protection whenbuying gold. Shipping two days after receipt of good funds isquite good; a week after receipt of good funds is reasonable; twoweeks is the most thats acceptable. After that, Im nervous.


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6. Ask f r iends and assoc ia tes fo r a re fe rence be fo re bu y ingf rom a dea le r . If they had a bad experience with a dealer anoverly pushy account executive or excessive delivery time, forexample it may be a tip off that the dealer is in trouble.

7 . Ask t he dea le r f o r a bank re f e rence and f o l l ow i t up . Ifthe dealer wont give you one, go elsewhere. One dodge is: Wedont want to bother our banker with endless phone calls. Afteryou make the purchase, well give you the reference.

A lot of good it does you after the dealer has your money! Itsmuch harder to get your money back than simply not to send itto them in the first place.

Next, be sure to phone the bank reference. Ask how long thedealer has been a customer, what the banker knows about thedealers management and dont be shy would he or shepersonally do business with the firm.

If you want to dig further, ask the banker whether customerfunds are segregated from general operating funds. What is theusual range of the firms balance? Has there been any recentsignificant drop in this average balance? Whats the dealers lineof credit with the bank?

You might think the banks answer will be automatic praise, but itwont necessarily be. Banks may have a legal liability if they giveyou puffed-up information. Ive been amazed at how lukewarmor even downright hostile some responses have been.

8 . Av o i d g o l d a t s p ot o f f e r s. These are typically extendeddelivery programs. You send the good funds now. They send youyour gold anytime from 30 to 90 days even to someunspecified time in the future. In the meantime, youve madewhat is essentially an unsecured, uncollateralized, non-interestbearing, non-callable loan.

If you get your gold, youre OK. But if the firm goes intoliquidation, or tries to reorganize under the bankruptcy laws, whoknows when if ever youll get your money back.


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Once they are satisfied youve sent them what you said youwould, they release the funds. The banker then simultaneouslyreleases the funds to you and the gold to the dealer.

When selling your gold, the only alternatives are: A) to carry thegold physically to the dealers premises and pick up good fundson the spot, or B) simply to ship your gold to a dealer you feelvery good about.

Option A is inconvenient, but you dont have to worry aboutshipping your gold off to some dealer a thousand miles away forpromised payment you may or may not receive.

Option B is convenient, but not as safe. Thats why we

recommend reverse sight drafts or shipping to a firm that willsegregate your gold until sending you good funds.

12 . Marg in . Margin complicates matters in cases of dealerinsolvency, so it adds risk beyond the obvious one of highleverage.

If you can honestly say to yourself that youre a sophisticatedinvestor, you know the gold market well, and you havespeculative funds youre willing to put at risk, then theres

nothing wrong with trading gold on margin at a reputable firm.

If you hit it right, your profits will be multiplied by the power ofleverage. If you hit it wrong, say bye-bye to your funds. Youshould not buy on margin with nest egg funds.

13 . W arehouse rece ip t s . These very useful instruments go bya variety of names including delivery orders and goldcertificates. They come in every size and shape available. Wediscuss them at length beginning on page 45.

However, two basic varieties are worth briefly discussing here:Non-fungible versus fungible. With non-fungible warehousereceipts, a specific unit of gold is set aside in an independentwarehouse, marked with your name as your property and,typically, insured to your benefit against almost anythingexcept fraud.


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Continue your search for a dealer by checking out their services.Make sure they offer what you want. Ask them about theirselection of coins and bullions, terms (leverage, as well as cashpurchase, if thats what you want), bulk discounts, storagefacilities, and repurchase terms.

Here are the addresses and phone numbers of my favoritedealers ...

Am er i can Cen t u r yPO Box 419200Kansas City, MO 641111-888-345-2071www.americancentury.com

Di l lon Gage, I nc .15301 Dallas Parkway, Suite 200Addison, TX 750011-800-375-4653www.dillongage.com

Rare Co ins Of New Ham psh i r e28 Jones Road, Suite #1P.O. Box 720

Milford, NH, 030551-800-225-7264www.rare-coins.com

Fidel iT rade 3601 N. Market StreetWilmington, DE 198021-800-223-1080www.fidelitrade.com

Manf ra , To rde l l a & B rookes , I nc .90 Broad StreetNew York, NY 10004-22901-800-535-7481http://www.mtbcoins.com
http://www.fidelitrade.com/http://www.mtbcoins.com/http://www.mtbcoins.com/http://www.mtbcoins.com/http://www.fidelitrade.com/


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Wh at D iscoun ts Are Ava i lab le?All dealers typically offer significant discounts for largepurchases. Most dealers offer discounts according to fixedschedules that, if you call, they will be willing to disclose to you.

So be sure to ask your regular dealer if they will match or beatanother dealers price.

Lets face it: If you have an established relationship with afinancially stable and ethical dealer, they wont want to lose yourbusiness. Give them a chance to match another dealers priceand you may get a genuine bargain out of it especially on alarger order.

Sa les Tax Trap A n d H ow To A v o id I t

If a state has a sales tax, gold purchased and delivered withinthat state is almost always subject to the tax.

Almost all dealers allow you to buy by phone and have yourpurchase shipped out of state. In these cases, the dealer willgenerally not impose a local sales tax. An exception is where thedealer may have offices in, say, New York and New Jersey.

If a New Jersey resident places an order through the New Yorkoffice, the dealer is generally still supposed to charge the NewJersey sales tax. If the only office was in New York, the dealerprobably wouldnt impose the tax.

Gold W areh ouse Rece ip t sThis little known but very useful gold investment goes by avariety of names, including delivery order and gold certificate.Warehouse receipt was the original name.

Somewhere along the line, people seemed to decide that goldcertificate had more pizzazz than warehouse receipt, and thenew name stuck.


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But whatever the name, this investment is quickly gainingpopularity among investors. The reason is simple: They offeryou a fast, safe and anonymous means of internationalizingyour assets.

How Go ld W arehouseReceip t s Wor k

When you buy gold certificates, or warehouse receipts, you buygold stored in depositories generally located in Switzerland,Canada or the U.S.

The depositories are often non-bank, and are usually located inportions of the country that do not levy sales or use taxes on theforms of gold stored there. The gold stays in the depository until

you want to remove it. You are issued a receipt/certificateattesting to your ownership of the gold.

The gold is almost always insured against loss, theft, fraud andmost other risks. The only risks generally excluded are war andgovernment confiscation. The insurance is underwritten, in manycases, by Lloyds of London.

When you want to remove your gold, you just present the

certificate either by mail or in person to the depository. Youpay the related charges and, generally speaking, the depositorywill arrange for shipping to the desired location.

Gold certificates come in almost every size and shape imaginable.However, two basic varieties are worth distinguishing ...

Non- f un g ib le vs . f ung ib le : With non-fungible warehousereceipts, a specific unit of gold is set aside in an independentwarehouse and marked with your name as your property.

With fungible warehouse receipts, your gold is (at best) storedin an omnibus account, along with the gold of all other customers.You have what is called an undivided interest in the whole.


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Non-Fung ib le I s Pre f e r red An Enor m ous Package Of Benef i t s

These certificates offer an enormous package of benefits for goldinvestors at what I consider to be a very modest cost.

You can use t hem t o i n t e rna t i ona l i ze you r go ld ho ld ings ,v i r t u a l l y o v e r n i g h t . Many Americans hold back on movingsome part of their assets to Canada or Switzerland. They eitherdont know how to do it, or they think its too complex. But assoon as you buy a certificate for gold in a Canadian or Swissdepository, thats it. You now own gold in that country.

They re exceed ing l y conven ien t . You simply send yourcheck to a firm here in the U.S., but you get the gold stored atthat firms vault.

They r e qu i t e sa fe . Your gold is stored by major depositorieshere and abroad. In Switzerland, for instance, the warehousingfirm is MAT Securitas Express, Ltd., a major Europeanwarehouse, roughly equivalent to Brinks here. The insurancepolicy adds another major measure of safety.

Since t hey r e non -n ego t i ab le , t h ey l end g rea t po r t ab i l i t y

t o y o u r h o l d in g s and almost never have to be declared atcustoms, including U.S. customs. So they offer you a majorbenefit when you travel.

One fellow, when re-entering the U.S. through New York, had hisattach case opened by the customs agent. It was filled withsilver and gold certificates representing upwards of $12 million ofgold. The agent looked at one certificate, saw non-negotiablestamped prominently across it; thumbed through 3 or 4 inches ofthem; saw they all looked essentially the same; closed the

attach case; and waved the person through.

This is not true for negotiable instruments. Many countries,including the U.S., try to restrict the international flow of fundsby mandating that negotiable instruments must be declaredwhen entering or leaving a country.


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Negotiable instruments are essentially bearer instruments, suchas bearer bonds, bearer stock certificates, bearer warehousereceipts, etc. They are very easy to transfer (hence negotiable)and, essentially, whoever has possession of it is deemed to bethe owner.

But except for the various commodity exchanges warehousereceipts, almost all r eceipts/ cert ificates sold t o the public todayare non-negotiable. Your name is on it. To transfer it, you haveto return it to the issuer with a guaranteed signature.

No sa les o r u se tax . When you buy gold in any of thedepositories were aware of, no sales or use taxes are required. Awarning though: Depository locations are very carefully chosen

specifically to avoid these taxes.

If you remove your gold from these depositories and take fivesteps north, south, east, or west, you may well be liable. Beforeyou do something like that, consult your tax advisor.

Secur i t y . If you lose a non-negotiable certificate or if one isstolen it can be replaced. This will be an inconvenience andwill cost some money, but your essential investment is protected.

Pr ivacy . If you are an American and you open a Swiss bankaccount, youre required by law to report it on your U.S. incometax return. Not so with certificates for gold stored in Switzerland(or any other foreign country).

The Disadvant agesOf Gold Cer t i f icat es

While the advantages seem enormous to us, the disadvantagesseem relatively minor.

The ce r t i f i ca t es are no t nego t i ab le . If you haveKrugerrands, you can give them to a friend or merchant insettlement of a debt, and thats it. You cant with thesecertificates. While they are transferable, as we said, to do sois a nuisance.


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They cost m ore . With a certificate, you have to pay for thegold plus anywhere up to 3% on top of that.

In addition, the storage and insurance can run up to another0.5% per year. These extra charges arent insignificant. And youhave to decide whether the advantages are worth the cost.

rwr0056 the great gold bonanza of 2012 final

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