2005 INVESTMENT SCORECARD – 2006 TRENDS
Tangible assets outperform for the fifth consecutive year! Again in 2006?
By David Bradshaw, Idea Factory Press
Jan. 4, 2006

PHOENIX, AZ - (IFN) – Tangible commodities and high quality collectible investments outperformed intangible investments like stocks, bonds and CD's again in 2005.

U.S. investors, whose returns were eroded in 2005 by high oil prices, rising interest rates, sluggish job creation, slowing corporate-earnings growth and modest retail-sales gains, are hoping 2006 will bring relief. But more and more are hedging with gold, just in case.

Last year marked an amazing run up in commodity prices that has effectively “woken up” bears and is attracting new buyers every day who don't want to miss out on the exciting opportunities offered in a variety of tangible assets.

Energy and precious metals were the big financial success stories of 2005. Here’s how the numbers stack up for some of the major tangible and intangible investment sectors, including the numismatic category (U.S. Gold Commemoratives,1904-1926 Mint-State 64 grade, eleven-coin series).

Tangible vs. Intangible Investment Overview (2005)


Investment .............. 2005 %RoI

SILVER Bullion -------------------- 36%
CRUDE OIL ------------------------ 35%
*Gold Comm Set. (MS64)---------- 26.9%
REAL ESTATE (median home) ------ 21%
GOLD Bullion ---------------------- 18.2%
10-year Treasury ------------------ 4.37%
S&P ------------------------------- 3.0%
NASDAQ --------------------------- 1.4%
DOW ------------------------------ -0.6%
*According to The Coin Dealer Newsletter


USA Today reported, “2005 was pretty much a washout for stock investors. The major three U.S. indexes ended mixed, with the Dow turning its slim 2005 gain into a 0.6% loss Friday with its year-ending sell-off. The Nasdaq managed to eke out a 1.4% gain for the year. And the Standard & Poor's 500 posted the best performance with its paltry 3% gain. U.S. indexes trailed virtually every foreign market. A buy-and-hold investor who invested $10,000 in the Standard & Poor's 500-stock index on Dec. 31, 1999, would now have an investment worth $8,493, excluding dividends. That equates to an annualized loss of 2.7%. The blue-chip barometer (Dow) is down 6.8% since the end of 1999.”

Swiss America CEO Craig R. Smith said today “2006 will be a great year! The impact of this new gold rush has yet to fully impact U.S investors, who are usually late to the party because they run in packs. But that could change any day! With virtually every major financial publication predicting gold to rise between $600 and $3,000 during the next bull phase, now is the time to seize this great opportunity. By owning tangible assets, such as U.S. gold and silver coins, you’re taking back control of your financial future. The alternative: another year of regret in 2006.”

BIG MONEY’S BEST KEPT SECRET

In 2005, many rare U.S. coins sold at historically high prices. For example CNN reports, “Andrew Jackson-King of Siam coins sold: $8.5M”... "Sale of rare coins sets new transaction record. A coin collector paid a record $8.5 million for a set of rare coins said to have been a gift from former President Andrew Jackson to the King of Siam.”

Kevin Lipton Rare Coins of Beverly Hills, CA reports, “2005 represents the best overall year in the history of the rare coin market, in my opinion. The rare coin market has been up steadily all year. There are still many great values in the world, including many in numismatics. While U.S. Gold Commemoratives rose over 25% in 2005, I expect similar results in 2006. The collector and investor-driven market for five, six and seven-digit ultra rare coins is red hot today, with auction prices breaking all previous records in 2005. There’s just so much demand for these historical coins with very little material becoming available in the marketplace.”

As volatile as the markets were in 2005, the lack of return on investment from the major U.S. stock indexes looks even worse over the past five years. For comparison we included two of the most popular U.S. numismatic gold coins -- the $20 Liberty and $20 St. Gaudens, both in gem quality (MS-65) condition.


Investment Overview (2001-2005)
Investment .............. 2001-2005 %RoI

*US$20Lib (MS65) -------------- 138%
CRUDE OIL ---------------------- 134%
GOLD Bullion --------------------- 98%
SILVER Bullion ------------------- 97%
*Gold Comm Set. (MS64)--------- 83%
*US$20St. (MS65)---------------- 79%
REAL ESTATE (median home) ---- 68%
S&P ----------------------------- -2.7%
DOW ---------------------------- -6.8%
NASDAQ ------------------------- -26%
*According to The Coin Dealer Newsletter


"From a five-year perspective, quality U.S. rare coins look even better. A high quality (Mint-State 65) $20 Liberty gold coin is now up 138% since the new millennium began, out pacing even the meteoric rise of crude oil,”according to Mr. Smith.

Since 2001, real estate prices have jumped an average of 68%, while gold bullion has shot up 98% during the same period. “Who says buying real estate is the only way to hedge market volatility and rising inflation?" says Mr. Smith.

Despite the stellar performance of tangible assets so far in the 21st century, Smith says a well diversified portfolio should include no more than 25% in physically held tangible assets (not including real estate or gold stock) depending upon your age, income, etc.

"The real problem with American investors is not owning too many tangibles, but owning virtually none," says Smith. “Gold and silver ownership is rising slowly as the U.S. public begins to understand that the price of gold and silver reflects the financial big picture -- which has become bloated with debt, over consumption and lack of savings."

Looking forward, Smith says "Investors are frustrated by the lack of return on stocks in recent years and are looking for a safe, profitable haven for their hard earned cash which tangible assets offer."

Will 2006 bring the gold rush to new heights? Will stocks continue moving sideways or lower, or are they now ready to resume with a new bull market after taking a one year breather? [Note: See 100-year chart of the U.S. stocks, which illustrates an 18-year bear market historically follows an 18-year bull market.]

2006: A MAJOR PARADIGM SHIFT

According to a 12/30/05 survey by The Wall Street Journal "Economists predict a thriving business sector should carry the economy through the fifth year of economic expansion, though overall growth will slow due primarily to a softening housing market."

“So, what's out there to worry about?” asks CNN. “The Federal Reserve pushing interest rates too high, for one thing. Fed policy-makers have raised rates 13 straight times in a bid to keep inflation at bay, but some analysts worry that the central bank might overdo it, crimping economic growth. A bankruptcy filing by General Motors could have ripple effects far beyond the company's employees and stock and bondholders. And there are concerns that the slowdown in the housing market could mean trouble for the broader economy. Sales of existing homes fell 1.7 percent in November to a 6.97 million unit rate as inventories hit their highest point in more than 19 years.”

According to Mr. Smith, "I expect the U.S. economy will feel impact of rising inflationary pressures from higher energy, gold, and other commodity prices in 2006. Here’s my short list of the 2006 investor wild cards …

- Twin Deficits – will U.S .trade/budget deficits cut off foreign propping up of the buck?
- Flight to a hard money – not dollars, euro or yen, gold!
- Geopolitics – Iran’s nuclear capability in 2006
- Flu pandemic -- $ billions in lost productivity, lives?
- Debt crisis – personal, corporate & government debt!
- Oil Crunch, II – will oil-producers withhold oil from U.S?
- Iraq – the high cost of defending freedom is dividing our nation
- Elections – will statesmen arise, or just more politics as usual?

"I see a major paradigm shift, leading investors to sell paper-denominated assets and buy hard assets -- like gold, silver and other commodities. And I am not alone. Dozens of economists and respected financial commentators now agree that "gold is the BUY of a generation!" says Mr. Smith.

FIVE REASONS U.S GOLD COINS ARE TRUSTWORTHY

1. COINS ARE VERY LIQUID - Reputable dealers offer a 72-hour cash liquidation - unlike stocks, bonds, mutual funds, real estate, etc. which can range from weeks, to months to liquidate.

2. HISTORIC U.S. COINS APPRECIATE TAX-FREE - Sure gold and silver coins may seem boring to some because they just sit in a safe or depository, but they are also one of the only assets that does not require a monthly tax payment, margin calls, or weeding to maintain their value.

3. GOLD COINS ARE TRUE, UNENCUMBERED WEALTH - Most equity assets are both assets and liabilities at once. Not so with gold or silver coins, they are nobody's liability.

4. GOLD COINS ARE VERY PORTABLE - Unlike most other tangible assets, U.S. gold and silver coins can be transported worldwide in a briefcase - privately.

5. GOLD STABILIZES A PORTFOLIO - According to the World Gold Council, "Gold is an effective portfolio stabilizer during periods of financial stress ... History implies that the upside potential for gold is greater than the downside risk."

Once you've decided to diversify some assets into gold, the next BIG question is: "Which type of gold sparkles brightest?" ... Gold stocks, gold ETFs, gold futures, gold bullion bars/coin or rare U.S. gold coins? Our brand new printed newsletter will explain how to make your gold and silver work the hardest for you over the next five years.

Register here for a free copy of "THE RULE OF GOLD"


DISCLAIMER: All of the provided information is believed to be accurate, however errors are possible. The opinions in the Commentary section do not necessarily reflect the opinions of Swiss America. Past performance of any investment is no guarantee of future performance. All investments have risk.

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