By James M. Carrillo
Sr. Portfolio Adviser
March 24, 2009
This is a Red Alert to all gold buyers to start looking into and buying rarity now. Why? Because of the Fed's decision to print, print, print trillions of dollars. This action will create INFLATION like we've never seen before!
As many of you know Swiss America has been recommending lower grade to mid grade common date gold Liberties and St. Gaudens and we still do, because they have outperformed almost every investment over the past 36 months. If anything has done better we don’t know what it is.
The reason we're recommending rare dated coins now is simple; the Fed is tripling the money in circulation! The only reason rarer coins have not performed as well during this time frame was the liquidity crisis. Most investors were looking for the "pure" gold play. Things just changed.
This chart illustrates the shear magnitude of this money creation. Once the money supply has tripled, the average price level in the U.S. will triple as well. This is a basic application of the law of supply and demand, which was proven by Adam Smith at the very beginning of the science of economics.
We have targeted several areas of the market that could literally explode in value over the next few years.
This alert is not for everyone. This should only be considered by people who have the liquidity to hold these coins for a minimum of three years, and preferably a decade, to maximize the return. Remember, all this freshly printed cash will gradually make its way into circulation. These rare U.S. gold and silver coins could explode in value overnight, but it may take some time.
The growth in this area of the market may take time, however the growth can be simply staggering. The graph below is an actual example of the money made between 1970 and 2005 with a $1,000 investment. Note that just $10,000 invested in the *12-Piece gold coin type set would have had a maximum return of over $1,200,000! I firmly believe we are re-entering this same type of cycle today.
* 12-Piece Gold Set: The 12-Piece Gold Set is an industry index that is used frequently within the world of rare coins for financial evaluations. It consists of the 12 U.S. Gold coins that have been most commonly traded over the last 50 years. It is an index like the DJIA is an index, meaning it is designed to represent the composite performance of a given market. It's important to note that being commonly traded does not mean that they are the best performing coins in terms of appreciation in value. Several pieces in the 12-Piece Gold Set have not performed well over the time period presented and we may not recommend buying specific pieces at certain times. Unlike the DJIA, however, these 12 pieces are a constant over the entire time period analyzed.
* Dow Jones Industrial Average: The Dow Jones Industrial Average consists of 30 companies. The 30 companies in today's DJIA are not the same as the 30 companies in 1970, though. Some companies have been dropped and others added for a variety of reasons, including poor financial performance. For example, Johns-Manville was dropped when it entered bankruptcy and Chrysler was dropped when it approached bankruptcy. As a result, the DJIA actually presents the performance of stocks in a better light because poor performing companies have been dropped from the index. Of course, the DJIA does not include stock dividends, which might be re-invested and increase the overall performance of the equities.
Even with the advantage of dropping poor performing stocks from the DJIA index, rare U.S. Gold coins still have a far superior track record for capital appreciation and could be considered a bargain at today’s levels.
Well-established third party grading companies provide data on quality and quantity of coins. It is easy to track value and prices for virtually any type of coin. Rare coins are also a very liquid investment several NASDAQ like trading networks exist as well as regularly scheduled auctions for Ultra Rarities.
Certified Rare coins offer you tremendous profit potential, a proven track record of appreciation, and an infrastructure for buying and selling that rivals the equities market. Many financial advisers agree that rare coins should be a part of a diversified portfolio.
Introducing CAC Coins
Third party independent grading services like PCGS and NCG revolutionized the U.S. rare coin industry by evaluating and certifying the condition and the grade of coins. Evaluations, however, can be subjective and over time, coins of varying quality have received the same grade.
Swiss America is proud to provide the finest protection for rare coin investors by offering "Certified Acceptance Corporation" (CAC) certified coins. Only U.S. rare coins meeting the highest of standards qualify for the unparalleled security offerd by CAC.
CAC certified coins guarantee top notch excellence. Now, Swiss America clients can rest assured that we are providing the very best quality product every time they look at their CAC seal.
All graded coins are not created equal, why? As in all areas, there is what is deemed the best of the best. Certified PCGS and NCG coins are no exception. Now there’s an easy way to identify elite coins within any grade. Just look for the CAC verification sticker.
"CAC’s objectives are to give consumers an easy way to identify higher-end coins and provide a formal basis for independent trading of those coins," says CAC founder John Albanese. "We want the market to reflect what they’re really worth."
In conclusion, the opportunity that exists today looks to be far greater than that of the 1970's, using basics economic principles. There have been many such cases of significant increase in the money supply in American history but none as great as today. As you can clearly see by the graph there is a potentially staggering amount of money to be made. We are now targeting key areas that we feel have the greatest potential for our investors. Seize this golden opportunity!