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The Best Precious Metals Investment You Can Make Today

By Matt Badiali, editor, S&A Resource Report
Wednesday, November 28, 2007

Would you take this deal?

You send the dealer a $25,000 check, which will draw no interest while you wait six to nine months for your order. You have no say in what product you receive and you can't send anything back for a partial refund.

Sounds crazy, I know. But according to Van Simmons, DailyWealth’s favorite gold coin expert, plenty of people bought into deals just like that during the last gold coin bull market in the 1980s.

Times back then were a little crazy. You see, Van and his partner David Hall didn't invent their Professional Coin Grading Service (PCGS) system until 1986. The PCGS system, which evaluates the quality and guarantees the authenticity of rare coins, will protect investors during the next bull coin market.

But buying coins in the 1980s was a little like buying cattle in the Wild West... many folks who entered deals like the one above were taken to the cleaners. They just got greedy (and a little lazy) while trying to capture the huge gains rare gold coins delivered in 1982-1986. Now, most folks are leery of gold coins and those who deal in them.

But a similar bull run in gold coins is coming... and coming soon. The grading and authentication system in place now makes it safe and simple to buy coins... and we can position ourselves to make huge gains in this environment.

Geologists like to say the present is the key to the past because you can use what you see around you to interpret what you see in the rocks. With collectibles like coins and stamps, you use the past to see into the future...

Over the last 30 years, rare coins enjoyed three major bull markets: 1972 to 1974, 1976 to 1980, and 1987 to 1989.

As you can see from the graph of below, these bull runs coincided with periods of rapidly rising inflation and concerns about the value of the dollar. And the similarities run deeper...

PCGS 3000 Index with Coin Bull Markets

IYF (Financial iShares)

In the first rare coin bull market, OPEC closed the spigot on oil, causing oil prices to quadruple. Interest rates changed nine times in 15 months, rising from 4.5% to 8%. Watergate and the war in Vietnam gripped the national spotlight. The price of rare coins went up more than 300%, while stocks fell 34%.

In the second rare coin bull market, the price of oil more than doubled. America's attention centered on the Iran-Iraq war and later the Iranian hostage crisis. Interest rates climbed from 5.25% to a high of 18%. The prices of precious metals skyrocketed: Gold rose 800%, platinum went up 400%, and silver shot up 2,300%. And the price of rare coins rose by nearly 1,200%, while stocks fell 35%.

The third rare coin bull market followed a similar pattern. The price of oil rose steadily, doubling in two years. The Iran-Contra scandal, the savings-and-loan debacle, and the Black Monday stock market crash dominated American headlines. And the price of rare coins went up by 665%, while stocks whipsawed investors.

After lagging behind gold for the past few years, I'm convinced it's only a matter of time before rare gold coins run much higher...

Why? The current state of affairs is so similar to those that launched the huge rare coin bull markets of the past. The supply of high-quality coins is thinning out. But prices don't reflect this scarcity and are just beginning to react to the rising gold price.

And, if this bull market is anything like the last three, investors who position themselves now will pocket thousands of percent gains.

Good investing,

Matt Badiali





Market Notes


THE WORST-LOOKING ETF IN THE WORLD


It's a tough competition these days to sport the worst looking chart in the ETF world.

With the clobbering retail, freight, and real estate stocks have taken in the past few months, they all merit consideration for the title... but we'll have to give it to the ETF of Wall Street's best and brightest – the iShares U.S. Financial Sector Index (IYF).

With its largest weightings in Citigroup, Bank of America, Goldman Sachs, Morgan Stanley, American Express, and Wachovia, this ETF holds America's biggest financial stocks... and some of the world's worst business practitioners of the past three years.

Citigroup's huge asset write-downs and desperate fire sale has helped the IYF lose about a quarter of its value in the past six months. If there is a sharper falling knife in the world, we haven't seen it.


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