The Gold Owner's Guide to 2014

by Michael J. Kosares "It's tough to make predictions, especially about the future." - Yogi erra, baseball philosopher !ince the beginning of gold's bull market in the early "###s, $e ha%e recommended an unambiguous course of action& '$n the physical metal -- fully paid for and stored nearby -- then sit back and $atch the sho$. (art of $atching the sho$ is the forecast and prediction festi%ities that greet each )e$ Year. *his year's entries $ill be of special interest to gold o$ners coming off the first do$n year for gold in the past thirteen. +s our good friend, James *urk, says further on& "One losing year after 12 winning years is not that bad." '%erall "#,- $as a good year for gold despite the price ad.ustment. Important trends -- like /hina's domination of the physical gold supply -- gained depth and substance. 0ermany's repatriation announcement early in the year added additional character to the demand side of the market, and emboldened pri%ate in%estors the $orld o%er added $eight to their portfolios as the price corrected. In the 1nited !tates, sil%er 2agle demand -- a bell$ether for precious metals interest -- set an all-time record. If I could add a prediction of my o$n for the )e$ Year, it $ould be that hea%y global demand for gold and sil%er $ill remain strong no matter $hat the price does. +t the same time, I belie%e $e are going to get back on the upside track this year. 'f all the predictions posted belo$, !cotia Mocatta's comes closest to my o$n thinking& "3or "#,4, a return to 5,,4-67o8 $ould not be too surprising." *he last nearly three years ha%e been correcti%e. . .I look for the ne9t three to be prescripti%e, as the foundational elements .ust mentioned begin to take precedence o%er the preoccupation $ith 3ed policy, for$ard guidance, etc. 2arly in the year, $hen Janet Yellen sits do$n to her broad desk at the Marriner 2ccles building, she $ill be faced $ith a %e9ing conundrum& :o$ to keep dollar interest rates do$n $hen elemental forces in the rest of the $orld are pushing them up. +nother taper tantrum, for better or $orse, has already begun ;More belo$<. . .and it $ill likely test the ne$ 3ed chair$oman early in her tenure. '$ning gold and $atching the sho$ are t$o $ell-ad%ised undertakings. *hose t$o courses of action ha%e paid handsome di%idends o%er the years, both in terms of peace of mind and a healthier balance sheet. In fact, in some =uarters, that prescription has created significant $ealth. +t the %ery least, it has preser%ed $ealth o%er the past tumultuous decade $hile other, more complicated courses of action, ha%e fallen short. *hat is $hy armchair economist-gold o$ners like Mr. !pot -- pictured abo%e in his study -remains content, confident and assured this )e$ Year's 2%e. :e does not o$n gold simply to make profit. :e o$ns it to protect the $ealth he has already garnered. :e keeps in mind the historical cycle described by +le9ander *yler, the ,>th century historian and .urist&

"+ democracy cannot e9ist as a permanent form of go%ernment. It can only e9ist until the %oters disco%er that they can %ote themsel%es money from the public treasury. 3rom that moment on the ma.ority al$ays %otes for the candidates promising the most money from the public treasury, $ith the result that a democracy al$ays collapses o%er loose fiscal policy follo$ed by a dictatorship. *he a%erage age of the $orld's great ci%ili8ations has been t$o hundred years. *hese nations ha%e progressed through the follo$ing se=uence& from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage." :e .udges that $e are no$ some$here bet$een the "selfishness" and "dependency" stages of *yler's cycle, hopes that things $ill turn around, but keeps his di%ersification intact .ust in case it does not. *he politicians, he obser%es, ha%e not acted $ell this past year. ?ashington, he says, seems to be confused and lacking direction and more interested, as *yler suggests, in getting reelected than making responsible decisions about the future of the country. :e points to )eil :o$e's conclusion, re%ealed this past year, that the 3ourth *urning started $ith the "##> financial meltdo$n and that $e are likely to be in a transition period for some time to come. :e takes :o$e's obser%ation to heart& "You are not .ust into it and out of it immediately. . .It is a season you ha%e to mo%e through before you are born again, so to speak, as a society, and regain institutional confidence. You ha%e go through the crucible to get there." ;2ditor's )ote& *hose of you $ho ha%e follo$ed my $ritings o%er the years kno$ that I consider @*he 3ourth *urningA ;,BBC< by ?illiam !trauss and )eil :o$e one of the most important books published o%er the past t$o decades. In that book, ele%en years before the "##> meltdo$n, the authors made one of the most stunning calls of all-time& @*he ne9t 3ourth *urning,A they predicted, @is due to begin shortly after the ne$ millennium, mid$ay through the 'h-'h decade. +round the year "##6, a sudden spark $ill cataly8e a /risis mood. Demnants of the old social order $ill disintegrate. (olitical and economic trust $ill implode. Deal hardship $ill beset the land, $ith se%ere distress that could in%ol%e =uestions of class, race, nation, and empire.A< 2%er the amateur historian, Mr. !pot takes special note of the drain of ?estern gold to the 2ast through the Eondon-Furich-:ong Kong-!hanghai pipeline -- undoubtedly the seminal gold market e%ent of "#,-. ;*he past year, after all, $as /hina's Year of the !nake.< :e is a$are that a drain of gold from declining cultures to rising cultures usually accompanies the end phases of *yler's cycle. 0old, he recalls, fled Dome .ust before the empire collapsed in the third century +.G. and the ritish 2mpire began to lose gold follo$ing ?orld ?ar I. *hough he does not belie%e the end is nigh, he does belie%e that gold mo%ements on this scale proceed for good reason. Many years ago, he tacked a sign on the bulletin board abo%e his desk. It reads& ":e $ho o$ns the gold makes the rules." ?e pro%ided Mr. !pot $ith an ad%ance copy of The Gold Owner's Guide to 2014. In appreciation he sent o%er the I(hone snapshot posted abo%e and an encouraging note& "I $holeheartedly appro%eH" +nd so, dear reader, $e send you along to our annual catalog of opinion and predictions posted belo$ $ith our o$n fondest $ishes for a %ery happy and prosperous "#,4.

?e shall start $ith recent predictions posted by the big global trading banks -- the bulls and bears of gold finance. The Banker Bears - 0oldman !achs predicts "significant decline" in gold for "#,4 I at least a ,6J decline. - 1 ! lo$ered its "#,4 gold forecast to a 5,"## per ounce a%erage. "'ur e9pectation for $eaker prices by no means suggests a straight path south. *he 5,"## a%erage forecast reflects the %ie$ that the gold market $ill fluctuate $idely as it faces the crosscurrents of an impro%ing macro backdrop, the changing landscape of physical demand and, ultimately, the implications on mine production." - +nalysts at J.( Morgan /a8eno%e forecasted a%erage gold prices to drop by ,#J to 5,,"K- an ounce for "#,4 and by,"J to 5,,"C6 for "#,6, according to a research note dated *hursday. *he )e$ Year $ill be characteri8ed by tapering and lo$ 1.!. inflation, $ith the do$nside e9acerbated by the re-emergence of producer-price hedging, the analysts said. - /redit !uisse& "If the gold price $ere to continue to retreat along its current tra.ectory, the metal $ould be trading close to 5B## per ounce by the end of "#,4." - !ociete 0eneral, a member of the Eondon 0old 3i9, predicts an a%erage price of 5,#6# per ounce in the final three months of "#,4& "Degardless of the precise timing underpinning our negati%e %ie$ to$ards gold is that the ultraloose stance of monetary policy is gradually un$ound." - Morgan !tanley says gold $ill e9tend losses into "#,4 amid speculations the 3ederal Deser%e $ill pare stimulus. "?e recommend staying a$ay from gold at this point in the cycle." The Banker Bulls - !cotia Mocatta, a member of the Eondon 0old 3i9, says in its lengthy "(recious Metals 3orecast "#,4"& "0i%en the funds are still net long, there are still many long term in%estors in 2*3s and in%estment buying in the 2ast is strong, highlights that the bulk of the market has not turned bearish. *he ne9t bullish chapter for 0old $e think $ill in%ol%e greater moneti8ation of 0old as confidence in fiat money and go%ernment paper deteriorates and $hen that happens $e think central banks and in%estors $ill end up chasing prices higher. :o$ high prices end up going is difficult to say. In "##>, the market dropped -- percent, before rallying ,># percent to the "#,, highs. It $ould re=uire a K- percent rally from the 5,,,>#7o8 lo$s to get back to the highs, $hich seems a tall order in the current climate, but it may not be out of the =uestion at some stage in the years ahead. 3or "#,4, a return to 5,,4-67o8 $ould not be too surprising, but $hether prices could then mo%e up abo%e 5,,46#7o8 might be e9pecting too much. If they did, it $ould suggest sentiment is turning more bullish. ?hether sentiment turns bullish ne9t year, or further do$n the road is difficult to call, but at some stage gi%en the debt situation $e think it $ill."

- Merrill Eynch forecasts a 5,"B4 a%erage $ith a rise to 5,-6# by year-end. It says gold $ill under-perform sil%er, but that gold could trade as high as 5"### per ounce by "#,K. - 0ermany's /ommer8bank says gold "$ill shake off its current $eakness" and end the year around 5,4## per ounce. "!peculati%e financial in%estors ha%e no$ largely e9ited the gold market, ase%ident from the fact that net-long positions are at a se%en-year lo$," it says. "*he negati%e market sentiment to$ards gold is also reflected in negati%e media reports and for the most part pessimistic price forecasts. +ll of this may indicate a rapid re%ersal of the trend. +fter the price has successfully bottomed out, gold 2*3s should report inflo$s again from the second =uarter, supporting the price reco%ery." It also says that a pick-up in economic economy $ill create "stronger industrial demand in "#,4." - arclays ank, another member of the Eondon 0old 3i9, says gold $ill a%erage 5,-6# in the first =uarter of "#,4 but track back to 5,"C# per ounce by year-end. If you $ould like to broaden your %ie$ of gold market, $e in%ite you to sign-up for our regular ne$sletter and recei%e =uality commentary like $hat you are no$ reading. It's free of charge and comes by e-mail. You can opt out at any time. Onward. . . . . "*he ?orld ank and the International Monetary 3und may ha%e $ritten off gold as an in%estment option but the yello$ metal sho$s no sign of losing its sheen in India. In "#,- not only did gold prices $itness an up$ard march to touch Ds -4,K## per ,# grams, the demand also remained some$hat intact. !teady demand, despite import restrictions, sa$ gold prices s$aying bet$een Ds "K,44# per ,# grams in +pril to Ds -4,K## per ,# grams in +ugust. '0old $ill al$ays remain an asset class in India. It $ill ne%er fetch any negati%e return. *emporarily, there can be some re%erses but in the long term it cannot fade a$ay,' achhara. amal$a, director of the +ll India 0ems and Je$ellery *rade 3ederation, told the Indo-+sian )e$s !er%ice." -- Indo+sian )e$s !er%ice "There are always surprises. You will recall that although she hasn't been confir ed by the !enate" Yellen is to ta#e o$er as the %hair an of the &ed. 'nd e$ery &ed %hair an" not only the ones that ('$e #nown o$er )0 years but the ones that ha$e been there for the full 100 year history" ha$e been tested in their first year by so e ar#et e$ent. &or Greenspan it was the %rash of 1*+," and for -ernan#e it was the Great .ecession. (' going to be $ery interested because we are seeing one possible i pact of that already and that is ortgage rates are creeping up // therefore" ortgage applications ha$e dropped off. 0e're bac# to ortgage applications falling to the le$el they were when 1eh an was being deconstructed. That is a $ery" $ery significant indicator. (t is ore ti ely than so e of the housing sales and a $ariety of other things. !o if we find that the ortgage rates creep up and the ortgage applications continue to fall" the &ed ay ha$e to re$erse itself with a 'red face' e$en before it gets started. ( thin# it would be $ery

significant in that people would begin to wonder" '(s the &ed in any control at all2' (f they had to re$erse rather 3uic#ly" before they e$en began the taper" then people would wonder" '4ow uch in control are these people2 4ow uch do they #now2'" // 'rt %ashin" 5-!
MK Note: +rt /ashin raises an important point. *he 6/factor in 3ed policy is the international demand, or lack thereof, for *reasury debt. +lan 0reenspan's $anted to raise interest rates and had a difficult time doing it because of foreign purchases of go%ernment debt. :e called the problem a conundrum. ernanke, and soon Janet Yellen, $ant to keep interest rates do$n, but in the absence of foreign buyers e%en the hint of reducing *reasury debt purchases sends interest rates hurtling higher as sho$n belo$ in the tenyear maturity rate chart belo$ -- a bell$ether for the bond market. /ashin also has a point $hen he raises the possiblity that the 3ed simply might not understand $hat is happening in the economy. In a recent 3inancial *imes inter%ie$, +lan 0reenspan admitted "$hen I $as sitting at the 3ed, I $ould say, 'Goes anyone kno$ $hat is going onL' +nd the ans$er $as, ''nly in part'. I $ould ask someone about synthetic deri%ati%es, say, and I $ould get detailed analysis. ut I couldn't tell $hat $as really happening." *his is the same +lan 0reenspan $ho said recently that the present stock market is not in a bubble.

Marcus 0rubb, Managing Girector of In%estment at ?orld 0old /ouncil ;?0/<, stated that gold as an asset class $ould $itness a renaissance in "#,4.In his %ie$, 2*3s are not al$ays a clear indication of the sentiment and that gold $ill deli%er positi%e upside surprise in prices ne9t year. 0lobal gold prices ha%e dropped nearly -#J year-to-date. 29change *raded 3und ;2*3< redemptions during the year stand at nearly >## tonnes so far this year. :o$e%er, 0rubb argues that it is too easy to bash an asset class $hen it is battered, but gold $ill soon shatter the obstacles in its path. 2%en after the disastrous decline in tonnage in global 2*(s, physical 2*3s still hold as much as ,,C## tonnes of gold. *he /hinese market sa$ three gold 2*3s being launched this year. *he trend is likely to continue in "#,4 as $ell.

*he net gold purchase by /entral banks is likely to reach 4## tonnes by the end of the year, although do$n $hen compared to the pre%ious year. +ccording to Marcus, the solitary fact that /entral banks continued to remain on buy side in "#,- is a clear indication of their trust in gold's uni=ue %alue. In fact, all 2*3 redemptions ha%e been largely absorbed by /entral bank demand or strong physical demand from +sian countries. :e further added that gold is a store of $ealth that cannot be debased so easily. Dight no$, the market is getting back to e=uilibrium. *here is potential upside for gold. *his could $ell be a surprise for "#,4. -- Desource In%estor "( belie$e that co ing up we are going to see a fourth de$aluation of the dollar against gold. -y doing this the 5! Treasury will o$ernight ha$e a $astly greater supply of wealth co pared with its debt" putting its finances in a uch healthier state. 4ow high ight the 5! re/set the official price of gold2 You pic# a nu ber // 7)"000" 710"000 or 7)0"000" but the nu ber should be high enough so that the price of gold won't ha$e to be re/set again in a hurry. There are two proble s with a re/set in the price of gold. 819 The go$ern ent ay decide to confiscate gold fro its people. 829 There are argu ents regarding how uch gold the 5! Treasury actually owns. There ha$e been no recent audits" and so e of our gold ay ha$e been loaned out." // .ichard .ussell
MK note: 3or those concerned $ith the possibility of a gold confiscation, $e recommend that at least 6#J of one's gold holdings be in the form of historic, pre-,B-- gold coins for reasons outlined here. Dather than numismatic items $hich trade at %ery high premiums o%er the gold price and are not directly correlated to the gold price, $e recommend the bullion related category of items $hich track the price of gold and trade at minimal premiums o%er their gold content. If you $ould like to learn more, I recommend you contact your 1!+0'EG broker. ?e ha%e detailed information $e can pass along.

"?hen the big bad $olf, also kno$n as the )e9t Decession or )e$ Gepression, hits sometime bet$een "#,6 and "#-6, these pigs $ill also be food for the $olf. *he third pig builds his house out of tangible assets. *hese pigs are entrepreneurs and professional in%estors $ho study and in%est for their o$n future, in%esting in real assets, not paper assets. ?hen the big bad $olf comes, in that "#-year $indo$ bet$een "#,6 and "#-6, those $ho ha%e built houses of "bricks" are likely to get richer. *hey become richer because they built $ith bricks, in%esting in tangible assets such as real estate, gold, sil%er, oil, food, and businesses they control. I $ould definitely a%oid paper assets such as stocks, bonds, mutual funds, and 2*3s and the reason is these are paper assets, not real assets. *hink of the story of the *hree Eittle (igs& *he first pig built his house out of stra$, the second pig built his house out of sticks, and the third pig built his house out of bricks. :ere's my spin on that story& *he first pig represents the poor. (oor people build their house out of paper. *hey $ork hard for cash and sa%e cash. *heir strategy

is to $ork hard, li%e belo$ their means, and sa%e money. ?hen the big bad $olf appears, huffing and puffing, these pigs are $olf food. *he second pig represents the middle class. *hey build their houses out of illusions, belie%ing in .ob security, benefits, o$ning their home, sa%ing money, and in%esting in a retirement plan filled $ith stocks, bonds, mutual funds, and 2*3s." - Dichard Kyosaki, Dich Gad, (oor Gad

"There is another reason to loo# bac# o$er the past 1: years" ;ric" and $iew the as one ti e span< One losing year after 12 winning years is not that bad. ;$en with 201: added in" o$er the last 1: years gold has generated an a$erage annual return greater than 1:=. (t has been and re ains one of the best assets to own" particularly gi$en that neither physical gold nor physical sil$er has counterparty ris#" and >ust li#e e$ery other bubble inflated by ban#s or go$ern ents" the '?oney -ubble' will pop too." // @a es Tur#" Gold?oney "I'%e been to !an 3rancisco $ith my $ife 4# times, and I ha%e ne%er seen the city of !an 3rancisco slo$er at any time in the past 4# years. I $ent shopping for /hristmas gifts, and normally there $ould be lines out in the street at some of these places. Instead, I $ent right in $ith no $ait, made my purchases and $ent straight to the cashier and paid $ithout $aiting. !o there is something strange going on. 2%eryone is saying the 1! economy is strengthening, and (resident 'bama $as saying today that there could be a real

turnaround in "#,4. I see all of this as propaganda and outright lies because from $hat I obser%ed $ith my o$n eyes, the bullish talk is patently false. I don't see the strength in the 1! economy at all. *hey .ust had about the third or fourth up$ard re%ision of the -rd =uarter 0G(. +nd no$, because the consumer had not been doing $ell, they cranked up the consumer numbers in the latest ad.ustment. !o I think there is something seriously $rong, and as a result they are falsifying a lot of data in a desperate attempt to try to co%er it up. ut I strongly belie%e that the harsh reality $ill become all too ob%ious as "#,4 unfolds." -- John 2mbry, !prott +sset Management "There's certainly so e %entral -an# anipulation. There's so e funda ental reasons ha$ing to do with what we'$e been tal#ing about" which is deflation. Gold should go down in a deflation en$iron ent initially. -ut if deflation gets bad enough" the go$ern ent will a#e the price of gold go up because they get desperate to create inflation. (f you'$e tried e$erything" if you want inflation" and you'$e tried e$erything to create it" so you tried oney printing" cutting rates" currency wars" Operation Twist" A;" forward guidance" no inal GBC targeting" you'$e tried e$erything" you still didn't get the inflation. There's one thing that always wor#s" which is de$aluing your currency against gold. !o there could co e a ti e when deflation gets so bad that the &ed and the treasury actually raise the price of gold" not to enrich gold in$estors" but to get close to generaliDed inflation. -ecause if gold goes up" sil$er and oil will go up along with it. (t's e6actly what happened in 1*::. !o that's one path. -ut the other" perhaps ore li#ely path" is that the &ed >ust #eeps printing oney and finally succeeds in changing beha$ior" $elocity of the turno$er oney pic#s up and inflation goes up on its own. Then gold will race way ahead of that." // @a es .ic#ards" author" %urrency 0ars "*he =uestion of uba's relationship $ith other central banks still remains open, ho$e%er one thing $e ha%e .ust learned is the pace at $hich the 0erman /entral ank has been able to repatriate its gold. It $ould make a snail proud. Yesterday uba head Jens ?eidmann told ild that gold %alued at M,., billion has been repatriated so far. (utting a $eight to this number& to date the undesbank has recei%ed shipments of a paltry -C tons of gold from its e9isting storage place in either )e$ York or (aris to 0ermany& '*he gold reser%es of the country $ill be stored in 3rankfurt because it has a special storage $ith the corresponding e=uipment,' said /arl-Eud$ig *hiele, a undesbank board member. *he repatriated amount o%er the course of all of "#,- represents .ust o%er 6J of the total stated target of C## tons, and is $ell belo$ the >C.6 tons that the undesbank $ould need to repatriate each year if it $ere to collected the C## tons ratably e%er year in the > year inter%al bet$een "#,- and "#"#. !o the =uestion begs& since the price of gold has tumbled in "#,- ;according to many dri%en in part by the uba's o$n demand, $hich $ould make procuring gold in the open market for the 1! and 3rench central banks that much easier for subse=uent dispatch to 3rankfurt< and one $ould assume there $ould be many more sellers than buyers of physical, $hy $ould the undesbank not be able to

obtain a far greater share of the goldL 1nless, of course, neither )e$ York nor (aris actually ha%e free, unencumbered physical gold in their possession -$ith most of it leased out to %arious e%en closer 'partners' - and are scrambling to procure as much physical as they can find at the ne$ lo$, lo$ prices ;thank you paper gold 2*3 dumping<. -- *yler Gurden, Fero:edge 0e see these enor ous $olu es of gold o$ing fro 0est to ;ast" so eti es through !witDerland. 0e saw the disparity in the -an# of ;ngland's gold $aulting reports between &ebruary and @une" where 1"200 tons of gold see ed to disappear. 0hen ( as#ed the -an# of ;ngland about that they basically told e to drop dead and they would ha$e no further co ent on the atter. 'll of this echoes what Eaye F4ong Eong analyst" 0illia EayeG is saying. 0e can see these gold outflows fro the 0est" and we can also see the inflows to the ;ast. 0e don't #now e6actly when the etal will run out" but we do #now we ha$e seen this o$ie once before. This is e6actly what happened when the 1ondon Gold Cool was drained. The pool collapsed and there were e ergency 5! 'ir &orce transport flights" according to the &ederal Open ?ar#et %o ittee ?eeting ?inutes" flying gold o$er fro the 5nited !tates to the -an# of ;ngland in 1*H+. This was at a ti e when the -an# of ;ngland was ad$ancing its own gold into the ar#et on behalf of the 5nited !tates" in an atte pt to hold the gold price at 7:) an ounce. (n ?arch of 1*H+" the outflow of gold had reached hundreds of tons per wee#. 't that point" the nations participating in the 1ondon Gold Cool realiDed they had only a few wee#s' worth of gold left at that staggering rate of outflow. !o" they closed the 1ondon Gold Cool. The dollar price of gold literally failed at that point. The price of gold was 7:) an ounce of gold one day" and the ne6t day there was no price at all because there was no official ar#et. ( suspect that either that will happen" and the gold that is a$ailable will run out" or ore li#ely the central ban#s will see what's co ing and arrange an international currency re$aluation. 't that point there will be chaos in the gold and currency ar#ets" but in the end this will ean substantially higher gold after the official reset of the international gold price." -- /hris (o$ell, 0+*+
MK Note: ack in "##>, $hen the financial system $as on the %erge of breakdo$n, Nueen 2li8abeth asked a no$ famous =uestion during a %isit to the Eondon !chool of 2conomics& "?hy didn't anyone see this comingL" *he ans$er she got left something to be desired, so apparently she decided to gi%e it another try during a %isit this past year to the ank of 2ngland's gold %ault. !u.it Kapadia, a member of the o2's 3inancial !er%ices /ommittee, responded by likening the "##> crisis to an earth=uake, saying it $as difficult to predict. :e also mentioned that "people thought markets $ere efficient, people thought regulation $asn't necessary." East, he said, "(eople didn't reali8e .ust ho$ interconnected the banking system had become." "(eople had got a bit. . .la9, had theyL" the Nueen asked. 'nce again, she had gotten the same standard boilerplate response that $as offered up at the time of the "##> crisis. (erhaps attempting to push for something better and

underline the concern e9pressed by the Nueen ;and one held by good many others<, (rince (hilip %entured to ask "Is there another one comingL"

"My sense is that at the present time, the 1! market is relati%ely e9pensi%e compared to foreign markets, especially to 2uropean markets and to emerging markets. 'n a cyclically-ad.usted (72 Oprice-to-earningsP basis, it is actually going to return %ery little o%er the ne9t se%en to ,# years. . . '0i%en all the money printing that is going on globally I and not .ust in the 1! I and gi%en that the total credit as a percent of the ad%anced economies is no$ -#J higher than in "##C before the crisis hit, I think that gold is a good insurance.'" -- Marc 3aber, 0loom, oom Q Goom Deport "&irst thing you should do is buy so e gold coins I or one gold coin ( should say I and buy an e3ual a ount of sil$er coins and that should constitute your financial foundation . . . -onds re ain a triple threat to your capital. 0ith interest rates at all ti e lows" that eans bonds are at all ti e highs. . .!econd thing is that bonds are deno inated in paper currencies and those currencies are going to lose $alue uch faster o$er the ne6t couple of years due to the trillion of units being created by go$ern ents"" he added. "Third thing is default ris#Jso bonds are a horrible place for your oney" ( wouldn't trust the with a 10/foot pole." // Boug %asey" %asey .esearch "If you're like me, you'%e bought gold due to the money printing policies of most de%eloped countries and the effect those policies $ill ha%e on the future purchasing po$er of our paper money. (robably also because there's no %iable $ay for go%ernments to escape the conse=uences of all the debt they'%e piled up. +nd maybe because politicians can't be trusted to formulate a realistic strategy to a%oid any number of monetary, fiscal, or economic crises going for$ard.

*hese are %alid, core reasons to hold gold in a portfolio at this point in time. ut a ne$ trend is under $ay, and someday soon it $ill be .ust as much a dri%ing force for gold prices as anything else& a good old-fashioned supply crunch. + fe$ metals analysts ha%e mentioned it, but it escapes many and certainly is off the radar of the mainstream financial media. ut unless se%eral critical factors re%erse course, a supply shortage is on the $ay $ith clear implications for the price of gold." -- Jeff /lark, /asey Desearch

Michael J. Kosares is the founder of 1!+0'EG and the author of "*he + /s of 0old In%esting - :o$ *o (rotect and uild Your ?ealth ?ith 0old." :e has o%er forty years e9perience in the physical gold business. :e is also the editor of .e$iew K Outloo#, the firm's ne$sletter $hich is offered free of charge and speciali8es in issues and opinion of importance to o$ners of gold coins and bullion. If you $ould like to register for an e-mail alert $hen the ne9t issue is published, please %isit this link. US GO!" #e$iew % Outlook is the contemporary, $eb-based %ersion of our client letter, $hich traces its beginnings to the early ,BB#s under the News % &iews banner. Its principle ob.ecti%es ha%e al$ays been to keep our clients informed of important de%elopments in the gold marketR condense the a%ailable gold-based ne$s and opinion into a brief, readable digestR and counter the traditional anti-gold bias in the mainstream media. *hat formula has $on it a fi%efigure subscription base ;and gro$ing<. In addition to our regular ne$sletters, $e occasionally publish in-depth special reports that focus on e%ents and de%elopments of interest to gold o$ners. Salued for its insight, accuracy and reliability, this pubilcation is linked and reprinted regularly by a large number of $ebsites both in the 1nited !tates and around the globe. It also en.oys the good$ill of countless $ebsites, indi%iduals and organi8ations $ho contribute regularly to its content. *o this group, $e o$e a deep debt of gratitude. "is'lai(er - 'pinions e9pressed on the 1!+0'EG.com $ebsite do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be %ie$ed in any $ay as in%estment ad%ice or ad%ice to buy, sell or hold. 1!+0'EG, Inc. recommends the purchase of physical precious metals for asset preser%ation purposes, not speculation. 1tili8ation of these opinions for speculati%e purposes is neither suggested nor ad%ised. /ommentary is strictly for educational purposes, and as such 1!+0'EG does not $arrant or guarantee the the accuracy, timeliness or completeness of the information found here.