What is today's best investment?

The answer is simple: Gold!
Most commodities are rising in price, but
Gold is by far the best investment
to get into right now - December 2003.

One of the reasons for the surge in commodities
is the rise in Chinese production and growth -
which is running at annual rate of 10%.

In 2003, crude oil and gold soared; so too did nickel (up 70%)...copper (up 35%)...platinum (up 21%)...wheat (up 25%)...soya (up 60% per bushel)...

Commodities traders haven't seen anything like it since the 1970s. Back then, the oil crisis started gold on its famous upwards path to $800/oz.

But today the question is: will it only be a matter of time before this natural resource resurgence spreads to the likes of palladium...coal...sugar ...uranium...natural gas...and dozens more valuable raw materials?

In the latter half of 2007 there will be something like a 'Crash Hell' in the US. Stocks, Housing and Bonds will tumble like a pack of cards. But unlike the Tech bubble, which only affected investors, this 'Crash Hell' will effect ordinary people. The like of which has never been seen before. The debt bubble is just waiting to pop!

This 'Crash Hell' is entirely due to Governments printing money which is not backed be gold.

The Gold standard was replaced by Nixon in the 1970s. He basically replaced the Gold Standard
with the 'Dollar Standard.' But the dollar is just printed paper which can be printed in any amount. You just turn up the printing press until one day you have so many dollars in circulation that it becomes almost worthless.

If every dollar must be backed by a certain amount of gold, then you cannot create money out of thin air. The gold standard says you must have the gold first. Governments find it harder to wage war, dole out entitlements and build public works with a gold standard tying them down. Banks can't lend as much money; hence they can't make as much money. This
is why the banking interests of this country backed the creation of the Federal Reserve. They appreciated the value of a good cartel.

When Roosevelt ordered Americans to surrender their gold coins in the spring of '33, he was not saving capitalism. He was burying it.

Capitalism [or free markets]depends on contracts. Contracts are nothing but promises. When contracts cannot be enforced, then you join the world of banana republics and post-Soviet style looting. The system breaks down. So it was whenever the country reneged on its promise to back its own currency with gold.

Those who gave their gold in exchange for dollars [backed by a promise to redeem in gold]were simply left with dollars. Their own government essentially stole their gold from them. Dollars, I should note, that have lost a lot of value in the ensuing seventy years.

But there's more than this. Money unfettered by specie is the main fuel for the unsustainable booms that later turn into the panics, crashes and
depressions that pock the landscape of financial history. Gold was what reigned in such excesses. It was the anchor that kept the ship in the harbor.

Just because the government frequently broke these rules does not mean the gold standard itself is at fault. (The rules were broken with finality in 1972, when President Nixon quashed the last vestige of the gold standard). A man who cannot keep his promises cannot reasonably lay the blame on the
promises. Such a routine breaker of promises may be a rogue, a thief, and a scallywag. Usually, the preferred term is "liar." Today we call such
people politicians and "saviours of capitalism."

When gold started to rise in the 1970s the UK government sold off gold in order to flood the market and bring down the price. It also created gold derivatives so investors could trade in
gold without physically buying it.

Now gold has started to rise again, how can the government stop it? There is only one way that gold can go and that's up!

Even now if all the gold ever produced on Earth were formed into a single cube its edge would be less than 20 metres - 2 metres shorter than a tennis court. Annually mined production grows that cube by about 12 centimetres a year, and more than each year's production is used up by jewellers
such that now 75% of that cube is fabricated in an art form worth several times its bullion value. Meanwhile after 15 years of consistent selling into private demand central bank ownership is now down to about 20% of the world's gold.

That 20 metre cube of gold would weigh about 140,000 tonnes and each tonne is worth about 16,000,000 dollars. So all the gold in the world is currently valued at $2.2 trillion, which compares to a US public debt of $8 trillion, and an unreserved US generational debt of $44 trillion. By contrast the US has the biggest gold reserve in
the world which at 8,000 tonnes is worth only $0.12 trillion, enough, were it all sold, to stop the deficits growing for about 10 weeks.

The utility of gold is simply that it is rare, and for 5,000 years people have used reliably rare stuff to store value for the future.

Savers are now realising that official money is not
being well managed and cannot in future be relied upon for rarity, and they believe their governments will soon be forced to create money in large quantities.

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M3 is the broadest measure of the money supply and it's no secret how much money has been created out of thin air the past 10 years.

You will find that one day the Federal Reserve will decided to stop reporting the M3 money supply figures and probably give no explanation.

When the numbers get bad enough the FED changes the way they figure them, just like the CPI index was changed a few years back to exclude certain "volatile items". The FED continues to create dollars out of thin air and someday they will no longer want you to see just how much that actually is. Is it really any wonder why other countries are increasing their gold reserves and why the prospects for gold have never looked better.

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Arising from the scale of public debt the forced monetary issue which is being anticipated by savers is causing them to value the unimpeachable rarity of gold higher. More and more people no longer believe that the artificial rarity of bonds, or bank-notes, shares, or even houses are offering that same assurance of future scarcity, and until
responsible fiscal and monetary management returns to government the outlook for gold is likely to remain resolutely positive.

An interesting fact is that if a bank has physical possession of gold which it owes you as its creditor, the bank itself is the current 'owner' of the gold.

However, if the gold you deposited at the bank has 'your name' on it as the owner, then you have what is known as 'allocated gold.'

But if all you have is a deposit slip showing that some ounces of gold were deposited, then you have, unfortunately, 'unallocated gold.' Unallocated gold is the most widely traded form of gold in the world. While this gold remains unallocated to you, the regulator considers it part of a bank's liquid
reserve. About 99% of gold deposits are in unallocated form, and therefore all the deposited gold is, is basically in the cellar of the bank.

This makes unallocated gold an attractive way for the bank to maintain its regulated liquidity, because you have paid for your gold, and the bank is free to use your money, while it is also able to add your unallocated gold holding to its own reserve.

The bank uses your gold as part of its reserves! And the bank's reserves are the assets that the bank can legally use to offset its own losses.

That's right, the banks can protect themselves and their owners by confiscating and selling the assets of the depositors.

So, your unallocated gold could, and would, be sold if the bank were in need of cash. If the bank went bankrupt and insolvent, then you would be
put in the line with all the other creditors.

After it's been divided up amongst the shareholders and the secured creditors etc, etc, you would have what's left.....if anything!

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For a great read on how Governments have
manipulated wealth and tried to destroy gold,
please read 'Financial Reckoning Day' by William Bonner with Addison Wiggin published by Wiley.

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If any course owners would like to know where
to buy Gold coins (lowest commission rate) or
would like to know of a very good Gold investment certificate program, please send me an email and I'll send you the relevant information. Just type 'Gold' in the Subject line.
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