Rare Coins Poised for Significant Attention.

Back in the halcyon days of $300 gold, prior to Enron the blue sky outlook when most believed stocks were heady, but at least banks were safe. A shrewd minority were casting around looking for safe havens to invest their money.

Real estate beckoned, after all people would always need a house to live in and we now know some needed three or four. Another alternative was the commodity sector, especially gold.

Even in 2003, numismatics were widely over looked as an asset class. They were still popular with knowledgeable investors, but few out side the industry foresaw the up swing we have witnessed today.

Strangely enough, the clues were there. The United States Mint had introduced the amazingly successful state quarter program. Visitors to the US in the last 10 years may have noticed the designs, but the program entailed each of the 50 states issuing 25-cent coins, from the first state Delaware in 1999, through to Hawaii later this year.

Also with the introduction of the euro in 2001 huge amounts of Europeans became collectors of their deeply mourned currencies and the new Euro coins. The public response to both events was incredible. The United Sates Mint estimates that almost 50 million Americans, are actively collecting state quarters. If only 10% continue their relationship the impact on supply demand equation will be immense.

Our experience in Europe indicates a far greater yearning for numismatics of all types, but mostly trinkets rather than rare specimens. Again, this is changing. During the first session of the millennium sale of world coins, many European examples sold for three even four times pre auction estimates. German, British and Russian are leading the charge, with price rises far outstripping gold.

Looking back over past bull cycles in rare coins we cannot remember a single occurrence when so many fundamentals lined up as they are today. All indications are that we have many years, possibly decades of contraction and realignment ahead.

During the week beginning 4th August, in a highly alarming development, the UK government will publish a review of the housing crisis. Unfortunately, the fox has been put in charge of the hen house.

Instead of consulting debt advisors, economists, and social scientists, they went to the same people that head the same banks that created the crisis.

According to reports, the conclusion of the report is that the government should buy up the toxic junk to loosen the mortgage market, and by default have the taxpayer bail out the banks that caused it. In effect, the taxpayer will be supporting irresponsible lenders, irresponsible borrowers and condemning buyers to over inflated asset prices. In the UK house prices have risen three fold in 10 years.

This may work in the short term, but it is a turning point that will greatly increase the impact your wealth.

Although the possibility of a complete collapse of the monetary system very real, another impact, widely over looked is the social and political. We are already seeing a vicious backlash building that could set back free markets decades, and may even topple some governments. Just listen to the rhetoric of the US presidential election. Marxists and communists must be giggling with glee.

If you think about it, investors in rare coins have weathered crisis after crisis stretching back centuries. Coin investing began, as we know it today, in the mid 1700’s. Mayer Rothschild began printing and distributing catalogues of the finest coins to the capitals of Europe. The Napoleonic wars, the depression, both world wars, and the re alignment of monetary policy following the collapse of the gold standard has not diminished their appeal.

Prior to certified grading, success in rare coins was dictated by the experience of a collector. Today the internet has reduced the world to a local village, and the information disparity has decreased to such an extent, that with just a few clicks of a mouse anybody, anywhere can uncover the best coins to buy, and prices they should pay.

That is why we are seeking to expand our position in the industry and facilitate opportunities at all levels of the market. Over the past three years, our staff and client base have increased significantly, and over the next 12 months we will double our dealers, and shipping capacity.

Our emphasis has always been focused on the needs and concerns of the individual, and that is where we will continue to direct our efforts.

The Calm of $900 Gold & $150 Oil..

Typically the summer period is relatively calm as dealers and there clients have minds focused elsewhere. However, I get the feeling that this summer may be different. The atmosphere at shows and auctions indicates few are willing to turn there backs for too long. Aside from a few headlines, the price of fuel seems to have been accepted as the norm. Surely high expectations of wage settlements will follow as the norm. As sure as night follows day, inflation will be right behind.

Just a year ago it was possible for us to attend 5 -10 major shows a year. Since March, we have attended a total of 22. It is not just demand, supply is becoming ever tighter with auctions the venue of choice.

In May, one of the most awesome collections I have seen was auctioned in Long Beach California. The Millennia collection spans 2,500 years of coins, and contained the finest available coins. Without question this auction, the first of three sessions will be one of the last times many of these coins will be available to purchase for a very long time.

It may also be one of the last opportunities for us to purchase gold for less than $1,000. During the $30 billion rescue of Bear Stearns gold achieved an all time closing high of $1002, mostly through panic buying by all and sundry.

To date, the so-called credit crunch has led to write downs of roughly $400 billion. With the IMF estimating the total will breach one trillion dollars; we are less than half way through.

If a $30 billion rescue of a small investment bank pushed gold beyond $1,000, what will be the effects of the next $600 billion? Where these losses turn up we have yet to see, but it will not be good for there customers, and it will be very good for gold.

If panic buying gold at $1,000 seemed the right thing to do when inflation was under 3% perhaps leisurely buying at $930 makes sense. This very well could be the last opportunity we have to get the yellow metal below $1,000.

The World of Gold, Why is it Valued.

Logically the grip of gold is absurd; economist John Milton Keynes called it “that barbarous relic”. Others have marvelled at the folly of digging holes and extracting the gold, only to dig larger, more expensive holes to bury it again. Not to mention guard it.

Of course, these views completely miss the fact that gold is the only universally accepted means of exchange. To understand its timeless appeal it is important to understand a little about this yellow metal.

Although the lust for gold can be traced back 6000 years to ancient Egypt, when gold was considered mystical; the physical incarnation of the sun god Ra’s skin. More recently, it is the versatility that recommends gold above all other metals.

Gold, like oil and other commodities is currently traded in US dollars, with the unit of measurement being the Troy ounce, equal to 31.1 grams with a minimum fineness of .999 per thousand pure (24K).

A single cubic metre of gold weighs an amazing sixteen thousand kilos.

It is so malleable it can be formed by hand, and even ancient goldsmiths could hammer gold leaf five millionths of an inch thick, (1/8 of a micron).

A single troy ounce can create a sheet roughly 10 metres square, or a length of wire FIFTY MILES long. It is such an outstanding insulator that gold plate protects the electronics of the space craft during launch, and from cosmic radiation while in space.

With an estimated total above ground supply of only 155,000 tonnes of gold, and fresh mine supply of about 2000 tonnes every year, there is not a lot to go around. Until modern times, when gold and silver were underhandedly removed from our coinage, have bankers been so loath to own it.

Legend has it that one London bullion bank would completely remove and burn its wooden floor every 20 years. This would capture the microscopic dust created as bars were moved and handled. Even today, the gold refineries will shut down to clean the soot from their chimneys to reclaim the tiny particles deposited by smoke.

Maybe gold is a barbarous relic in this age of paper transactions where debts, obligations and promises are accepted with unquestionable faith. Perhaps, in the not to distant future we will not have money at all, just secure cards with our DNA encoded against fraud or terrorists.

Looking to the future, I do not anticipate gold to be an investment. I believe, the golden age is behind us, and in the not to distant future strategic reasons will arise for all gold to be handed in voluntarily or forcibly.

Make Hay While The Sun Shines.

If there is not already, there should be a web site dedicated to the language of bankers and the “financial engineers” they employ.

Whether you call it a credit crunch, asset crisis, or liquidity crunch the truth is far simpler:

“Society has been riding the greatest economic boom ever” This was according to US Treasury secretary Hank Paulson.

By spending more money than is earned tens of billions of dollars, euros and pounds have been used up on valueless consumer goods. This is what has driven stock markets. Now bankers seek lower interest rates, so we can borrow more to buy more.

If we don’t, corporate profits will fall and our pensions will be hurt.

Personally, what I find particularly frightening is the fact that potential problems have not started. They are lined up like dominos ready to tumble, but they have yet to do so.

In England during last year 27,100 people had there homes taken away, that is up from 22,400 during 2006 and only 8,300 in 2003. This is predicted to rise to as many as 50,000 home repossessions during 2008.

Why?

Interest rates are well below historic norms, in fact a fraction of where they were in the 1990’s. Inflation is officially 2-3%, and unemployment continues to fall.

What will happen if things get bad, even worse get really really bad?

My guess is that the latest DVD player with high definition live action replay will not be classed as an asset of value.

For twenty years I have been a vociferous advocate of real assets: gold, silver and if you can afford them rare coins. 10 years ago, gold was trading at only $300 per troy ounce, in January 2008 it had an all time nominal high of $948.

Just 10 years ago the financial wizards of Wall Street were hailing the death of gold as a currency, predicting it would never gain its lustre. In 2008 those same wizards say gold is too high.

I will leave our readers to decide as consumers what has value for them. A new flat screen TV, or an ounce of gold.

Numismatics and Precious Metals Could Not Be Better Positioned

If you are comfortable with drifting through life, accepting events as they arise you are probably not a planner.

However, if you are like me you will occasionally take stock of where you are, which direction you are heading and plan where you go next. For this reason, I also like to straddle the years and understand where we are in the numismatic market.

In January 2007 we were attending the Florida United Numismatists show in Orlando anticipating a record-breaking auction of a 1913 Liberty head nickel. This legendary asset, the finest know example, had a reserve of $5,000,000.

In the event, the coin failed to receive a single bid.

Far from dampening market sentiment 2007 will be recognised as an incredible year for numismatics.

Just ten or twenty years ago there would be perhaps 15-20 major auctions worldwide which accounted for around $100,000, 000 of fresh supply. During 2007 $100,000,000 was an average month. Heritage galleries conducted a single weekend sale close to $80,000,000 alone.

From Sydney to Hong Kong, Europe and the USA collectors with deep pockets ruled the floor.

How the financial crisis sweeping the world will affect trade in during 2008, nobody can tell. However, in reality the so called “Credit Crunch” is in fact an ASSET CRUNCH.

With Bank of England and ECB money supply running at record levels, not seen since the early 1980’s there is plenty of money sloshing around looking for a home.

Credit, whether a bank note or mortgage is only as good as the faith in the asset behind it. With more than $500,000,000,000 of debt valued at only 10 cents on the dollar, and only twenty per cent of this debt accounted for there is an additional $400,000,000,000 waiting to turn up in pension funds, banks and insurers.

Without question, the world is awash with cash, unfortunately it is mostly worthless paper.

• In modern economics, inflation is described as prices rising.


• In traditional economics, inflation is defined as an increase in the stock of money.

In July it was reported the ECB was running the printing press at a 25 year high. 11.7% fresh money supply created, up from 10.6% in June. Statistics for euro money supply are calculated back to 1981, only in 1982 was more printed.

To maintain price stability official ECB policy is a rate of 4.5% money supply.

To compound this miscalculation, on August 9th the ECB injected an unprecedented E95,000,000 into the credit markets dramatically followed in December with an additional E500, 000,000.

So looking forward to the next 12 month, we will continue to read and hear strange, exotic sounding headlines from the financial world. Politicians will continue to claim inflation is only 2%, and the price of gold should soar through $1,000 per troy ounce.

In fact is, as I sit here, I cannot think of better prospects for the numismatic market.

Is it Worthy? Who Really Knows the Value of a Rare Coin?-.....

In the article Rusty Goe answers how the value of a so-called “rare coin” is determined, the people and processes involved. He states clearly that it is a complicated question and cannot be explained in a nutshell.

For this reason, take a couple of minutes to click on the link below. We have used PDF format for you to print and read the full article. If you dont have the time now email me to get a mailed copy to your file address to read at your leisure.

In a very illuminating form, Goe lays out the story of a headline rarity, the 1913 “V Nickel” 5 Cent. A coin that has featured in movies, resides in the Smithsonian, and creates headlines every time an example passes between buyers.

Goe details how the coin came into being, how the initial value for an apparently circulating 5-cent coin was established, and its value in good times and bad.

In short the article explains better than I ever could how can you be sure, that what you own is the very best you can afford, and whats is the REAL WORTH.

I hope you enjoy, and if you have any questions on what your holdings are worth, or to organize sales or purchases, don’t hesitate to contact us.

Original Source Article.Who Really Knows the Value of a Rare Coin?-...... Rusty Goe.

If you are not already receiving mailed copies of our reports, offers and intelligence just tell us and we will forward hard copies in the mail for SIX MONTHS FREE of charge for non clients. Sign Up Here. TO READ OUR PRIVACY POLICY CLICK HERE

The US Federal Reserve Bails out the Stock Market- AGAIN-.....

With a 25 Basis cut in interest rates the Fed has made it clear that their priorities lie in bailing out speculators, not protecting savers.

This most recent cut is on top of the 50 basis point slash they made in September. To add insult to injury within 24 hours Fed chairman Ben Bernanke stating "the Fed believed in a tight monetary policy", he then injected a whopping $41 Billion into the market.

Just how dumb does he think investors are?

If you believe the statistics inflation in the Euro zone is running at 2.6%. This is 30% higher than the official 2% target. In the UK the government claims inflation of 2.3% against the target of 2%.

With the meeting of the Bank of England and the European Central Bank on Thursday this week will they follow the Fed and help the speculators at the expense of savers?

Our guess is yes.

With the Euro trading at 1.45 to the US$, (within 50 basis points of the all time high of the defunct Deutsche Mark) the ECB has a choice; destroy the economy or un-leash inflation.

Whichever way they move, the taxpayer losses.

In reality, inflation is much higher than the official figure. You know it is and THEY know it is. Compare your daily expenses to the prices you paid just six months ago.

What does this mean for you?

It means the central banks are more interested in keeping the gravy train running than halting inflation.

To date the central banks have bailed out the speculators to the tune of 100’s of billions (Euro, Dollars, Pounds- you choose which because IT DOES NOT MATTER- it is just inflationary paper) than protecting their citizens- you and I- against inflation that THEY cause by printing money.

In fact, the biggest threat to our futures and our families’ futures is not a falling stock market (economy) it is rising inflation.

The current crisis is being called SUB PRIME CREDIT CRUNCH. Simply put this describes loans made by the banks to those least able to repay: Humourlessly called NINJAS, an acronym for: No Income, No Job or Assets.

What has not been widely reported is the fact that the current “Crunch” is on loans made 2-3 years ago.

These loans were made by commision only brokers at very low “teaser” rates, which generally last 1 or 2 years before being adjusted to standard interest rates.

It is when they are adjusted that the defaults begin.

As a result we can safely say that current defaults are on loans made during 2005- since then banks have continued to lend at a staggering £100 billion ($200 billion E150 Billion) per quarter!

Every quarter, through 2005, through 2006 and up to the summer of 2007. Just a little arithmetic indicates we are at the tip of the iceberg.

The economic cycle today is characterized by rising inflation unstable interest rates, high energy and commodity prices, high trade deficits and stock markets that continue to set records.

In the mid to late 70’s many of these same events occurred which lead to a flight to quality assets that hold their value, while inflation raged for almost 20 years- from the 1970's through to the early 1990's.

With its latest rate cut the Fed has declared its intention to support speculators and hold off a recession.

However, a typical recession only lasts about 12-18 months.

INFLATION CAN LAST DECADES.

As we REPORTED IN AUGUST the last time inflation was let loose rare coins as measured by the PCGS 3000 index soared 1000%.

The current crisis has the potential to cause far more pain than anything previously thrust upon us.

According to some estimates, AAA mortgages are trading at a 20% discount- 80 cents on the dollar.

BBB mortgages (sub prime) are selling at an 80% discount, that is to say 20 cents on the dollar, which could still be too much. With Citi Group writing down more than 10 billion we have to wonder how much of this toxic sludge the pension funds hold.

And when they do mark to market (put a price to the sludge) what will be the effect on our retirement funds?

In the seven weeks since the northern rock implosion, this bank has borrowed almost £23 billion ($46 billion) from the UK taxpayer.

Remember this tiny bank had deposits of only £24 Billion (about 10% the size of Citibank’s $700 Billion in deposits).

To date the bail out works out as £300 per man woman and child in the UK, and all to keep afloat a bank that has a market capitalization of £700 million. (give or take a few million, after all- “it is only paper”).

This means not only has the bank blown every penny of its depositors money, there is no end in sight to what the tax payer must pay and could end up costing upwards of £30 Billion pound sterling or $62 Billion dollars, or E43 Billion euros.

Who really cares?

It is just paper, as long as the printing press doesn’t run out of ink the total is unlimited.

When (not IF) this happens within the Euro zone how will citizens of the major economies feel using their taxes to bail out the spend thrifts- who have binged on credit at the expense of the frugal?

The question is do you have faith in the bankers and politicians to put your interest before their annual bonus or re-election prospects?

We think not.

It is for this reason that I would like to say how proud I am of our clients. They have shown foresight, and courage to step away from the crowd and take action. This is sadly lacking in many. Some have listened to us and have yet to take action others have been brave enough to take a step into a market they know little about.

He that last laughs last, laughs longest.

So IF YOU HAVE GOLD, SILVER AND RARE COINS have a giggle, because if you dont own them the only other option is to cry.

Bankers Abandon All Pretense of Knowledge.....

Our eyes are glued to the Mediterranean area. A crisis arising from this region could test the ECB, and pit Northern Vs Southern economies. The problem for the euro (and the pound sterling) is that if a crunch does occur, which currency would investors rather have?

Not an easy question.

However, there is another choice, we believe the only real choice. Gold.

From all the pages and pages of news printed about the northern rock bank run, you may be forgiven for missing two very important admissions from central bankers.

The first came from the Bank of England’s chief economist Charles Bean writing in the banks quarterly bulletin confessing they have not kept up with the financial engineering, and need to look into private money supply:

“The bank will need better understand the credit markets” “said Bean, and John Mc Fall further admits: “ “the bank has not kept pace with technology and private money supply”

Jean- Claude Junker, chair of the banks Euro Group, also gave up pretending all was well when he confessed:

“We have begun to have great concern about the euro exchange rate”. “

At the same time, ECB chair Jean-Claude Trichet decried the French budget deficit of 42 Billion Euros. Virtually calling France a basket case.

Northern “Wreck” A Numismatic View of Banking...

Until January 2007, executives of Northern Rock were paid performance bonuses based upon a simple formula:

For every 1% rise in profits, they would receive 5% of salary as a bonus, up to a maximum of 100% of salary. For this reason, every opportunity was used to it full extreme to create profits. As is sometimes in the world of high fiancé this was not enough.

To further ensure “performance” in January 2007 executives voted them selves a bonus increase. from 5 to 10% of salary for every one 1% of profit- up to a maximum of 200% of salary. Great work if you can find it. But exactly what do bankers do that they deserve to earn so much more than the average person? And is their work important enough to warrant such extravagance?

It is widely accepted that banking as we think of it today, began during the fourteenth century in Medici’s Florence. In Britain, the first bank was Coutts and Co founded in 1690, followed by world’s first “central bank”, under charter from King William III in 1694.

The events leading to the founding of the Bank of England occurred some 50 years earlier under King Charles I.

In 1640, King Charles faced raising and paying an army to invade and pacify Scotland.

He swiftly prepared to fund his campaign by seizing the gold held in the Tower of London. As events unfolded, the proposed war against Scotland petered out and eventually the gold returned.

Two years later, in 1642 the Great Civil War did break out between King and Parliament. Nervous citizens, fearing another seizure- from either side- removed their gold and sought another secure depository.

A natural option was an arrangement with London’s gold smiths, who had their own, private methods of storage. The gold smiths issued receipts to depositors, which rapidly became a freely circulating currency.

Very soon, the gold smith’s noticed that very few, if any, people returned to take possession of there gold, so the next step was taken. This was to issue additional notes to borrowers, in return for an interest charge.

This practice of producing twice the amount of money than deposits held became enshrined as standard banking with the founding of the Bank of England 52 years later

In 1694, King William the Third was facing a war against the French. Before he could seize the gold, a cabal of six London gold smiths offered the king a loan.

In return, the goldsmiths received royal charter to establish the first “Joint Stock Company” called the Bank of England. The world’s first central bank: Privately owned, responsible only to the stockholders, known as the Court of Directors.

In addition to the Million-pound loan to the king, the company was allowed to issue the public the same amount in paper- with an interest charge.

during the 300 years since, this original 2 million pounds has grown to a figure beyond comprehension.

In August 2007 total private debt in the UK broke 100% of GDP reaching an incredible 1.35 Trillion pounds, surpassing GDP at only £1.33 Trillion. Adding public and corporate debt, this figure surpasses £2 Trillion of public and private.

Approximately half total US Debt of $9 trillion, but America has 5 times the population and an economy that is almost 7 times the size.

Total deposits made by customers of Northern Rock are about £25 Billion Pounds. Their loan book is in the region of £105 Billion. More than four times deposits.

The question now is what will be the new business model?

Main Stream Propaganda- Buy Cheap Gold...

On Friday 29th September spot gold- the price paid for immediate delivery, came within a whisker of breaking $750 per troy ounce (31.1 grams). At 3.30pm gold was bidding at $749. 80 cents.

Since the “Northern Wreck”, bank run mainstream media have been screaming that gold is near 27 year highs.

I also take pleasure in the fact that these same pundits told their followers; gold is a terrible buy when it was below $300. Many of them while trumpeting the tripling of price, from $250 to $750, are now saying it is crazy to buy an asset at 27 year high.

Far from the truth

According to Adam Hamilton in research published by zealllc.com the facts are a little more inconvenient in real terms. Adjusted for inflation, in 2007 you would need $2,300 dollars to have the same purchasing power of $850 in 1979.

This makes today’s gold price one third of its inflation adjusted all closing high.

To put into perspective how you have lost TWO THIRDS of your purchasing power just look at some prices:

In 1980:
• The average household income was $18,000. In 2007 it is $48,000.
• A new house in 1980 cost $80,000. Today the median price is $220,000,
• A new car in 1980 would average $8,000. Today it is well over $20,000.

This means WHEN gold reaches $2,300 it merely match the purchasing power of 1980. In addition, if events continue to spiral out of control we could see the price soar through this level.

1921 High Relief Peace Dollar- Short Lived Optimism...

The United States congress passed the Pittman Act in the spring of 1918. This called for the destruction of several hundred million silver dollars. The recovered bullion was mostly sold to Britain who then shipped the silver to India. By flooding the market there the British sought to curb a disastrous speculation in the white metal.

The Pittman Act further provided that the destroyed coins were to be replaced at the end of World War One. With urging from the American Numismatic Association, Congress legislated a new type of silver dollar for the replacement coins. A coin which commemorated the peace treaty just signed between Germany and the USA in 1921. The designer of this new dollar was Italian-American sculptor Antonio de Francisci, who used his wife Teresa as his model for the delightful, radiate bust of Liberty.

Following several delay’s in designing and authoring the peace dollar the American Numismatic Association pressure the mint to conduct a limited run of Morgan Silver dollars in 1921. The first coins of the ‘Peace’ type were dated 1921 and were in high almost cameo type relief. Impractical for coinage, the models were reworked for 1922 in very shallow relief, destroying the coin’s character. Just a few proofs from high-relief dies dated 1922 were coined for influential persons. These coins were of the matte, or intentionally dulled style favored by medalists of that time.

Now a famed and eagerly sought after rarity, it wasn’t too long ago that the high-relief, matte proofs of 1922 were largely unknown to the numismatic community. Their creation is shrouded in mystery, and numismatic scholar Walter Breen reported that only 6 to 8 are known.

The 1921 High Relief Peace Silver Dollar Starts from £200 in MS63

NGC Certifies Astronaut Buzz Aldrins Peace Dollar. Realizes $31,070 at auction...

Normally, the 1923-S Peace Dollar is a fairly common coin, trading around £500 in MS65 and £30 in MS63.

But this particular coin has providence literally out of this world. It was part of the material that Buzz Aldrin, the second man to walk on the surface of the moon after Neil Armstrong, took with him in his Personal Preference Kit (PPK). Dr. Aldrin had possessed the coin before consigning to our auction. For the purchaser the coin is further guaranteed after receiving a certification for NGC with the notation, 'Carried To The Moon Aboard Apollo 11 / July 20,1969 / Dr. Buzz Aldrin. Source: Heritage galleries.

Over $3 Million for Finest Known Ultra High Relief St Gaudens $20 Double Eagle...

One of America's greatest numismatic treasures has traded hands in a private-treaty sale. The finest-known Ultra-High Relief St Gaudens double eagle, graded Proof-69 was purchased by Certified Assets Management (CAMI) of Wilmington, Delaware.

"This magnificent coin bridges the world of art and numismatics like no other coin in American numismatics," Don Ketterling, CAMI Vice President and co-founder said. "Everyone who sees it, whether complete novice or jaded professional, can't help but say 'Wow!' and the fact that both grading services have endorsed the coveted '69' grade removes any doubt about its quality and standing in the world of certified coins," he added. "This coin has it all: It's big, it's gold, it's rare, it's the highest quality possible and it's unquestionably one of the most beautiful coins ever produced anywhere in the world."

24 Original proofs were struck in 1907, but only 13 are currently listed in the population reports of both major services. The finest of these is this single Proof 69 which has been graded equally by both NGC and PCGS and is still listed in both reports.

Striking Ultra-High Reliefs required seven blows from the dies, a situation that rendered them impractical for business-strike production. They were the closest to the original concept that Augustus Saint-Gaudens created, but two subsequent modifications of the design were needed to create the production coins that were eventually coined through 1933.

The Connection Between Coins and Inflation.

The Connection Between Coins and Inflation

Investors understand that whenever inflation is let out of its cage, hard assets can be used to tame it.

In extreme cases, holders of paper will fight to purchase literally any asset that they can lay their hands upon. I remember the story my grandmother told me when young. She was born in Hamburg, and grew up their. As a child, she was sent to the store with a wicker basket full of money. she was robbed, and the money was tipped on the floor and the basket stolen.

Another story she told us, was when she went to the market to find all food stuffs gone, and the shelves virtually empty. The only thing that she was able to purchase where cardboard collars; (Remember the days when shirts had detachable collars?) Concerned that her parents would be furious she delayed going home, but when she finally arrived, they were not angry, but happy. They were happy that she had managed to get something, anything, for the worthless paper.

Consider the example of the nearly 18 percent inflation between 1976 and 1980, when gold shot from $185 to $850 an ounce...which was a 360 percent increase.

During that time, collectibles such as investment rare coins went absolutely stratospheric, pushing the rare coin index (CU 3000) up an amazing 1000 percent. Back then, Investors were as preoccupied with tangibles and collectibles as they have been with stocks in the 90’s.

Like the late 70's, inflation is creeping up now, too. According to a recent USA article, published on the front page of the Money Section, it say's...“If you own bank cds or money market mutual funds, you could be losing money, after inflation, for the first time in seven years.”

Not that an inflationary setting is a necessary prerequisite for investment rare coins to prosper, but inflation-countering is one of the many powerful reasons why hard assets should be an essential part of any portfolio.

Think of it this way: however high gold rises, solely in response to rising inflation, investment rare coins will rise that much higher.

Stability, Security and Profit can be added to you investment portfolio through diversification with Investment Rare Coins.

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Numismatic Legends: 1907 $20 St Gaudens High Relief.

St Gaudens HIGH RELIEF.

Augustus St Gaudens became one of Americas most acclaimed sculptors and was selected by President elect Theodore Roosevelt to execute his inauguration medal. Later during a tour of the Smithsonian Institute Roosevelt commented upon the splendor and beauty of ancient Greek and Roman coins. His association with St Gaudens led the President to commission his friend to redesign all American coinage. Never could he have known that in 1933 it would be his cousin, Franklin Delano Roosevelt that would consign the legendary $20 Double Eagle to the Mints melting pot.

MINTAGE 11250. The field of the high relief is excessively concave. Some production strikes had a wire rim, others a flat rim, and all displayed the date in Roman numerals.

Liberty’s skirt shows two folds on the side of her right leg; the Capitol building in the background at left is very small; on the reverse side, 13 rays extend from the sun.

Weight 33.3346 grams; composition .900 gold.100 copper; diameter 34mm. Net weight 0.9765 Oz. Pure Gold

St Gaudens LOW RELIEF.

According to records, the earliest production strikes received five blows each from the Mint's hydraulic minting press. The high-relief edition of Saint-Gaudens' double eagle became an instant collectible, pieces bringing as much as $30 within weeks of their issue. However very soon complaints from banks noted that the coins did not stack as normal coins. This, along with the complicated striking process brought the end to Roosevelt’s dream and St Gaudens masterpiece. Mint technicians soon substituted new dies with modified, lower relief.

Readily available, but with a waiting list prices starting around £5,000 the high relief is a constant recommendation for any collectors or investors portfolio.

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2007 bears striking similarities to 1929.

The similarities of the lead-up to the great market crash to today’s economic environment are obvious. Don’t say you weren’t warned.

The economic and financial landscape of 2007 bears striking similarities to 1929. Back then, there were large, unregulated pool operators and other insiders constantly muscling the tape in whatever direction they chose. The public, too, was involved, thinking the country was experiencing a new era. Meanwhile, business began deteriorating in the spring of 1929, though the partying in stocks lasted until the fall.

‘Only Yesterday’

To give you a flavor of those times, I’d like to quote from Frederick Lewis Allen’s “Only Yesterday,” which is one of my favorite books about 1929: “Mergers of industrial corporations and of banks were taking place with greater frequency than ever before, prompted not merely by the desire to reduce overhead expenses and avoid the rigors of cut-throat competition, but often by sheer corporate megalomania. (My emphasis.) And every rumor of a merger or a split-up or an issue of rights was the automatic signal for a leap in the prices of the stocks affected — until it became altogether too tempting to the managers of many a concern to arrange a split-up or a merger or an issue rights not without a canny eye to their own speculative fortunes.”

Obviously, I don’t need to point out how similar that is to the practices we are seeing today.

Giant footprints of the funds

Today, too, there are pool operators, in the form of leveraged-buyout (LBO) and hedge funds, both of which borrow money to invest. And, just like their predecessors, who ignored macroeconomic and corporate deterioration, they are partying as never before. In reading the following passage from Allen’s 1931 book, you have to remind yourself that it’s a portrait not of 2007 but 1929:

“One could indulge in all manner of dubious financial practices with an unruffled conscience so long as prices rose. The Big Bull Market covered a multitude of sins. It was a golden day for the promoter, and his name was legion.”

I think that for this current cycle, “promoter” should be changed to “hedge fund.”

Macro-myopic Wall Street

Turning to the economy, Allen wrote: “Though the shelves of manufacturing companies and jobbers and retailers were not overloaded, the shelves of the ultimate consumer and the shelves of the distributors of securities were groaning. Trouble was brewing — not the same sort of trouble which had visited the country in 1921, but trouble nonetheless. Still, however, the cloud in the summer sky looked no bigger than a man’s hand.”

That’s where we are now. The economy continues to deteriorate under the surface. Proof that its engine of strength, the consumer, is faltering? Problems cited by many large retailers, whether that be Wal-Mart Stores (WMT, news, msgs), Sears Holdings (SHLD, news, msgs), Target (TGT, news, msgs) or various purveyors of specialty goods. And, when The Home Depot (HD, news, msgs) lowered expectations last week, it chose the politically incorrect words — “housing slump” — to pinpoint the source of its troubles.

Meantime, the stock market is powered by gargantuan speculative forces. With every day and week that passes, speculation becomes that much more intense. (I was amazed to find out that trading volume on a recent Thursday in China eclipsed all the rest of Asia combined. Not that trading volume is always a perfect measure of speculative activity, but in this case, I think it probably is.)

In this cycle, I don’t believe we’ll get to the point where the public is back to claiming it’s a new era. That was done in the 1998-2000 go-round, and only the real-estate mania saved it from an extraordinary amount of post-stock-bubble pain. The public won’t be back — because its money is tied up in real estate, which will continue to sink.

No magic LBO bullet

Make no mistake about it: The tightening of credit has (and will) radically alter the housing market — witness the softening of home prices nearly everywhere in the country as inventory builds and sales slow.

The deteriorating economy is a process that has a long way to go, even though Wall Street tries to throw a party every day that bad news does not absolutely pummel it into submission. No amount of hedge-fund and LBO speculation is going to make the average consumer whole again. Thus, I continue to see no way forward other than a recession and, at some point, a dislocation in the stock market.

Until the transient success of speculation comes to an end, I encourage folks to think about that ultimate unraveling — making sure they can either explain to themselves why it is not very likely or, if they expect events to unfold as I do, have a plan for preparing and/or reacting.

History brings the future home

Finally, although it’s impossible to predict the timing, I am certain of one thing: When this unsustainable environment finally ends in tears, people will ask, “How could we have known?” — when all that would have been required was a little understanding of financial history.

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