The Gold Report

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The Gold Report Stuart Goldsmith www.stuartgoldsmith.com

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The Gold Report

By

Stuart Goldsmith

Dateline: October 2011


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NOTE

Please do not worry about this report being old. It is a download so I keep it

right bang up to date. The advice you are reading is almost certainly less than a

week old (if you downloaded it recently, of course!).


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Hello.

Several years ago I wrote a very prophetic

edition of theStuart Goldsmith Newsletter

in which I urged my readers to buy gold.

I usually try to practice what I preach and

so I took a spoonful of my own advice at that

time and piled into gold.

As a result, over the last few years I have made 369,567.00 pure

profit by doing absolutely no work at all!

I did this by making a simple investment decision and sticking to my guns.

I made the investment... I sat back and watched...

Gold did diddly-squat for two years and so I effectively lostmoney (the interest I

could have had if I had invested the money elsewhere.)

Id like to say I snapped my fingers in the face of fate and calmly waited, sure in

the knowledge that I was right. In fact, I got a little jittery. No investment

decision is a sure-fire thing.All anyone can do is to carry out some duediligence, come up with a strategy and then play it for real.

So I checked my facts and checked the fundamentals. They were all screaming

out buy gold so I sucked up my pantyhose and bought more. Quite a lot more, as

it happened!

Then I waited a bit longer...

The graph on the next page tells you the story. Gold started to rise and hascontinued to rise ever since, obviously with a few corrections from time to time.

Some of the corrections can even be quite dramatic!

The result is the very nice profit I mentioned above. Naturally I wish I had

bought even more of the glittering stuff. But there you go.

Now I hope you realise Im not writing this urgent report to boast to you about

how well Ive done! Good for me, but what has my success got to do with you?


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Simple. I believe we are just at the START of a huge ramp-up in gold prices

which could see gold at anything between $3,000 and $5,000 an ounce or even

higher.

At the very leastI expect gold to double over the next twoyears.

I hope you appreciate that if I told you about an investment which wassuretodouble in two years, you would sell your house, car, liquidate everything you own

and pile into that investment, right? I mean you'd be crazy not to.

The only thing that would stop you going all in would be your fear that the

advice was wrong and that you could lose a significant portion of your investment.

Thats perfectly understandable. After all, even I did not bet the farm on gold.

Far from it. In fact I put about 2% of my total wealth into gold at that point. How

timid is that???

You are not alone in being fearful. But in this report I hope to convince you that

gold is a very safe bet (you will not, for example, ever lose ALL of your money,

unlike many other investments) and it also has fantastic upside potential.

The take home advice in this report is to BUY GOLD as much

of the shining stuff as you can get your grubby hands on. As

much as you dare to invest.


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And... you need to do it ASAP because things are getting increasingly ugly out

there.

You could wake up any day to another massive bank collapse

and currency inflation which would wipe out almost everythingyou own.

So having told you to buy gold, the rest of this report is aimed at convincing you.

Oh, and I hope I hardly need to say there is nothing in this for me. No amount of

gold you (or anyone else who reads this) buy will affect the price by a hundredth

of a cent, so Im not in the share-ramping business!

What The Hell do I Know?

But you probably shouldnt listen to me. I am not an IFA (i.e. I am not a brokeperson in a cheap suit advising you on your investments). I have no investment-

related qualifications (thank God). I am not an economist. Im telling you this

because I believe it's something you should urgently do. Take my advice with a

pinch of salt... or seriously. Its up to you. Get a second opinion from some broke

people if it pleases you.

My only qualification is having made many millions following

my instincts and playing with serious money.

On that latter point, here is something really, really important. You cant make

serious money playing with pennies.If you buy 500 in gold after reading this

report, and it doubles, do you care? I doubt it very much. Youre not in the game

if you do that. In fact, I wouldnt bother with such a low stake because the

winnings are insignificant. And worse, it persuades you that you are doing

something about getting rich or at least protecting your assets, when in fact you

are not. You are playing at it or dabbling.

Get Serious!

To make real money you need some balls (for the men) or true feminine grit

(for the ladies).Everyone who has made a decent wedge of the folding stuff will

tell you the same there was a time when their ass was on the line and they were

sweating. You dont want to be betting the farm of course, but you do need to be

betting with real money in any of your investments. Property, shares, gold, silver

whatever it is theres no point in having a few quid in the pot.

I put way over a hundred and fifty grand on the table in my first gold play. Im

not so rich that it wouldnt have hurt me if I had lost that it would.


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The take home here is this: if it doesnt hurt you to lose the

money, it wont excite you to win.

Compare with putting 10p on a horse which comes in at 14-1. Hoorah! Whatever

will you spend your 1.40 on?! You dont care if the horse wins, or loses.

Now consider putting 5,000 on that same horse. Ouch! It hurts if you lose that

amount, but if you win, that 70,000 in winnings is very tasty, thanks very much.

So dont fiddle around with gold its not worth the hassle. You need a serious

(to you) chunk of change in the game

Okay lets get started on convincing you...

What is Money?

This stuff you loosely call 'money'. Just what is it,

exactly? Where did it come from? Is it serving our

current purposes, or could we lose the lot

overnight?

Money is really a way of exchanging units of

labour.

If I live with my family in an isolated region far from other humans, then we will

have to make our own shoes, plough our own fields, fix the roof, grind the corn,

tote that barge and lift that bale - all on our ownsome. No flicking through Yellow

Pages and hiring 'Barge -U- Tote Ltd' or 'Lift-a-Bale & Co' to do the job for us.

We wouldn't need money. This is the way it was for thousands of years.

But it is inefficient for me to do all of these jobs myself. For a start, I'll be

complete rubbish at some of them, and it'll take me far longer to make (say) a pairof shoes than my fairy-fingered friend in the next village. He can knock out a pair

in half an hour - it takes me all day to get the bleedin' cow gum to be the right

consistency to stick the soles on. God, I hatethat job!

People soon wised-up to the fact that living in splendid isolation sucked. It

became obvious that if a few of the guys got together, then they could watch your

sheep whilst you caught a bit of shut-eye, and heck, you could watch theirsheep

whilst theygrabbed some zees.


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Everyone was happy.

Then, after endless tedious centuries of

mutual baa-lamb watching... (cue theme tune

from 2001...) we had a brain-wave...

I could mendyourwalls (I'm brill' with a

hammer, me. I'm a real man) whilstyoucould

ponce around doing all that poofy shoe-

making and sewing stuff (because you are,

let's face it, a great big girl's blouse - no offence). That way, we're both doing what

welikedoing, and are also being far more efficient. This means that between us,

we work fewer hours than we would if we lived apart. Great! The idea spread

quickly, and soon people specialised in their chosen professions of butcher, baker

and candlestick maker.

Butstillwe didn't really need money (although it probably existed even back

then in some form). People lived in tight, small communities which were really

extended families. And just as you would not charge your son for fixing his bike,

so they did not compare hours. They didn't say: Hey! I spent fourteen hours on

time and a half fixing your barn and you only spent a lousy eleven ploughing my

field. Everyone just mucked-in.

I'm talking thousands of years ago, of course.

Time went by. Sheep were born. Sheep died. Lambs gambolled, lambs kicked

the habit. Gradually societies got larger. Too large. Some people discovered The

Pharaoh Principlethe knack of exploiting people by pretending that you have a

direct line to God or that you are God. They were called Pharaohs. Some people

discovered the 'Lazy Bastard' principle, and that ancient term is still used today.

People started to grumble. They started keeping time-sheets and comparing the

number of luncheon vouchers each had. So... spontaneously, money was invented.

Money was a tokenrepresenting a number of hours of labour, and from that day

(about five thousand years ago) right throughout recorded history, until about fifty

years ago, money had to fulfil five main functions:


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The Five Functions of Money

1. It had to be a good store of value. A five-hour token

shouldn't gradually become worth (say) three hours. After all,

you put the five hours in, you deserve to get the five hours paid

back to you. Furthermore, your five hour token shouldn't rot

away, or corrode, or break. For this reason (and a few others)

cabbages make lousy money.

2. It had to be freely exchangeable. If I give you my five

hour token, you must be prepared to accept it, and do five hours work for me. I

don't mean you have to, but you must at least recognise it as a valid token.

3. It must be freely transportable. No point in having fifty foot oak logs asyour basic currency, sub-divided into one hundred six-inch-thick wagon wheels,

which you couldn't spend anyway because (as Douglas Adams would say) the

shops in those days didn't take fiddling small change.

4. I think it should offer privacy. Nobody has the right to examine your

affairs, to come barging in and demand to see how much wealth you have, to

confiscate it, steal it or render it worthless.

5. Finally, it must be hard to forge. In practice, this means it must be rare orhard to make/copy. Those cute ancestors of ours soon realised that if stones were

used for currency, you didn't actually have to work the five hours. You could

squander your time spearing a few bison, swimming in the lake and taking in the

sunset before tooling-off home and scooping a pocket full of money from the

gravel drive right outside your hut... The cads! As if anyone would.

These were, and still should bethe essential characteristics of money. The rest is

history. They tried a few things, cowrie shells (too much wave noise), beads (too

round - kept rolling under floorboards, getting stuck up small children's noses etc.)

copper coins with Nero's head on (anyone with a hammer and a bit of nonce could

knock out a dozen before tea time).

Until... finally they hit on... gold.

Let's see if this 'gold' stuff fits the bill...


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Does Gold Tick the Boxes?

So, is gold a good store of value. Yes. It doesn't rot, wear out, make silly sea

noises or roll around in an irritating fashion. It tends to hold its value, or increase

in value, although it can also go down on occasions.

Is it freely exchangeable? Yes. Try getting a waiter in Botswana to take your

lousy English ten pound note and he'll spit in your face. But gold can be

exchanged in almost any country on the earth. It is still a universal currency.

Is it transportable? Yes. A Krugerrand is about the size of a 50p piece (but a lot

heavier) and is worth about 1100at the time of writing. It is highly transportable.

A slight downside is that there are no small denomination coins. 250 or so (in

value) is about the smallest common coin (say a sovereign).

Is it safe from forgery?Yes.

Gold is...well,...gold, really.

About all you can do is clip bits

off the edges and pretend the

coin is still full weight. You

then save up your clippings and

make yourself a free gold coin

six months down the line.

Waddya mean "What sort of lousy cheapskate would do this?"- why do you

think they invented milling around the edges of coins...?

Well, gold seems to tick all the boxes for me, I dont know about you.

For contrast, let's have a look at the bits of worthless paper and cheap copper

junk we laughingly call money nowadays...

Fiat Currency

The pounds in your pocket are called fiat money, which is definedas:

any money declared by a government to be legal tender

state-issued money that is neither legally convertible to any other thing, nor

fixed in value in terms of any objective standard

money without intrinsic value


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precious time - over one thousand hours will be lost over ten years. If you wait

another ten years, a further five hundred hours will disappear. Finally, they will

become worthless.

The Peril of High InflationI believe that the UK is about to enter a period of very high inflation and that

means the erosion of your savings (actually it is government theft of your savings)

is about to accelerate. This is one of the prime reasons to get into gold right now.

An interesting question which I'm sure is on your lips is: Where does the 'stolen

time' go to then? I won't go into the detail of the answer now, but stated simply,

your time is stolen by the state to squander as they see fit. This is in additionto the

thefts associated with punitive taxation. The 'leak' is caused by inflation. Inflation

is caused by governments 'printing' money which they don't have. We have just

printed hundreds of billions of funny money this will (indeed must) eventually

filter through into higher inflation.

If hyper inflation occurs, you will lose the lot (your entire life's efforts, stolen by

the government). If there is a banking collapse again, you could lose every penny.

The banks will not even be open and you will be lucky to eventually get 10p on

the 1. If you have money sitting in a bank, it can be frozen, confiscated and

seized on the whim of any one of half a dozen 'authorised' government agencies -and the list is growing.

As I write, the shares of Lloyds Bank are worth 33p.Down from 6 four years

ago. Yes folks, the great Lloyds Bank is apparently worth one twentiethof what it

was worth four years ago. Bet you didnt see that coming? (Neither did I, by the

way).

By putting money in a bank you are, in fact, betting on the

honesty and integrity of bankers and governments.Is modern money freely exchangeable? Well, within your own country it is, but

not outside. If you want to take your chips off the table and leave, you have a

problem. Not a bigproblem, but heck, you shouldn't have any problem at all if

money was doing its stuff, right?

Is it freely transportable. Again, sort of. It depends on the mood of the

government. If they want exchange controls, they will impose them, which means

that your money is frozen in one small area of the globe. This is not free

transportation. Today you have to declare if you are taking more than 10,000


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cash out of the country. Why? Some specious anti money-laundering tosh. Also,

even those worthless bits of paper (banknotes) are becoming hard to use. Try

buying a car with 20,000.00 in notes and you will find detectives waiting to

interview you when you collect it. Yes, you've guessed it, car sales people are now

expected to report any 'suspicious' transactions on penalty of a five year prisonsentence...

A friend recently tried to take 10,000 in cash from a major High Street bank. He

found this difficult.The bank had to scratch around for money from all the tills

and in the end he had to come back the following day for the balance.

So is it free from forgery?

Hardly. In 2010, Bank of England

figures revealed 566,000

counterfeit notes in the UK. Of

these, 95% were twenty pound

notes. That figure has come down

a bit since as new printing

processes are making it harder to

copy a note. The most common

fraud is of one pound coins. There are some 30-40 million in circulation, so about

2.8% of the total are fakes.

If you think bits of paper are worthless and easily forged, what value do you give

to a few bytes on a 100 terabyte hard drive sitting at Lloyds/Barclays or wherever?

That, nowadays, is all that represents your 'bank balance'.

Does it offer privacy? I don't think I even need to answer this. Governments

seem to believe they have the right to examine your income, savings and bank

accounts at will. All staff at banks must, by law, tip-off the government to any

suspicious activity on your account. It is an offence if they tell you that they arespilling the beans.

So modern money barely scrapes by on one and a half out of five. Gold scores

four and a half out of five. The 'half' is missing because gold can go down in

valueas well as rise in value. This makes it less than perfect as astoreof value.

Still, it's not bad.

Now, seriously, with the current highly perilous state of the Euro and the British

economy, with banks teetering on the very edge of another major collapse, smartpeople are heavily investing in 'real' money. That is, physical gold, silver and


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maybe even property, with only a smallish stake in the stock-market (at present,

because of the potential for huge losses) and little in the banks and building

societies.

On this latter point, if you have conventional savings you are effectively payingthe bank to look after (!) your money. The interest rates are derisory and

inflation is rising. 20,000 in a savings account is currentlyguaranteedto lose

you money in real terms.

Maybe that would be okay if the banks offered safety. But incredibly, almost

unbelievably, they will not even guarantee to return your initial investment with

them! What does that say about the banks belief in themselves? They cannot even

guarantee that they will not steal the bulk of your money.

Staggering, really.

Gold the Ultimate Safe Haven

The government can print endless money, but they cannot increase the supply ofgold. Anything the government cannot replicate by decree, I want to own.

Michael Pento, Chief Economist, Delta Global Advisors Inc.

Right. Enough of the banter. Lets get serious. I presume you are interested in

keeping and increasing your wealth? In short, getting more money?

The first thing to realise is that its not looking good for fiat currency that is the

pounds in your pocket and in your accounts. With the coming inflation spike and

continued questionable banking practices, most people in the know are

predicting double digit inflation for the UK in the near future.

Your first lesson is that gold does not have to make money in real terms(although it is great if it does) its main function is to protect your money.

Look at it this way, gold might double in the next two years but that might be

accompanied by a halving in the value of money (so gold is still worth the same

as it was). If you had not been in gold however, you would have lost half of

your money.

The U.S. dollar has been losing value since they abandoned the gold standard.

But the situation now is probably worse than its ever been in my lifetime. The


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pundits I respect are predicting it might collapse. And this could happen faster and

sooner than you might guess.

The graph below tells its own sorry story.

And in case you think it is just those careless crazy Americans, thing again!


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If the inflation spike happens, as I expect it to, it will impoverish most of the

middle class and lead to a drastic decline in most peoples standard of living

unless you are prepared.

Given the speed at which we are printing money, inflation is all but inevitable. If

you dont prepare for it immediately, you may wake up one day and realize the

value of your savings account has been reduced to almost nothingwhile your

income is insufficient to meet your needs. Any money you have saved will be

almost worthless. There will still be the same number of pounds, of course, its

just that they wont have much purchasing power.

Its happened in the past. The total value of German mortgages in 1913 was

about 7 billion. By 1923, due to 800 billion percentinflation, these were only

worth 1 penny! Bank notes were so worthless that people used them to light their

fires with.

Its happening right now in countries like

Zimbabwe who have just introduced two

new bank notes in $20 billion and $50

billion denominations! The new $50 billion

note will buy you two loaves of bread!

You can protect yourself now and profit in the future by investing shrewdly in

the way I am disclosing to you. I firmly believe that part of your investmentsshould include precious metals and investments related to precious metals.


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arepredominantly in the 0.5 to 2.0 million ounce region. It takes years for a large

mine to begin producing.

Production is falling and the mining industry is not coming close to replacing its

reserves.

And even if we did begin to discover one huge deposit after another (unlikely), it

takes years for a large mine to begin producing. Not to mention environmental

pressure that is putting the brakes on mine development. (Goldmines are nasty,

highly polluting places and nobody wants them anywhere near them.)

London-based metals consultancy GFMS confirms that despite surging gold

prices, the production bottleneck is here to stay:

The financial crisis will undoubtedly have negative implications in coming years

as the funding gap in project and exploration expenditure begins to filter through.

The bottom line is that gold production will remain heavily constrained for years

to come. Combine that with steadily rising demand and you have an equation for

soaring gold prices!

Central Banks Are Now Gold Buyers

We could soon see demand seriously outstripping supply. This is incredibly

bullish for gold. But until now, this supply gap has been filled by central banks

selling and leasing gold into the market.

The banking elite have used official gold sales and leasing operations to

artificially keep rising gold prices in check. But the banks are running out of

gold to dump on the market.

In fact, many central banks have stated that they intend to increasegold reservesand are adding to their supplies aggressively.

Russia added 135 tonnes of gold to its reserves in the first eleven months of last

year (2010), including 9 tonnes in December, to become the world's eighth largest

bullion holder, the World Gold Council said recently.

According to Harvard Professor Jeffrey Frankel, the worlds central banks are

gradually reversing their policy of selling their gold stocks and are now buying.


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The Peoples Bank of China, the Reserve Bank of India and other central banks in

Asia have all now bought gold.

Jeffrey Christian, managing director of CPM Group, told the Denver Gold Forum

recently What we are seeing is that central banks are making the transition fromlarge net sellers to large net buyers. You will see a net buying of 6 (million) to 10

million ounces per year by central banks, and that is an extremely conservative

projection.

Christian believes that European central banks will now stop further gold sales.

Meanwhile central banks in emerging countries are now diversifying into gold due

to volatility in the dollar.

The Director of Chinas Central Bank recently stated: An increase in our

countrys gold reserves is necessary.

Central banks, holding about 18% of all gold ever mined, are expanding theirholdings for the first time in a generation as investors in exchange-traded funds

amass bullion as an alternative to currencies.

Nicholas Larkin, Bloomberg.comNick Moore, an analyst at Royal Bank of Scotland, told Bloomberg. There's

clearly been a renaissance of gold in central bankers' minds, it's not just been

central banks taking on gold, but a general shift for physical gold in the

investment sector.

But it is not just countries that are stepping up their buying...

Worldwide Investment Demand is Surging

There is a massive worldwide migration to gold and the trend has only begun.

It is no longer just the gold bugs who are chasing the yellow metal. Every day,

more and more pension funds and advisors to wealthy investors are recommending

a double-digit percentage allocation to gold and gold stocks.

Axel Merk, Chairman of Merk Mutual Funds, recently wrote, Gold is moving

toward the mainstream. It is also becoming part of the asset allocation of larger

fund managers having a portion in gold.

What used to be a trading vehicle has now become a coreholding for many hedge funds and institutional investors.


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$10,000 an Ounce? It Could Happen!

If just 1% of the money that is in stocks and bonds migrated to gold, the metal

could easily soar past $10,000 an ounce. And if you invest in gold at the current

price you could double, triple or quadruple your money!

China is Diversifying Out of Dollars

If China is worried about their holdings of US dollars, shouldnt you be worried

about your holding of near-worthless fiat currency?

Hardly a day goes by that China does not announce an investment in hard assets

or express concern about their dollar holdings. The Chinese Premier, Wen Jinbao,

didnt beat around the bush in a recent speech when he said: We have lent a huge

amount of money to the US. Of course we are concerned about the safety of ourassets. To be honest, I am definitely a little worried.

Mr. Johnson, a former Chief Economist for the International Monetary Fund,

estimated that China holds about $1 trillionin US currency.

And in the days leading up to the Group of 20 Summit, Chinese officials were

talking openly about a new reserve currency that would remove the inherent

deficiencies caused by using credit-based national currencies.

Hmmm... which national currency do you think they were talking about?

With nearly a trillion dollars of funny money in hand, China is treading

carefully. The last thing they want to do is spook the market and see those dollar

holdings halve in real value. But make no mistake. They know the dollar is

doomed.And they are taking steps to seek protection.

The last thing the Federal Reserve would do is encourage you to own gold. But

that is exactly what the Chinese central bank is doing urging the Chinese citizens

to start buying and saving gold.

If the Chinese people and government were to achieve the same per capita gold

backing as the US, it would require 1.2 billionounces... 10 years of world global

mining production!

Chinese demand for gold has been growing at an average of 13% per annum over thepast five years and it now has to import gold to meet national demand, despite being

the largest producer of gold in the world.Source: Goldcore


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A Monetary Meltdown

When some of the richest and most knowledgeable moneymen think the dollar is

doomed, its best we sit up and listen:

Warren Buffett advises us to build an ark to protect against the falloutfrom the plunging US dollar.

Paul Volcker, the former head of the Federal Reserve Board, gives a75% chance of an economic crisis in the next five years, and...

Professor Kenneth Rogoff, a former head researcher at the InternationalMonetary Fund, warns of a potential 40%+ drop in the greenbacks value.

Im talking dollars here because, lets face it, whatever happens to the USA is

likely to happen to Europe since we are following a near identical trajectory. Also

gold is priced in dollars. If dollars lose their real purchasing value, gold soars.

So how can we protect our assets and stay diversified in this type of

environment?

One major part of your strategy is to invest in gold, as I have said.

This is what many consider the ultimate crisis commodity, and for very good

reason. Gold is the only commodity that has consistently outperformed otherinvestments during periods of world tension.

Since the end of World War II, the five years when US inflation was at its

highest (1946, 1974, 1975, 1979, and 1980) saw an average real return on stocks

as measured by the Dow of minus12.33%.

Meanwhile, the average real return on gold was 130.4%!

But gold doesnt have to be just a hedge against inflation. We have moved into anew era, one that looks to be very favourable for gold, and this is going to play a

major role in generating healthy returns for you.

All Aboard Gold is Leaving the Station

According to Robert McEwen, CEO, US Gold Corporation:

Gold prices may reach $2,000 an ounce in 2011 on demand for an alternative tocurrencies. You have much, more money than there is gold, and as people see theircurrencies falling relative to gold, theyre going to be saying Maybe I should have

some of this.


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Holding Physical Gold

So how do you get into gold? The first and most obvious option is buying

physical gold. If you dont own gold, you might want to start buying some now.

At a minimum, you should have enough physical gold to keep you afloat for two

or three years. If you cant afford that much, you should begin to buy what you

can. Dont stop until at least 10% of your savings are in precious metals.

What You Should Be Buying

I recommend sticking with the five most commonly traded gold bullion coins in

the world:

1. South African Krugerrand

Kruggerands were the most commonly traded coins in the lastgold bull market and are still commonly traded today.

2. Canadian Maple Leaf

The coin was first minted in 1979 and was an instant success.

Like the Krugerrand, it contains a full troy ounce of gold. It

actually has a face value of $50 (Canadian Dollars), which is far

less, of course, than the value of the gold it contains.

3. Australian Kangaroo

The Roo, as its called, replaced Australias Nugget coin. It,

too, has 1 troy ounce of gold.

4. Chinese Panda

The Panda was first introduced in 1982, and remains a popular

choice for gold buyers but be careful, as it also has

numismatic (collector) value. The premium charged on Pandas

by the Chinese mint is higher than that charged for

Krugerrands, Eagles, or most other gold bullion coins.

Although this may make Pandas slightly less attractive to

investors interested purely in their gold content, it does not appear to have deterred

collectors.

5. American Eagle

This is the gold bullion coin favoured by USA buyers. It is

the equivalent to the Kruggerand.

When buying gold and silver coins, be sure to buy top quality


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coins that arent damaged in any way. Nicked or scratched coins wont get you the

full value when you go to sell them. And make sure that you are not paying a big

premium for them 5% or 6% is the absolute limit, in my opinion.

I must mention eBay. Amazingly you can buy gold coins on eBay pretty muchany day of the week and the price is almost always exactly the spot gold price for

the day as it is a very efficient market. I have both bought and sold gold coins on

eBay without any problem, but obviously apply the usual precautions, particularly

as this is quite a high ticker purchase.

What, Exactly isGold Bullion?

Lets look at gold bullion in a little more detail. First, Ill explain what gold

bullion is and what it is not.

Bullion is a standard of money (usually in the form of coins or bars) that uses a

specific quantity of pure gold to determine its value. Bullion can usually be

converted easily into the currency of other countries.

In other words, gold bullion is a precious metal coin or bar whose market value

is determined by its inherent precious metal content. The cost of a one-ounce gold

bullion coin is usually closely linked to the spot (current) price of gold.

The spot price of gold can be found on hundreds of financial websites, including

Kitco.com, TheBullionDesk.com, and Bloomberg.com. The site I use the most is

www.goldprice.org

The Gold Cycle

Gold markets follow a fairly predictable cycle. Thats right predictable. An

investor can make money in any gold cycle. However, its important to remember

that there are several gold markets and the markets for rare gold coins,

numismatic coins, and bullion are similar but not identical. These gold productsusually follow the general trend of spot gold, but there can be fluctuations within

gold markets too. For example, the price of bullion can spike upward, while the

price of gold coins can lag behind.

Gold Bullion in a Class of its Own

Bullion coins have a universal exchange value in practically every country of the

world.


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impossible to sell in the open market for what you paid. Often, they are utterly

worthless.

The American Gold Eagle Bullion Coin

Gold bullion is minted in countries around the world. But the standard of goldbullion coins is still the American Eagle, the official gold bullion coin of the

United States. If you are a gold newbie, I strongly urge you to start out with a

small collection of American Eagles. Kruggerands are also a good starting coin.

Authorized under the Gold Bullion Coin Act of 1985, the Eagle was first

released by the United States Mint in 1986. It is offered in various sizes: 1/10 oz,

1/4 oz, 1/2 oz, and 1 oz denominations. The one-ounce gold American Eagle has a

diameter of 32.7mm, a thickness of 2.87mm, a total weight of 1.0909 troy ounces.

An odd weight, you may think, but thats because the coin is notpure gold that

would make it too soft to use. Instead, it is 22 karat gold mixed with an alloy of

silver and copper to help increase the stability and scratch-resistance of the coins.

How Much Gold Does a Coin Contain?

Most gold bullion coins (and certainly the American Gold Eagle) areguaranteed

to contain the stated amount of actual pure 24 karatgoldweight in troy ounces.

(One troy ounce is equal to 31.10 grams, slightly more than a conventional ounce.)

The bottom line is, if you melted a one ounce Eagle or a Kruggerand down andchucked out the alloys, youd be left with exactly one troy ounce of pure, 24 karat

gold.

Remember, the market value of the coins is generally about equal to the spot

market value of their gold content, nottheir face value. So their actual selling

prices vary daily based on the current spot price of gold. The United States Mint

also produces a proof version of the Eagle for coin collectors.

A proof coin is a coin struck using a special, high-quality minting process.Modern proof coins often have a mirror-like appearance. The term proof always

refers to a type of coin, or the way it was struck, and not to a coins grade or the

amount of precious metal it contains.

There are many ways to make money in the gold market. An investor can trade

gold futures contracts, or invest in gold-backed CDs or even rare coins and

numismatic markets. But investing in the gold market with bullion is a viable

option and one of the safest and easiest to get into. Believe me, theres nothing


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like the feeling of having a few tens of thousands of pounds in real, tangible gold

hoarded away!

What About Mining Stocks?

Another way to hedge against inflation is to buy mining stocks. But you must becareful when doing this, so Ill only mention it briefly.

The mining business is problematic. It requires lots of expensive employees and

capital equipment. Key employees jump from one company to another without no-

tice especially when the market is good.

In addition, the mining industry now faces extensive environmental and other

regulations. That generally means two things: inefficiency and extra costs.

Like so many investment-related industries, the mining stock business is

crowded with cheats. As Mark Twain said, A goldmine is a hole in the ground

with a liar standing next to it.

And if all that were not enough, know this: Mining is a boom and bust industry,

thanks to price swings and the unwillingness of banks to lend to small miners

when commodity prices are low. These days, due to the scarcity of easily mined

deposits, it costs almost as much to get the stuff out of the ground as its worth onthe open market so profits are slim.

All these problems discourage smart investors from putting their money into

mining companies. And that is why, during the 20-year bear market in metals

(1980-1999) it was possible to buy mining companies very cheaply, based on their

fundamental values.

But all that changes when precious metals prices climb. Gold mining stocks

move up first and fastest. But silver quickly follows gold. Platinum, copper, andpalladium can shoot up too.

Recently, the cost of mining stocks has been lagging the price of gold, and that

means they are extremely attractive right now. This anomaly will not last with

coming higher precious metal prices. Many people are saying now is a good time

to snap up some mining stocks.

Precious Metals Pooled Accounts

You dont have to bury gold in the backyard to profit from precious metals.


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last day or so. Thats to be expected. Nothing goes straight up. Buy on these dips.

Gold could even go as low as $1500, so dont panic (in fact thats a great buying

opportunity).

Finally. I am not telling you to do something I am not doing myself. I have putmy money where my mouth is and currently have 650,000 invested in gold.

Thats a big punt, I hope you agree.

I could be totally wrong of course. Nothing is certain in the investment game.

You need to do your own due diligence and make a decision for yourself whether

to get into this or not. The only thing I would say is to repeat what I stated at the

beginning of this report dont dabble or play. Its not worth bothering with if you

put a few hundred (or even a few thousand, probably) into gold as the gain will not

excite you.

In conclusion, gold is set to perform with or without major calamities coming

our way. You stand to do exceedingly well with precious metal investments in the

coming months and years. You can even hunker down for doomsday, if you want,

secure in the knowledge that gold will always have good buying power when fiat

currencies are crashing and burning.

What Ive provided here is enough to get you interested. I hope youve started

thinking seriously about protecting yourself from inflation by investing in precious

metals, especially gold.

All the best to you

Stuart Goldsmith

www.stuartgoldsmith.com

Date post:	04-Jun-2018
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The Gold Report

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