Swiss Perspective - How to Profit From the Coming Economic Turmoil

8/6/2019 Swiss Perspective - How to Profit From the Coming Economic Turmoil

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Free-Market WealthBuilding Solutions

Proudly Presents:

HOW TO PROFITFROM THE COMING

ECONOMICTURMOIL

Prepared by: Scott Smith

with

Anton Wole

SWISSPERSPECTIVE

http://www.arbp.ch/



Understanding free market economics leads to exceptional investment success.

Meet Scott Smith, Editor o Swiss Confdential

Contributing Editor to TheDailyBell.com

Beore his recent retirement, American-born Scott Smith spent nearly 30 years as a member o the Swiss

investment banking community.

He spent most o his long career at legendary investment banking giant Credit Suisse, where he was an

executive working in the oreign exchange and derivatives departments.

Over the course o his career, Scott became privy to the closely guarded, somewhat regimented, wealth

building and asset-protection strategies that have made the Swiss among the wealthiest people in the

world - wealthier even than Americans, according to the World Bank.

In addition to writing special reports, such as this Swiss Perspective, Scott is also a contributing editor

to the TheDailyBell.com and the editor o a membership based investment newsletter called Swiss

Confdential .

In each issue o Swiss Confdential , Scott shares with subscribers the valuable analytical techniques he

learned while working within the ast-paced Swiss investment banking industry – techniques that oten

enable him to uncover investment opportunities beore other mainstream nancial commentators.

Scott’s unique Swiss-inspired approach is to break down the propaganda and look or reasons not to

invest. He was trained to humbly recognize that experts have a limited rame o reerence or their

so called expertise – including his own. And since he accepts ull responsibility or the investment

opportunities he introduces in Swiss Confdential , you can be assured that he perorms an extensive

amount o due diligence.

When analyzing the merits o a potential investment opportunity, Scott believes it is imperative to

assemble a due diligence team comprised o third party experts specically or the purposes o analyzing

that particular investment. His team approach is designed to probe deeply behind the curtains o

propaganda and ask the real questions - the tough ones most people don’t ask – the one’s that allow or

an intelligent decision to be made.

Armed with common sense inormation, real acts and gures, Scott is able to condently oer his

premium investment analysis and conclusions to his subscribers. It’s the kind o nancial inormation and

guidance that can help you protect and grow your wealth as the global nancial crisis deepens over the

next ew years.

Swiss Confdential also refects Scott’s reverence or personal responsibility and ree-market principles.

And in keeping with those principles, he accepts the duty to protect your personal inormation.

For more inormation about Scott Smith’s Swiss Condential, please visit www.SwissCondential.com

http://www.swissconfidential.com/



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3SWISS PERSPECTIVE: HOW TO PROFIT FROM THE COMING ECONOMIC TURMOIL

CHAPTER 1 : CRISIS AND OPPORTUNITY

The Advantages of Gold InvestingSafety and Security in Uncertain Times

INSIDE

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Chapter 1

Crisis and Opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

How the growing economic crisis has opened the door to the investment opportunity o a lietime.

Chapter 2

Gold vs. Traditional Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Why gold is the most trusted currency in human history

Chapter 3

Approaching a Perect Storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

How an unprecedented series o global events has made it critical to invest in gold NOW.

Chapter 4The Future o Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Factors that could send gold past the $2,000-an-ounce mark.

Chapter 5

The 4 Ways to Invest in Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Your options or a stronger and more diversied portolio

Copyright 2008 - 2009 Appenzeller Business Press AG. All Rights Reserved.

DISCLAIMER: This white paper is an inormative compendium o independent economic views and analysis, which is published

by Appenzeller Business Press AG. The inormation contained in this white paper is or inormational purposes only, is impersonal

and not tailored to the investment needs o any particular person and should not be construed as nancial or investment advice.

As a business publisher, Appenzeller Business Press AG does orm business relationships with third party companies some o

which may be mentioned in this white paper. Appenzeller Business Press AG does not accept any liability or responsibility or, nor

does it veriy the accuracy o the inormation being provided. Readers must accept the responsibility or perorming their own due

diligence beore acting on any o the inormation provided within this white paper regardless o the source.



APPENZELLER BUSINESS PRESS AG, APPENZELL AR, SWITZERL AND4

IntroductionThe world is in the midst o uncertain times. An economic crisis is growing.And, like a roller coaster, the market swings up and down unpredictably.This uncertainty impacts stocks, bonds and mutual unds.

It is no wonder that many advisors, und managers and nancial experts are putting as much as 30%

o their port olio into gold. Gold is a hedge. Gold is saety. Gold is protection, and as you will see,

gold can be a great appreciation tool. During the past ew years, investors have made greater gains

with gold than with stocks or bonds, and rom our Swiss Perspective, we do not see this changing.

Appenzeller Business Press AG has been providing some o the world’s leading banks and institutional

investors with advice or buying, storing and managing hard assets, like gold, or their clients. It is ahallmark o our Swiss tradition to be cautious and conservative and to maximize protability.

In this white paper, you’ll discover why gold should be your source o nancial security and asset

diversication, and why it can bring you prots despite the economic climate. You’ll discover the long

connection mankind has had with gold; its use as the oldest currency in the world; its symbolism or

wealth across cultures throughout time; and most importantly how gold has been used to protect wealth

in times o war, crisis and economic uncertainty, and why the investing elite are now investing in gold.

Gold as an investment

With serious economic events coming together in the orm o a declining dollar, recession, infation

and an uncertain market, it is more important than ever to look into gold as an alternative hedge toprotect your wealth. Read on and discover the advantages o gold.

INTRODUCTION




Chapter 1

Crisis and OpportunityHow the growing economic crisis has opened the doorto the investment opportunity o a lietime.

Today, there is a growing ear among investors about economic attacks on their investments, savings

and retirement unds. A series o poor choices by central bankers, large nancial investment rms and

governments across the globe have made the current economic environment tumultuous and highly

risky. Here is what investors ace:

Crisis Scenario #1—Infation: Infation is a rise in the overall level o prices o goods and services.

Things get more expensive. Why? Because o the expansion o the money supply. As more money isprinted, each existing dollar is worth less, and thereore has less buying power.

The result is that your ability to buy the goods and services you need is stolen rom you.

Crisis Scenario #2—Stagfation: This is extremely slow growth combined with high prices and high

unemployment. The global stagfation o the 1970s is a perect example. Central banks tried to battle

economic disaster due to high oil prices. Their solution? Pump more money into the system.

The result was a runaway wage-price spiral and a recession.

Crisis Scenario #3—Recession: A recession is a signicant decline in economic activity spread across

the economy, lasting more than a ew months. Again, by pumping more money into the system, there

is reduced spending power and an increase in prices resulting in reduced GDP, reduced industrial

production and reduced wholesale-retail sales. And when no one is buying or selling, people lose jobs.

Crisis Scenario #4—Depression: A severe or long recession is reerred to as an economic depression.

A decline in the Gross Domestic Product (GDP) by 10% is a sure sign o a depression. The Great

Depression o the ’30s marked a decline in GDP by 33%. Keep in mind that it was during the Great

Depression that private ownership o gold was made illegal.

Money that is simply printed without something valuable to back it has always led to economic disaster.

History proves this. Consider that since 1997, the supply o American dollars has doubled, lowering the

value o the dollar and reducing your ability to save, to spend and to invest.

So how did things get like this?

The Fiat Currency System

Almost all money exists today in the orm o paper issued by a central bank. And those who control

the central banking system too oten nd it in their best interest to create money out o nothing, in a

ractional reserve banking system. In this way the ederal government can spend more on programs

without raising taxes—but the value o the dollar suers.

Over time this system takes wealth out o the hands o people who invest and save—and puts it into

the hands o an elite ew who control the system.




Since 1913 the U.S. Federal Reserve, a privately controlled corporation, has acted as America’s central

bank. And, since that time their manipulation o the money supply has aected the price o goods andservices, the value o your home, your buying power and the actual wealth you own.

The system ell into total breakdown in 1971 when President Richard Nixon, without the advice o

the members o the international monetary system or his own State Department, stopped the direct

convertibility o dollars into gold.

Here in Switzerland we were shocked.

Without gold collateral to back it up, the dollar is just money without objective value. It is merely a

piece o paper with a promise o value. Truth be told, today’s paper money is not real money at all, but

instead it is at currency. It only has value because the government and society say it has value.

Until recently, the world looked to the U.S. dollar as the store o value. Not anymore. In the past six

years, the dollar has lost nearly 50% o its value against the euro. And recently, the dollar traded or

less than 100 Japanese yen—or the rst time in 13 years!

Another measure o the money supply is MZM (money zero maturity)—all o the money readily

available in the economy or spending and consumption. It is growing two and a hal times aster than

the economy. So every run o the currency printing press continues to dilute the value o the dollars in

your wallet even urther.

What does this mean for you?

Your purchasing power declines as prices rise.•

Your savings are decimated, as they do not keep up with the rate o infation.•

Your investments are in jeopardy.•

But there is also opportunity in the midst o turmoil, uncertainty and crisis. In the next chapter you’ll

learn about the advantages o investing in gold, why it is valued above all precious metals and why or

over 6,000 years it has continued to be the most trusted currency in human history.

CHAPTER 1 : CRISIS AND OPPORTUNITY




Chapter 2

Gold vs. Traditional InvestmentsWhy gold is the most trusted currency in human history

Since the beginning o recorded history, gold has been the centerpiece o luxury and wealth—and

the most reliable orm o exchange. Gold is the most malleable and ductile metal on the planet. Just a

single ounce o gold can be hammered into a sheet o 300 square eet. Gold readily orms alloys with

many other metals. It is an excellent conductor o heat and electricity. Heat, moisture, oxygen and most

corrosive agents have very little chemical eect on gold, making it impervious to the ravages o time.

What’s more, gold is beautiul and has been the medium o choice or artisans, jewelers and cratsmen

or centuries. It has also served as the very denition o wealth or caliphs and kings, popes and pirates.

It’s no wonder gold has been the currency of humankind for over 6,000 years.

Across continents, languages and cultures, gold has been the standard or wealth. No matter how

economies fuctuated, there has always been value in gold. It has always been an accepted medium o

exchange. And in times o economic and political crisis, gold has been the only money that matters.

The protection and security o gold have oten been entrusted to the stores o vaults here in

Switzerland where these assets remained protected in times o crisis, economic upheaval and even two

world wars.

So, why is gold such a strong investment option?

First, gold is a hedge against all other investments as well as economic downturns. It should be part o

a well-diversied portolio. Many advisors recommend 10% to 30%.

Second, gold is not aected by the devaluation o the dollar.

Third, gold oers a saety net against the uncertain ebb and fow o a volatile stock market.

Fourth, gold retains value against the Federal Reserve’s monetary policies—actions that oten reduce

the value o the dollar and cause pr ices to rise.

And nally, gold is protection against government spending decits, which urther lower the value o

the dollar and push prices higher.

Gold is a hedge against infation and the dollar’s declining value, but also o ers protection against

an uncertain stock market and oolish government monetary policies. Here are the ve compelling

reasons why you should consider adding gold to your portolio…and why even in Switzerland, ew o

these reasons are well known.

CHAPTER 2 : GOLD VS. TRADITIONAL INVESTMENTS




Reason 1: Gold has an insatiable demand

For any investment to hold (and grow) its value over time, it must be in demand. And or the last 6,000

years, gold has never lost its appeal as a valuable commodity. According to the World Gold Council

(WGC), the demand or gold worldwide has doubled over the last our years. In U.S. dollar terms, it’s

up 124%. That’s three times the nominal growth rate o the global economy.

Where is this demand coming rom? There is a huge demand or industrial gold usage or making

electronics, communications equipment, jet engine parts, computers and even dental llings and

prosthetics. Approximately 53% o this demand is coming rom just ve countries: India, Italy, Turkey,

the U.S. and China. And as China and India’s industrial needs grow, so will their demand or gold.

There is also consumer desire or gold. According to the WGC, in 2007 alone, India’s demand

surpassed 1,000 tonnes! And with China’s ever-growing middle-class, their demand will reach record

highs. (More on China shortly.)

Annual mine production o gold over the last ew years has been close to 2,500 tonnes. About 3,000

tonnes go into jewelry or industrial/dental production, and approximately 500 tonnes go to retail

investors and exchange-traded gold unds (more on this later). This translates to an annual demand or

gold that exceeds mine production by 1,000 tonnes—a supply decit that must either be made up by

central bank sales or by acquiring gold rom other above-ground sources.

But gold is more than a commodity. There is such a demand or gold that it inspires people to pay

substantially more or it than its mere commodity value. That’s because gold is a hedge against stock

losses and infation. It is a proven source o wealth protect ion and saety.

Reason 2: Gold is a nite resourceUnlike at currencies that devalue over time as more money is printed, gold is nite. There is only so

much o it in the earth. The act is that the high price o gold is due to its rarity. It cannot be created.

It can only be ound. In act, only three parts out o every billion (0.000000003) in the Earth’s crust are

gold. It has been said that i you were to melt down all the gold ever mined, it would only amount to a

ootball eld–sized rectangle ve eet high.

Over the past ew years, the major gold mining companies have had only a modest increase in gold

production. As a matter o act, in three o the last ve years, production has remained fat, despite

increasing demand.

Reason 3: Gold enjoys instant liquidity worldwideAs an investment, no other commodity has the liquidity o gold. Stocks and bonds are easily sold, but

it could take many months or even years to sell real estate, art, antiques and other investment vehicles.

Gold is accepted and actively traded in global markets, making i t always easy to sell and easy to buy.

And because gold is universally valuable, it retains its worth, no matter what borders it crosses.

While countries, governments and stock investments rise and all, gold is always desired and traded

with solid, honest value.





Reason 4: Gold ensures real portfolio diversication

Asset allocation is an important part o any investment strategy. By diversiying, investors hope to

maximize returns while minimizing risk. Unortunately, many investors believe their portolios are

adequately diversied, when they typically allocate unds to just three classes o assets—stocks, bonds

and cash.

To counter adverse movements in an asset class, many investment portolio managers, nancial

analysts and investment experts recommend that gold should make up 10% to 30% o your portolio.

Because o the current economic crisis, a Swiss perspective would encourage 30% or more.

Reason 5: Gold is an investment with huge prot potential

In Switzerland, gold is viewed as a quality investment. As you’ll see in a minute, many are predictinggold could rise to between $2,000 to $5,000 an ounce.

“We would be very surprised i the gold price did not blast right through the old highs, and we

rearm our old targets or gold o $3,000 to $5,000 an ounce (plus silver over $100 an ounce)…

gold is not merely a colorul trinket but a monetary asset, and when mass ear strikes at the

heart o paper money, the stampede to gold will be awesome.”

James Dines, Editor, The Dines Letter

Gold has shown strong returns over recent years. Its most valuable contribution to a portolio lies in

the act that it is not correlated with most other assets. This is because the gold price is not driven by

the same actors that drive the perormance o other assets. This makes it the perect addition to any

portolio or saety and protability.





Chapter 3

Approaching a Perfect StormHow an unprecedented series o global events hasmade it critical to invest in gold NOW.

There have always been cataclysmic events that have driven up the price o gold. In times o national

crisis, people ear that their assets may be seized and that the currency may become worthless. They

see gold as a solid asset that will always buy ood and transportation.

With our client base o leading international banks and high net worth individuals, Appenzeller

Business Press AG knows rsthand the need to protect one’s nances through the acquisition o hard

assets like gold in times o severe political and economic crisis.

It’s also important to keep in mind that in times o great uncertainty, particularly when there is a war or

natural disaster, the demand or gold will rise.

The Approaching Gold Storm

Today, it seems we are on the eve o events that could dramatically ignite an unprecedented gold

boom. Any one o these events could push the demand or gold to remarkable new highs. But should

they coincide, a rare investment opportunity could arise. These events include:

The U.S. dollar crisis and economic distress•

Massive global instability, including unrest in the Middle East•

The atermath o a central bank gold sell-o•

The China actor•

Growing infation•

Gold can rise due to any one o these actors. But, when you combine two or more o them, you could

have a new gold boom. Mix three or more o these ac tors together, and you could have a record-

breaking gold price o historic proportions.

Dollar decline and economic downturnFor the last 15 years, the main export o the United States has been dollars. These are the unbacked

liabilities o the U.S., exported to the rest o the world in exchange or oreign cars, electronics and

oil. But now, the international community is holding over $6 trillion o a currency in which they lack

condence. The dollar has become like a “hot potato” and they don’t want to hold on to it or very long.

These dollars will nd themselves fowing back into the U.S., which in turn will infate the currency already

in circulation. The result? High interest rates and high infation that will hurt the average American who is

not prepared or this backlash.

CHAPTER 3 : APPROACHING A PERFECT STORM




Other threats to the dollar include…

Immense ederal budget decit• . The wars in Iraq and Aghanistan have a combined cost o

almost $1 trillion dollars. Congress continues to overspend with an annual budget o $2.7 trillion.

The U.S. national debt is currently $9.4 trillion. These actors have created enormous risks or

investors. With an increasing government debt comes infation and economic uncertainty. This will

continue to weaken the dollar.

Rock-bottom interest rates• . Just like in the ’70s, we are witnessing these today. Low rates won’t

protect today’s homeowners and investors rom the ravages o infation; rather, these rates

contribute to it. Watch or the resulting infation to trigger a run on precious metals, particularly

gold. Why? Because as gold prices r ise, the dollar weakens.

Talk o OPEC switching to the euro• . Since 1971, OPEC oil has been exclusively quoted in U.S.

dollars (called petrodollars). This creates a permanent demand or dollars on the internationalexchange markets. But recently, OPEC members Iran and Venezuela have been pushing or a

switch to the euro because o the weakening dollar. In act Iran already requires euros in payment

o exports being sent toward Asia and Europe. And on May 10, 2006, Russian president Vladimir

Putin announced the creation o the petroruble to trade oil and gas. As the dollar weakens

worldwide…your only protection is gold.

U.S. real estate bubble• . Ater this bubble and the resulting credit crunch, many investors are leery

o real estate. These investors are looking to place their money into solid investments they can trust.

Fear o a massive stock market meltdown• . Currently, the market has been quite volatile, keeping

investors guessing. Many investors are looking or more security and saety, and they are nding it

in gold.

Massive global instability

Wars, ear o war and the current global “War on Terror” have increased the likelihood o a gold boom. It

isn’t necessary to have all-out hostility. There just needs to be enough uncertainty and instability to uel

the ear we see on the evening news. Here is just a short list o existing global conficts and concerns:

The ongoing war with Al-Qaeda and, with it, the ear o another 9/11•

A nuclear North Korea with madman Kim Jong Il’s nger on “the button” as well as the backing o his•

army, the ourth largest in the world

A near-nuclear Iran controlled by Islamic extremists bent on destroying the West•

Instability and violence in the petro-rich Niger Delta, which has led to a drop in world oil production•

and a rise in oil prices

Ongoing saber-rattling rom Venezuelan dictator Hugo Chavez, who controls the largest oil reserves•

in the Western Hemisphere

Unsecured nuclear weapons acilities within the territories o the ormer Soviet Union•

Any one o these situations or any combination o them could be the spark that leads to global confict.

Will you be prepared i or when it does?





Central bank gold sell-o

Central banks around the world hold about 33,000 tonnes o gold. Unortunately, central bankers

concluded that all this gold sitting in their vaults is useless as it is not earning interest. Their answer to

the problem is to loan it to various business entities in order to earn a modest rate o interest.

This availability makes gold seem more accessible or manuacturing, dentistry, jewelry and other

uses. This creates the illusion that gold is in plenty o supply. But as we revealed in Chapter 2, gold is

nite. In act, the amount remaining above ground, is less than hal o what has already been ound and

produced rom the beginning o civilization.

According to the U.S. Geologic Survey, there are only 50,000 tonnes o gold let to mine in the earth’s

crust. With the rate o gold consumption at 3,760 tonnes per year, the world’s supply will be ully mined

beore 2022. And as investors come to that realization, existing gold supplies are going to become

increasingly more valuable, coveted and hoarded.

The China factor

Imagine having an instant market o over 1 billion consumers vir tually overnight. According to the

World Gold Council, the demand or gold worldwide nearly doubled in 2007—and much o that

demand rests on the shoulders o China.

Gold ownership or Chinese cit izens was legalized in 2004. Now a system or selling bullion to the

largest population in the world is in operation. The demand or gold in China increased sharply last

year, hitting 326.1 tonnes, a 26% growth rom the previous year, and according to the China Gold

Association, China has become the third-largest consumer o gold in the world.

What’s more, the Chinese central bank is also diversiying out o U.S. dollars and into gold. (That spells

more trouble or the dollar.) And in March 2006, the National Development and Reorm Commission o

China said that “China intends to more than double it s gold reserves to 1,270 tonnes this year.”

Change is coming

It is very possible that people in the uture will look back at this time and clearly see the convergence

o events that led to a run on gold. An economic downturn is in our midst. The world has never been

more dangerous. And the demand or gold continues to grow.

NOW is the time or you start investigating how to incorporate gold into your portolio.





Chapter 4

The Future of GoldFactors that could send gold past the $2,000-an-ounce mark.

In 1979, Jimmy Carter was president. Americans were being held hostage in Iran. Oil prices were

escalating on a weekly basis. Infation was in the double digits, and the U.S. dollar was under siege.

In the 12 turmoil-lled months leading up to January 1980, gold went rom $240 per ounce to $850 per

ounce. Gold ell back during the economic stabilization o the Reagan presidency, but has been slowly

rising since then. In act, the price o gold more than tripled since 2000 to its all-time high o $1,002 per

ounce in March 2008.

But could gold today really make the same kind o price spike that it did back in 1979? The truth is, at

the time, gold in 1979 dollars was worth $850 an ounce. But, adjusted or 2008 infation dollars, the

same gold would be worth $2,200 an ounce today. So it is possible that the price o gold could hit

$2,000 an ounce. But is it probable?

Consider how today’s events parallel those o 1979. America is at war with Islamoascism. Iran is

exporting terrorism and is now nearly nuclear. Infation is a real hardship. Oil prices have increased the

cost o virtually every product and service. And the dollar is again in decline.

The bull market or gold is just beginning. According to Morgan Stanley’s top-ranked nancial advisor

Rick Blosser, “We’ve been in gold ve or six years now and we don’t think the bull market has run it s

course yet.” Let’s take a look at gold since the year 2000…

Table courtesy o Kitco.com

As the chart above shows, in 2006 gold broke a critical benchmark when it hit the highest average

monthly price in history. And as you know that trend has continued signicantly higher with gold

reaching an all-time high o $1,002 in March o 2008.

CHAPTER 4 : THE FUTURE OF GOLD




So where will it lead? Let’s take a look at 4 concrete actors that have boosted gold prices

in the last ve years and which promise to urther increase gold values rom already historicbenchmarks — to levels o $2,000 an ounce and beyond.

1. Lowered overall mining production

Global gold mine production was at an 11-year low last year. This is the second consecutive year o

decline. What’s more, total production costs were up by $99 per ounce, which means lower output

rom major mines.

Worldwide production is simply slowing as the aging mines yield less gold and as mining exploration

companies struggle to discover new mines. Investors would be wise to look to more ecient small

cap mining companies that employ unique business strategies, working with less overhead, exploring

prospects that are too small or the gold giants.

2. Political instability in South African mining

Since the 1880s, South Arica has been the source or a large portion o the world’s gold supply,

with about 50% o all gold ever produced coming rom this area. In 1970, South Arican production

accounted or 79% o the world’s supply, or a total o about 1,000 tonnes. However, by 2007,

production was just 272 tonnes.

The decline in supplies rom South Arica has resulted in an overall global gold production slowdown.

Labor unrest, political instability and high costs have all taken their toll. Recently, and or the

orseeable uture, the South Arican government is expected to ration electrical power to mining

outts. The Financial Times reports this could “slow production by as much as 15% to 20%.”

I this happens, it could reduce worldwide gold output by another 55 tonnes, creating a severe supply-

demand imbalance. The result would most likely be a dramatic price spike.

3. Gold-producing countries are holding on to their gold

Another reason or the increase in the price o gold is that many o the world’s gold-producing

countries are holding on to their gold or economic reasons—or domestic demand is simply so strong

that the country has none let or the world market.

Consider China again. China is currently the world’s largest gold producer at 275 tonnes o gold a year,

yet it still imports another 50 tonnes! Not only is China’s retail demand ravenous, there are rumors thatits sovereign wealth und is buying up all the gold it can.

Russia is another example. As the world’s th-largest producer, it’s still a major importer o gold. In

act, Russia’s central bank chairman recently said the bank would be “purchasing gold on all markets

on which it is available.” The intent is to use it or the nation’s nancial reserves and serve as a bulwark

or the ruble.





The bottom line? Although China and Russia are two o the world’s largest gold-producing countries,

the rest o the world doesn’t actually have access to their production. So the total production numbero 2,447 tonnes or 2007 is misleading, since large amounts o this total don’t gure into global supply.

This actor alone speaks to the potential or a severe gold shortage in the coming years.

4. Increased demand for investments and jewelry worldwide

Political uncertainty, the threat o economic crisis and the ailing dollar have led to widespread

investment demand.

In 2001, 400 tonnes o gold were purchased or investment. By 2007, that gure had climbed to 1,000

tonnes. Currently 28,800 tonnes o gold are held by private investors and 28,500 by the ocial sector

(primarily central banks), and jewelry consumption has skyrocketed. According to the World Gold

Council, “Jewelry consumption in the developing markets has been expanding rapidly in recent years[and] several countries, including China, oer considerable potential or uture growth in demand.”

$2,500 gold…are you ready?

When you take a look at all o these the actors that are driving actual gold investment and purchase,

one must conclude that gold’s uptrend is being caused entirely by increasing demand coupled with

decreasing supply—a trend showing no signs o abating.

These actors have the potential to ignite a remarkable bull run on gold. A price o $2,500 per ounce is

quite possible. In act, one can argue that it is a probable outcome.

Now that you understand the dramatic demand or gold, the history o its value and the causes or thecurrent developing bull run, let’s take a closer look at the best ways or you to get involved in the gold

market.





Chapter 5

The 4 Ways to Invest in Gold Your options or a stronger and more diversied portolio

In the previous chapters we have looked at the economic, historical and geopolitical actors driving

the need to prudently invest in gold. In this chapter, you’ll look at various strategies or investing in

gold. The strategy that is right or you depends largely on two goals: capital preservation and wealth

accumulation and growth.

A capital preservation strategy is a conservative way to protect your wealth. It is a strategy oten

preerred by investors who intend to leave their assets or heirs. It is also considered a “deensive”

strategy designed to protect one’s portolio.

I you have 30% o your assets in gold, we recommend 10% or capital preservation and 20% or

wealth accumulation. Wealth accumulation and growth is a more aggressive strategy that could

produce signicant returns over time. Not counting investments in gold utures (which, or many

investors, are simply too risky and unpredictable), there are our major gold investment options.

Gold bullion•

Gold coins•

Gold ETFs (exchange-traded unds)•

Shares in gold mining companies•

Investments in any o these strategies, particularly low-cost gold exploration companies, can be

started with as little as $5,000.

Note: Many conservative nancial advisors

recommend 10% to 15% o your total portolio

in gold. Still many advisors and wealthy investors

have 30% to 50% in gold due to the dollar’s

decline and the current U.S. economic crisis.

Some o these investment options are suited toward portolio stability, while others are capable o

dramatic returns o 100%, 200% or even 1,000% over periods as short as six months to a year.

Gold bullion

O all the gold investment options, bullion is the saest and simplest way to invest in gold. I you are

looking or maximum capital preservation, own gold bullion. Bullion can be purchased in units as

small as one-tenth o an ounce or as large as a 400-ounce gold bar.

Your investment gains will be largely determined by the rise and all o the spot market price o gold,

plus the ees levied by the exchange where you purchased your gold.

CHAPTER 5 : THE 4 WAYS TO INVEST IN GOLD




While gold bullion is extraordinarily sae (remember gold will almost never lose value over

the long term, though it can go down in price), the prot potential or bullion has the kind o modest returns you’d expect rom such a sae investment.

Remember you’re buying a physical amount o gold, which means you have to actually put it

somewhere. This can present one o two problems. First, it leaves you open to thet i you keep it at

home. Second, you could store it in a secure location, but that involves storage ees, which will eat into

your prots.

Still, even though there are other options or making larger returns, it is always best to have some

assets in bullion (real or honest money).

Gold bullion coins

There are two types o gold coin investments that can be made - numismatics and gold coin bullion.

Numismatics are rare gold coins, which at one time were in circulation and used as money. Their value

is based on their age, condition, scarcity and overall aesthetics. This investment is or the collector

who knows and ully understands the risks o this highly speculative investment. Gold coin numismatics

have transaction costs that can be as much as 100% over the spot price o the gold used to make the

coin. And, this “premium” pays no dividends.

I you are looking to protect your wealth, you cannot achieve it with numismatics. With the strongest

possible emphasis, Appenzeller Business Press AG does not recommend investing in numismatics.

I you are looking to protect your wealth, we recommend gold coin bullion. These coins derive their

value rom the gold content only (not rom their rarity as in numismatics). Among the most amous o

these coins are the South Arican Krugerrand, the Canadian Gold Maple Lea and the American

Gold Eagle.

Gold bullion coins are also produced in ractions o an ounce—typically hal, quarter and onetenth.

Their value is mainly dictated by their troy weight and the prevailing market price or gold. Gold coin

bullion is an extraordinarily sae investment that can be traded just about anywhere in the world. And,

it can be traded at only about 5% over the spot price (a huge advantage over numismatics). That’s the

upside. The downside is the risk o thet and the potentially modest returns.

Again, it’s smart to consider your investment goals. Gold coin bullion is excellent insurance against

hyperinfation and other calamities. Gold coin bullion is an option or those investors who are more

savings-minded, those who are looking to protect their wealth.

Gold ETFs (exchange-traded funds)

An ETF is a type o mutual und that trades on a stock exchange like an ordinary stock. They dier rom

mutual unds in that shares o ETFs can be traded at anytime while the host stock market is open. The

ETF’s exact portolio is xed in advance and does not change. The r ise or all in the gold ETF price will

closely track the spot price o bullion.





Typically a commission o 0.4% is charged or trading in gold ETFs, in addition to an annual storage

ee. The annual expenses o the und, such as storage, insurance and management ees, are chargedby selling a small amount o gold represented by each cert icate. Thus the amount o gold in each

certicate will gradually decline over time.

I you are interested in taking advantage o the real value o gold assets you will not nd it in ETFs.

They are still paper and represent merely a promise o value.

I you’re interested in the real value o physical gold, look into buying bullion rather than ETFs, and, i

you are looking to maximize your wealth accumulation potential, look to gold mining stocks over ETFs.

Gold mining stocks

Gold mining stocks oer maximum opportunity or protability. They are the ideal choice or wealthaccumulation and growth. That’s because they have the ability to oer tremendous leverage you just

can’t get rom bullion or numismatics or even ETFs. The reason is simple. Assume or a moment that

gold is selling or $1,000 an ounce. I it rises to $1,250, you’ve just made 25% on your money, or $250.

Not bad.

But now assume you’ve invested in a careully selected gold stock—one that spends about $200 to

mine an ounce o gold. I gold is selling or $1,000 an ounce, the company is making $800 or every

ounce it mines.

So, i the price o gold rises to $1,250, the company now makes $1,050 or every ounce it mines, and

that increase in prots should quickly be refected in the company’s stock price. What’s more, the costs

are xed. I it takes $20 0 to mine an ounce o gold at $1,000 an ounce, it will st ill cost $200 to mine an

ounce o gold when its $1,250 an ounce.

There are 3 types o mining companies you can nd that oer shares.

1. Large gold producers

2. Intermediate companies

3. Junior companies

Large gold-producing companies are in actual production, removing gold ore rom the ground. These

are oten huge companies with large operations, high overhead and signicant operating costs. In

act, even with the price o gold trending upward, operating expenses can eat a signicant portion o

prots. Take a look at the gains some o the biggest gold mining companies in the world have made in

just the last ve years:

AngloGold Ashanti (up 214.9%)•

Newmont Mining (up 201.5%)•

Agnico-Eagle Mines (up 369.9%)•

Gold Fields (up 200.7%)•

Harmony Gold (up 216.1%)•





Still, when it comes to mining stocks, consider the intermediate and junior mining companies as your

best opportunity to prot rom a coming gold boom. Intermediate and junior mining companies havethe advantage o being able to operate quickly and eciently with less overhead than large gold

mining producers. They operate with smaller capital needs, and maintain a bare bones overhead. They

also tend to take on projects that appear to be too small or the larger gold producers.

However, these projects yield major prot opportunities or small- or medium-sized companies. Among

these mining companies are those with actual resources—gold that’s been discovered or purchased.

Then, there are mining companies in ull exploration. They have yet to nd gold but have the potential

or a major new discovery. Investors must be cautious o companies without established resources and

recognize that with this potential comes a higher level o risk.

Here are 3 advantages to intermediate and junior mining companies with resources:

1. Low overhead. These companies typically are very small and keep costs low. They also tend to be ast-moving

operations, ree rom the slow-moving bureaucracies o bloated production companies. This means

they can make quick decisions, both in the boardroom and in the eld.

2. Leaders in discovery.

Mining exploration lives or dies on its management team and its geologists. These aren’t boardroom

people sitting behind a desk. They are gited explorers who actually get their hands dirty. The best o

them have almost a sixth sense that drives them to nd mines rich with potential.

3. Easy share accumulation.

I an investor is looking or low-cost stocks poised to hit a megaboom, these companies oer

incredible value and potential. Some trade or under $2 a share, making it much easier to double, triple

or quadruple your money in a very short period o time—something that’s nearly impossible when your

money is locked into a gold-producing behemoth priced at $57 a share or more.

This is a demonstrable act. The shares o large gold mining producers typically rise two to our times

more than the price o gold itsel. Smaller exploration companies oten soar higher than that on the

basis o new gold discoveries, sometimes as much as 5 to 10 times more than the increase in the price

o gold itsel. Here are a ew examples:

Take the case o one gold exploration stock that was trading or $1.17 a share. They hit upon a major

nd and the stock jumped to $2.48, turning every $10,000 investment into $21,197. And that’s on the

small side o the scale.

Another stock went rom $0.61 in March o 2006 to a breathtaking $40 in November o the same year. A

$10,000 investment would have led to a whopping $655,737.70.

Still a third stock with a small market cap o just $15.96 million and trading or as little as 16 cents

leaped 31.35% in a single day on news o a gold price spike.

The best examples o this type o wealth accumulation and growth strategy may be ound in

companies like Seabridge Gold.

Seabridge Gold Inc. was created to provide it s shareholders with exceptional leverage in relation to a

rising gold price. From 1999 through 2002, when the price o gold was lower, Seabridge acquired nine

North American projects with substantial gold resources, including the multimillionounce Courageous





Lake and Kerr-Sulphurets deposits. Subsequent exploration by Seabridge has signicantly expanded

this acquired gold resource base.

The Seabridge strategy measures its perormance in terms o gold ownership per common share.

That’s why project acquisitions and exploration programs are careully chosen to ensure that the share

dilution required to und these activities is more than oset by additional ounces o gold resources.

In contrast to most other gold companies, Seabridge’s gold ownership per share has risen or six

successive years, providing its shareholders with exceptional leverage to a rising gold price.

As a result, Seabridge shares have outperormed the Toronto Stock Exchange Gold Index by nearly

3,400% rom 2002 through 2006.

How do you nd quality mining exploration companies?

Consider the mine’s geographic location. Gold resources are ound around the world, but much

o the globe is still dangerous and unstable. There is also the risk o a mine’s operation being

“nationalized” by a t inhorn dic tator.

For the time being, steer away rom mining companies operating in risky parts o the world. Instead,

look or excellent investment opportunities in the Western Hemisphere where political risk is low,

mining laws are avorable and property rights are respected.

Some o the most protable mining opportunities can be ound in Peru (one o the world’s largest gold

producers), Chile (one o the largest mining countries in the world), Argentina (an underdeveloped

mining location with huge potential) and Brazil (a place lled with underdeveloped gold elds).

In Latin America, you’ll nd smart, well-managed junior and intermediate companies in addition to the

gold giants, who will oten buy out these smaller companies once there is news o a signicant nd.

These giants in Latin America include:

Newmont Mining•

Barrick Gold•

Noranda•

GoldCorp•

Compañía de Minas Buenaventura•

BHP Billiton•

There are also opportunities in the U.S. as well as in the gold-rich districts o Canada.

Consider the cost o mining. Open-pit and underground mining costs have soared in recent years.

In order to be more ecient and deliver higher prots, some companies employ placer mining

techniques.

Placer mining is an extraction technique used in the search or gold to explore and process alluvial

deposits—that is, material deposited in the soil and ans o ancient riverbeds. These deposits are

created by millions o years o water movement and erosion.





Typically, delta regions surrounding ancient r iverbeds have been ideal locations or alluvial gold. Areas

receiving attention or their alluvial gold potential include the Northern Amazon region in Peru as wellas areas o Colombia and Brazil.

Placer mining operations have been the basis o the biggest gold rushes in the world has ever seen.

Whether it’s the 49ers o Caliornia or the Alaskan gold rushes, all the major gold rushes were around

placer mining discoveries.

Case in point is the 2006 purchase o Placer Dome, Inc. by gold giant Barrick Gold Corp. or $10.4

billion. Placer Dome started as a placer mining operat ion.

Consider the management. Management is critical. It is the key to developing these projects into

highly prosperous ventures. Strong leadership knows and understands the necessity o securing in-the-

ground resources, nding more o them and then developing them.

There is also an understanding that production is not the main ocus. Too oten companies try to be

all things—explorers, developers and producers. They oten ail because o the dierences between

managing a production opportunity and managing an operation ocused on building more gold value

behind its shares.

Ultimately, you need to perorm your own due diligence. Research the management. Check out their

previous accomplishments. Look to see i they have established a successul track record. These will

be good indicators o the company’s uture. Look at the properties and study their his tory. Read all

you can about the surrounding properties. Look at the market cap and the stock price. Try to spot a

bargain waiting to be snatched up.

With a junior exploration company, a signicant nd can take a $2 stock and rocket its price 400%,

500%…even 1,000% or more. Ideally, you want to consider the number o shares outstanding (hovering

around 50 million), and look or a share price under $2—and preerably closer to $1 than $2.

Now is the time to act

The team at Appenzeller Business Press AG hopes we have added to your knowledge o gold investing

in these times o economic uncer tainty. We are dedicated to ensuring that investors like you have the

acts you need in order to make a well-educated investment decision.

With serious economic events coming together in the orm o a declining dollar, recession,

infation and uncertain markets, it is more important than ever that you look into investment

alternatives and consider gold as an option in the creation o a well-diversied portolio.




APPENZELLER BUSINESS PRESS AG

Appenzell Ausserrhoden, Switzerland

www.ARBP.ch

http://www.arbp.ch/

http://www.arbp.ch/



Welcome to the Intersection o Free-MarketEconomics and Investment Protability

My name is Albert Kessler and I am proud to be the chairman o one o the most unique publishing

houses in all the world, Appenzeller Business Press AG (ARBP). ARBP is located in the scenic Swiss

region o Appenzell - one o the last bastions o ree market thinking, culture and tradition. Appenzell is

renowned or its ree market traditions, respect or personal liberty, rejection o government intervention

and reverence or Austrian economic principles.

Still to this day, Appenzellers gather each year in the village square to take part in one o the world’s

oldest and purest orms o direct democracy, the Landsgemeinde. It’s a centuries old tradition that

happens just minutes rom our oces. Eligible citizens meet openly in the village square to decide on

laws and expenditures by the council. Everyone can debate a question. And those in avor o an issue

signiy their vote by simply raising their arm in the air or all to see.In that same tradition, ARBP is dedicated to supporting savvy and hardworking people who ully realize the

danger o blindly entrusting their own welare to government. We do this with publications and tools we

create to help support investors and entrepreneurs who still believe in privacy, personal responsibility and

personal reedom.

Each service we oer is based on Austrian economic principles. These principles, developed by Ludwig

von Mises and Frederich Hayek, have proven over time to refect human nature, the real world and

economic progress.

For investors, these ree market principles help us understand the business cycle, the investment and

economic results o government involvement in the economy and how investment and cash fows react

to geopolitical events. This results in an investment advantage, an early orecasting and early warning

system or investors. Ultimately, investors nd greater protability and saety.

By creating products designed to support liberty and economic reedom, we like to think ARBP is

oering

people around the world an opportunity to have a voice in their own Landsgemeinde—just as their

like-minded riends in Appenzell.

Freedom works in all cultures and countries. Free market economics can help all people prosper.

That is why we try hard to support reedom and ree enterprise around the world.

Sincerely,

Albert Kessler

Chairman, Appenzeller Business Press AG

P.S. Thank you or taking the time to read through this Special Report.

We are condent you nd many practical ideas and useul

solutions that can help empower you to a make better-

inormed social, political and nancial decisions.

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