The first, called "Gold coin shortage likely to become chronic" by Michael J. Kosares, outlines the reasons why gold bullion coins have been so hard to find at reasonable premiums, and why these forces will probably keep premiums high in the future as well. BTW, Michael's book, The ABCs of Gold Investing: How to Protect and Build Your Wealth With Gold is well worth reading if you are new to buying gold.

The second article was written by the editors of BIG GOLD at Casey Research and published in Dr. Steve Sjuggerud's excellent (and free) Daily Wealth email. Its title, "What You Need to Know About Storing Physical Gold" says it all.

Take advantage of gold's recent pullback (aka the US Dollar's recent strength) to add to your stock of cash that clanks – and keep your investments growing in their gold value!

Charles

PS: Dan Ferris, editor of Extreme Value, a newsletter I recommended to you in Gold101, scored big points with me in his weekly update today. Dan is a dyed-in-the-wool value investor, and his portfolio contains only excellent companies that are trading at great prices. But today he told his subscribers to sell several of his portfolio picks – including some long-time favorites and some very recent recommendations. Why did he do this? Because his honest opinion is that the stock market has further to fall, and having cash on hand will be key to taking advantage of the values that will be available in the future. He is keeping the strongest of his stocks, especially those he calls "World Dominators", and is buying some outstanding gold-related companies. This had to be a hard letter for him to write, but I think he's doing the right thing, and I applaud him for it. Follow his lead: take a hard look at what's in your portfolio, and don't be afraid to sell the weakest things in it, whether at a loss or a profit. Concentrate on strength and building your cash position for buying when things turn around.

Remember that gold is a form of cash, not an investment. It doesn't grow in value, create new jobs, earn profits, or generate income for you. It is simply a currency that no government can counterfeit or debase. You should hold it as a way to reduce the volatility of your portfolio, or for long term saving. Don't imagine that owning gold will make you rich: If gold doubles in price due to massive creation of fiat currency, most of the other things you need to buy will eventually double in price as well. Gold can preserve your wealth, but not really grow it. For that you need real investments and prudent speculations.

Gold is the King of Cash!

From safest to riskiest:

1) Physical bullion coins and bars – your main risk is physical security. You need a safe place to keep it where it won't be stolen. Bank safe deposit boxes are great – unless the bank is closed. In-home safes and backyard burial are some of the alternatives. Pros: no counter-party risk, it's in your own control. Cons: hard to find at decent a price these days. Track the spot price at Kitco's 24 hr Live Gold. My favorite way to buy is through my local coin dealer, Beaverton Coin and Stamp. I suggest you look in the yellow pages and make the acquaintance of your local coin shop; they can be very helpful, and may be the best place to sell your gold when the time comes to convert your savings in to local currency. Another dealer I have used for years, always with very good results is Camino Coins.

2) Goldmoney.com – stores your gold (and silver) in insured third-party vaults in London or Zurich, and allow you to buy and sell via wire transfer, very quickly and easily. This is a great service, very easy to set up and use, perfect for savings. Pros: Very low markup, low storage fees, very safe storage, online access to funds. Cons: no way to get the gold in your hands except to sell the Goldmoney and use the funds to purchase physical gold. It is one of the best forms of "paper gold", but not quite the same as real gold in your pocket.

3) The Gold ETF, symbol "GLD": This is a stock that you can buy and sell in your brokerage account. The fund's managers try to make the value of each share be the same as 1/10 ounce of gold. There are also options on it , as with many stocks. Pros: a great tool for trading and speculating. Quick and easy to buy and sell. Cons: it is a stock, not really gold itself. Brokerages, dealers, stock exchanges, and many other counter-parties all have to perform in order for you to realize value from this security. Best used for shorter term trades in times when the markets are functioning well.

The next two categories are really speculations, not cash positions. Used prudently, they can increase the gold value of your investments. Used carelessly, they can destroy your savings. Proceed with caution:

4) Numismatic gold coins – these are really collectible antiques, with gold playing only a minor role in their value. They can be a great speculation, but like gold stocks they can rise and fall much faster than gold itself. There are some that are available for close to bullion prices; these are attractive because they offer a numismatic "kicker" to the gold value. Circulated common date US gold coins were in this category until recently; now they are hard to find at reasonable prices. On the other hand, almost all rare gold coins are now trading at premiums to gold that are very low compared to historical averages, and many offer good values; but they are still mostly "premium" and only a little "gold". Do not buy numismatics unless you know what you are doing or have expert assistance. My favorite expert is Van Simmons, president of David Hall Rare Coins.

5) Gold stocks: These are companies that explore for and mine gold and other metals, finance gold mining and receive royalties from gold production. Very risky! Many are just "holes in the ground surrounded by liars". Some are excellent speculations that can rise much faster than gold itself (and fall faster, as well). Some generate very nice income streams. You need good research to find the best plays and avoid the deathtraps. The dean of resource investing is Rick Rule of Global Resource Investments. Highly recommended. Newsletters that have performed well for me in the past (for many investments, not just gold stocks) include Brent Cook's Exploration Insights, Agora Financial's Options Hotline, Stansberry and Associates' Extreme Value, True Wealth and Short Report letters. Doug Casey has several excellent newsletters including Big Gold.

I hope this is helpful!

Charles

The big claim is that after peaking in 2000, incomes fell, bottoming in 2003, and have now climbed back to make new highs in 2006.

The author examines IRS data showing average Adjusted Gross Income and Wages and Salaries as reported on US tax returns. The numbers quoted are a bit confusing – some are adjusted to 2006 dollars, some are totals and some are averages. But one thing is clear to me: stated in gold, Adjusted Gross Incomes in 2006 are down about 50% from their 2000 levels, about where they were in 1995. Wages and Salaries, stated in gold, are also down about 50% from their peak in 2000.

I'm not sure how useful this data is, as Adjusted Gross Income is merely a number used for calculating taxes, and is subject to all kinds of exclusions, deductions, and so on, that relate solely to the complexities of the tax code. I prefer to watch the Per Capita Disposable Income, a number reported monthly that shows on average, the money available after taxes for consumption, investing and saving. This number also fell about 50% from 2000 to 2006, and has continued to fall since then. It is currently about where it was in the late 1980s.

People do have more dollars to spend… but those dollars are worth much less. Don't be fooled! Make sure your income and net worth are rising when measured in gold.

The first part of this interview covered Paul van Eeden's background and laid out his views on gold, inflation and interest rates. In this final segment, we'll discuss what to do about this situation – how to translate this view of the world into investment action.

Paul has been working hard on a more accurate model for the money supply that will give investors a clearer picture of what's coming in terms of inflation and interest rates. The best way to get access to this information is to subscribe to his newsletter – something I strongly recommend.

As I write this, there are still a few seats left for the 2008 Agora Financial Investment Symposium, to be held in Vancouver, BC from July 22 to 25. Paul and I will be there along with the legendary Jim Rogers, Rick Rule, Bill Bonner, Doug Casey and a boatload of other excellent speakers. If you will be attending, be sure to drop me an email or leave a message on the Priced In Gold Hotline at 888-868-5656, and we'll see what we can work out for a get-together. Keep an eye out for my pith helmet!

Last year, in July of 2007, I attended the Agora Financial investment Symposium in Vancouver, BC. There were a lot of excellent speakers and sessions covering all aspects of investment, with quite a bit of emphasis on natural resources and a strong international flavor. One of the speakers who impressed me the most was Paul van Edeen. On my return home I subscribed to his newsletter – which has since become one of my favorites.

Last month I had an opportunity to interview Paul on the phone, and I picked up some great investment ideas and tidbits of investing wisdom that I am excited to pass along to you.

Because of it's length, I'm breaking the interview up into two podcasts. The first will cover Paul's background and lay out his views on gold, inflation and interest rates. In the second, we'll discuss what to do about this situation – how to translate this view of the world into profitable investment action.

I heartily recommend Paul's newsletter, and would love to see you at the upcoming 2008 Agora Financial Investment Symposium, to be held in Vancouver, BC from July 22 to 25. Paul and I will be there along with the legendary Jim Rogers, Rick Rule, Bill Bonner and a boatload of other excellent speakers. If you will be attending, be sure to drop me an email or leave a message on the Priced In Gold Hotline at 888-868-5656, and we'll see what we can work out for a get-together. Just watch for my pith helmet!

One of my favorite quotes from his Senate presentation:

“Whereas the prices of oil and wheat measured in dollars have soared over the course of this decade, they have, on the other hand, been remarkably stable when measured in terms of gold — gold having been the foundation of the world’s monetary system until 1971. It is, therefore, reasonable to conclude not that we are a experiencing a commodities bubble, but, rather, the end of what might usefully be termed a ‘currency bubble.’”

And from the Hard Asset talk, this wonderful idea:

So how could gold make a revival as a sort of international money? Well, we don't actually need a government run gold standard anymore. There are already private gold banks. They've been growing for some time. Their growth has roughly charted the decline of the dollar. People buy digital shares in gold. Gold is held in vaults by these banks, and you buy digital claims on them, just like when you buy a stock today you don't have a physical certificate. You have a digital representation of that stock.

If we all owned digital shares in gold, and we were able to move money from our accounts between us, and we were able to walk around with smart cards carrying representations of this digital gold, we'd be able to travel around the world, and to transact with one another. Think about it. You would go into a café in Sao Paolo, and you would order your cappuccino, and you would pay with a smart card that would debit your account for some flake of gold. And since people have always had confidence in gold as a long-term store of value, there's no reason why it couldn't play that role.

Dr. Steil also comments on why gold is a better monetary choice than a basket of currencies or commodities:

The problem with a basket is I think it's too abstract for people to connect with as a long-term standard of value. In other words, a basket is probably going to have to be run by some sort of institution, and people will probably over time lose faith in the institution.

The reason why I suggest that digital gold may have more attraction for people is because a system based on one commodity with unique monetary properties like gold does not have to be run by an institution. You can have a competitive market developing around gold as an international monetary standard. So that's the reason I think gold would probably make a better money than a commodity basket that would have to be managed by some large institution.

He points out that while the US Dollar may not be doomed in the immediate future, the dilemma described in 1960 by economist Robert Triffin remains unsolved today: if a national currency operates as the international currency, this currency must be supplied to the world by running either large balance of payment deficits, or large current account deficits. But when we do that, people eventually lose confidence in this currency because it can be printed without limit.

So far the US has pushed its deficits higher than many economists of the 1980s thought possible – past 3%, then 5% and recently 7%. But at some point, people will say "enough is enough. We don't trust your management of the dollar any more." And as Dr. Steil says, "that's a very dangerous situation to be in."

These are quite remarkable discussions of the US Dollar, gold, Federal Reserve policy and the future of money. I strongly recommend that you read through them, study the included charts and think about the implications for your investments.

Stocks (as indicated by the Dow Jones Industrials at 474) were last this low in September of 1996. But in those days, they were on the way up – about 15 years into a 20 year bull market – just leaving the foothills behind in the dramatic run-up to almost 1400 gold grams in 1999.

Some commodities have rallied, however. Platinum in particular has shot up dramatically – from about 54 to over 70 grams/oz in the last month. Silver is also showing some strength.

Going forward, remember that the tax refunds, rate drops, and mortgage relief plans all amount to devaluation of the money in in your pocket and in your bank and brokerage accounts. Never trust values given in fiat currency: they are subject to the whims of those who issue that currency. Keep your eye on the true value of your investments and assets – their value measured in gold.

From 1904 to 1929 the Dow grew 12 times in value from 47 to 568 gold grams, then gave up 89% of that gain, ending at 64 grams in 1933.  In the next phase, the Dow grew almost 14 times, to 893 grams in 1966.  This was followed by a long decline, losing almost 96% of it's value, finally bottoming around 37 grams in 1980.  Then the next bull market emerged, growing over 37 times to 1,393 gold grams in 1999.  The 8 years following this all time peak have been a downward march, representing a loss of almost 56% to the August 31, 2007 close of 618.262 gold grams.

What will the future hold?  I would love to hear comments from technicians on this topic… But if the last two market cycles are any guide, I suspect we will see the Dow trading below 200 gold grams sometime in the next 5 to 10 years, and it may not be until around 2035 that a new high is made.

There are many roads that could lead to the 200 gram level; the Dow could move sideways as the value of the dollar shrinks, or the Dow could keep making "new highs" in terms of a plummeting dollar, or the dollar could stabilize or even strengthen while the Dow collapses in nominal terms.

But if your goal is to build your real wealth, the key is to keep your eye on the ball: investing in assets that are growing in gold value, regardless of their price as viewed in the fun-house mirrors of fiat currencies.  The Custom Chart service can help you identify those opportunities, and we will be bringing more tools online in the future as well.