The Secret Currency

There’s a “secret” investment behind some of the world’s richest families… one that few Americans know anything about.

It’s beyond the reach of any government or corporation. And it’s capable of producing amazing results… In the past, this investment has delivered returns of 500% to 1,000%.

We call it the “secret currency.” And today, I’m going to show you how to take advantage of it personally.

The secret currency is a form of gold and silver. But it’s not your typical precious metals investment.

It has nothing to do with mining stocks, mutual funds, options, futures, or bullion. Instead, it’s a kind of currency used for centuries by many of the world’s richest families. But it’s not old-fashioned or obsolete. Dozens of wealthy families are still using this investment to both grow and safeguard their wealth. For example…

– The Rothschilds (at one time, the wealthiest family in the world)

– The Onassis family (Greek shipping magnate Aristotle married Jackie Kennedy after JFK died)

– The Hunt family of Texas (H.L. Hunt made his billions as an oil wildcatter)

– The DuPonts (whose descendants today run the second biggest chemical company in the United States)

– The Morgans (JP was one of the richest railroad men of the last 100 years)

– The Adams family (famous for producing two U.S. presidents)

– The Hopkins family (Johns gave money to build the university and the world-famous hospital, which both bear his name in Baltimore)

– The Green family (Hetty Green was once the wealthiest person in the world – wealthier than Bill Gates today)

– The royal Farouk family (which produced the last two kings of Egypt)

This investment is like regular gold and silver, only better – with the potential for much higher returns.

From 1972 to 1974, this investment rose 348%, according to an index that keeps track of its market as a whole. At the same time, stocks dropped 34%, according to the S&P 500 stock market index.

From 1976 to 1980, while the stock market plummeted 35%, according to the S&P 500 index, this investment realized 1,195% profits.

More recently, between 1987 and 1989, investors who took advantage of the secret currency saw profits of 665%. Stocks, meanwhile, went on a roller coaster ride – up and down dozens of times (sound familiar?) during this period.

The last time the Salomon Brothers brokerage firm included this vehicle in its annual investment survey, the secret currency ranked No. 1 over the prior 20-year span, with an annual return of 17.3%. In other words, it was the single most profitable thing you could do with your money over the previous 20 years.

It beat stocks, bonds, ordinary gold and silver, artwork, diamonds, U.S. Treasury bills, real estate, and oil, according to an article in the Chicago Tribune.

But if this investment is good enough for the world’s wealthiest families – the Rothschilds, DuPonts, Morgans, Adamses, Hunts, etc. – it’s good enough for you and me.

I want to show you how to make as much money as these folks have made – at least on a percentage basis.

I believe you could more than double your money with this investment. The last time the conditions were even close to this good (in 1987), investors made 665% profits in this investment.

These kinds of gains are possible all because of a glitch in the system, created by the U.S. government. I’ll get into all the details in a bit, but first let me explain why gold and silver are the safest places for your money now…

What We’re Certain of…It’s a No-Brainer

For me, the starting point is always the same… What is certain? What is known? What can we bank on? And is there an outstanding way to profit that nobody has already gobbled up?

One thing we’re certain of right now is that the Fed is going to do its best to prevent deflation (falling prices). The Fed has repeatedly stated it will print money – as much as necessary – to head this thing off. In an effort to calm any fears, the government has been as explicit as possible that it would rather overshoot in this process.

The obvious result is more paper dollars out there. And the next result is that a paper dollar is worthless. Consider this scenario… Say the supply of gold stays roughly the same. But say the supply of dollars out there increases dramatically. What should happen? It should cost more paper dollars to buy an ounce of gold.

And that is exactly what’s been happening. The gold price has pulled back from its 2011 highs. But it has risen from a low of around $260 an ounce in 2001 to around $1,275 an ounce today.

The same is true for silver. The silver price has risen from a low of around $4 an ounce in 2001 to around $17.

Chances are the Fed will be “fighting” this battle for a while. And therefore, chances are gold and silver will be an excellent place to profit from this fight in the years to come.

So I went looking for the best way to get into gold and silver right now… the way that will give us significant upside potential but will keep our downside risk limited. It’s actually hard to find…

We could own these precious metals outright. But if we’re right in this Fed scenario, we’d like a little more bang for our buck. We could buy gold and silver futures, but they’re risky – why risk losing more than our initial investment if we don’t have to? The next logical choice might be buying shares of mining companies like Newmont Mining, but mining shares are risky, too. I had to dig deeper.

The secret currency is the super-safe way to get into gold and silver and still have big upside potential…

The Glitch in the Gold System.

To understand this investment and how it works, we have to back up a little bit…

Before 1933, gold literally was money… Gold coins could jingle in your pocket. After 1933, President Franklin D. Roosevelt actually made it illegal for U.S. citizens to own gold or gold coins, upsetting two centuries of stable money…

For most of the 200 years before 1933 (going back to England), an ounce of gold was worth $20.67. Major governments had actually committed to giving you gold for paper money if you demanded it.

FDR changed all that. A month into his new presidency, he ordered all U.S. citizens to immediately exchange all their gold for paper money. His next move was to issue an executive order raising the price of gold from $20.67 to $35, which devalued the U.S. dollar by 41%. In essence, any savings U.S. citizens had were now worth nearly 41% less, by government decree.

Americans were forced to liquidate their investment holdings. Those who failed to do so faced a 10-year jail term, a $10,000 fine, plus a penalty of twice their investment’s value. This glitch in the gold system lasted 41 years. Americans were not allowed to invest in gold coins again until December 31, 1974, when President Ford finally re-legalized it.

Now, 80 short years after FDR trashed the gold standard, we’ve seen the value of the U.S. dollar decline by over 95%.

Today, our government wants to pull off what FDR did. It wants to squeeze out of a rough period of debt by creating a massive inflation. The massive devaluation of the dollar worked for FDR – industrial production rose by 60% and unemployment fell from 25% to 14% from 1933 to 1937. Our current government plans to do the same, devaluing our money to stimulate the economy. We can sit back and watch, or we can take advantage of the glitch and pocket gains of 100% or more…

The Secret Currency of U.S. Gold Coins

What I want to tell you about is a way to invest in American gold coins.

Before you dismiss this idea, remember that this is an investment the most powerful and wealthy families in the world have used for generations.

But it’s not just any coins I want to show you how to invest in… It’s a very specific group of gold coins.

Let me explain…

Before Franklin Delano Roosevelt, there was Teddy. Teddy had a thing for coins. He passionately hated America’s coins, calling them “artistically of atrocious hideousness.” America had become the most powerful nation on Earth. And the President felt that our most valuable coins should be a reflection of our status. So he sought out the foremost sculptor of the day, Augustus Saint-Gaudens…

“Dear Mr. President…” Saint-Gaudens replied to Teddy. “Well! Whatever I produce cannot be worse than the inanities now displayed on our coins, and we will at least have made an attempt in the right direction…”

Though in poor health, Saint-Gaudens delivered. He designed the gallant $20 “Double Eagle” gold piece, a design that today is nearly unanimously considered the most beautiful coin of all time. It was Saint-Gaudens‘ last work. He died and never saw the fruits of his labor.

The coins were minted from 1907 until 1933 when Teddy Roosevelt’s cousin Franklin Delano Roosevelt made it illegal for individuals to own gold and melted down many of these gorgeous coins. After gold ownership was banned in 1933, private ownership of gold was not allowed in the U.S. until 1974.

While the entire 1933 series of Saint-Gaudens Double Eagles was supposedly destroyed by FDR, 10 of the coins somehow sneaked out of the mint. Over the years, nine have been recovered and destroyed by the Secret Service. The government seized the 10th coin in New York and made arrests, but the government’s case fell apart and a compromise was met. The coin would be auctioned, with the proceeds split half and half between the government and the other party. This 1933 Saint-Gaudens $20 Double Eagle sold for $7,590,000, the highest price ever paid for a coin.

A Saint-Gaudens $20 gold piece would have an intrinsic value of just a little less than the price of an ounce of gold, simply because it contains nearly an ounce of gold.

Of course, coin enthusiasts will always pay more than meltdown value for Saint-Gaudens $20 gold pieces – as they are considered to be the most beautiful coins in the world. But right now, we can own a piece of history, and we can own real money with real gold, for a small premium over the meltdown value.

The Benefits of Buying U.S. Gold Coins

First, these coins represent an “island of safety” from currency fluctuations. Their intrinsic value and desirability are not dependent on what’s going on with the dollar, the euro, or any other individual currencies. They’re also saleable in almost any place on Earth in a wide range of currencies, as opposed to many traditional assets that are denominated in dollars.

A second benefit is anonymity. Classic American gold coins are a way to hold some of your wealth without showing up on Forbes’ list of the wealthiest Americans. Things like real estate, stocks, and bonds can be easily tracked. On the other hand, owning gold coins is a way of taking your wealth out of view of almost anyone who wants to know what you own.

Third, unlike most other investments, pre-1933 U.S. gold coins are things that you can actually enjoy. You can buy a coin, hold it in your hand, and enjoy the history of it.

Finally, U.S. Gold coins are an anti-confiscation hedge. The last time gold ownership was illegal in the United States (1933-1975 ) holding rare gold and silver coins was not illegal. Even FDR, with all his power at the height of the Depression, did not make rare coin ownership illegal.

What Kind of Upside Potential Are We Talking About?

Pre-1933 U.S. gold coins have experienced a few roaring bull markets since gold ownership became legal again. Coin prices (as measured by the CU 3000 Index) were up 1,195% in the 1976-1980 bull market in coins. In other words, a $10,000 investment would have risen to $129,500 in value.

In the 1987-1989 bull market, coin prices (as measured by the CU 3000 Index) rose by 665%. Coins like the Saint-Gaudens in pristine “Mint State” condition (coins graded “MS65” by the coin grading service, “PCGS”) were big winners.

Our Investment Prospects

When it comes to gold coins, there are basically two types… rare ones and common ones.

The common gold coins are called “bullion coins” because a one-ounce gold bullion coin generally sells at about the same price (or at a small premium to) an ounce of gold. Famous bullion coins include South African Krugerrands and Canadian Maple Leafs.

The rare U.S. gold coins are called “numismatic coins.” These coins trade based on their rarity, scarcity, and collector demand. This means a rare and highly prized one-ounce gold coin can easily fetch at least tens of thousands of dollars more than the price of ordinary bullion.

Then there is a third type of gold coin… The “hybrid coin,” I call it. And this is what I like. These coins have characteristics of both bullion and numismatic coins, but they’re not really either.

They have a high collectible value, yet they are easy to buy and sell. Like bullion coins, there are enough of them to go around, plus they contain just under an ounce of gold.

In short, I believe the upside potential in these coins is astounding. The story is simple. Today’spremiums are the lowest in history. Less than half of the premiums we saw in the 1990s and early 2000s. With prices so low, you should definitely have these coins in your portfolio.

What We Hold in the True Wealth Portfolio

I first recommended buying gold coins in True Wealth back in June 2003. I recommended three different coins… All of them more than doubled in the time they were on our recommended list.

One of them performed so well, it is in the “Hall of Fame” at my publisher, Stansberry Research. It’s one of the top-10 best-performing recommendations in the history of ALL the newsletters that StansberryResearch publishes. That particular coin rose 273% in value.

In the January 2010 issue, I recommended selling all of our coins. The price of gold had hit its all-time high between the previous issue and that one. We caught the peak and sold as a downtrend started.

I summed my thoughts up in that issue: “I bought when [gold] was cheap and ignored. And I’m selling when gold is up hundreds of percent and it is popular. Sell your gold coins now, while the gold market is hot.”

Our timing was right. Gold coins like the ones I recommended fell 20%-25% soon after.

And in the October 2010 issue, we added the MS65 Saint Gaudens to our model portfolio. Our upside potential is unlimited – and historically, rare coins have soared in gold bull markets.

If the dollar continues to lose value in the long run, the gold price should rise dramatically. That means the value of the “hybrid” gold coins I describe in this report could skyrocket.

We have enormous upside potential. Triple-digit returns are possible in U.S. gold and silver coins now.

A Rational Reason to Buy Gold.

Gold rises in times of fear… the old saying goes. And it is true. But how exactly do you measure fear? It’s tough because fear is not rational. However, right now there is an outstanding and very rational reason for the price of gold to continue rising for a long period of time. It has nothing to do with fear. It’s simple. It could lead to extraordinary profits. And I’ll share it with you today.

No Chicken Little Here

Most gold writers push the fear buttons… “The world is going to hell in a handbasket – you’d better own some gold,” they say.

I try to stay out of the fear crowd. I’m agnostic when it comes to investments… I don’t love gold or love stocks. I just want a good buy. And right now, there is an excellent rational reason to buy gold. You can leave fear out of it.

Gold is attractive now because it’s attractive… fear or no fear. Let me explain…

Money Flows Where It’s Treated Best

Gold pays no interest. So if the bank is paying you 7% interest on your cash, then chances are you’ll prefer to have your money in the bank. It makes sense… because due to compound interest, in 10 years you’d have doubled your money in the bank.

But consider this… Imagine if the bank was paying zero-percent interest… then which is more attractive, paper dollars or gold? In this case, both pay no interest. And in this case, a rational investor would choose gold. The government could print money and make the paper money worthless. It can’t print gold.

Money flows where it’s treated best. If there are high interest rates, then gold does poorly, as money flows where it’s treated well. If interest rates are low or zero, then money flows toward gold. Gold can’t compete with high interest rates. But it is extremely competitive with zero-percent interest. “But wait,” you say. “How did gold run from $100 to $800 in the late 1970s?”

The “Real” Deal… Considering Inflation.

If you’re just looking at the current interest rate, you’re not getting the whole picture. You have to consider inflation as well, to get to the “real” interest rate. For example, banks might pay you 1% interest. But inflation may be 2%. So the “real” interest rate – the interest rate AFTER inflation – would actually be negative 1%. And that explains it all…

Right now, investors lose money to inflation by putting it in the bank. When faced with -1% interest in cash, or 0% interest in gold, the smart money is choosing to get out of cash and into gold. Back in 1979, short-term interest rates were 8%, but inflation was 13%. That means your “real” return was negative 5% a year on your cash. Gold went from $100 to $800 in no time. Then, at the end of the decade, Fed Chairman Paul Volker drove short-term interest rates through the roof. By 1981, short-term interest rates were 15%, and inflation was back into the single digits. That means investors got an outstanding “real” return on their money… and gold pulled back into the $300-plus range by 1982.

The Present Situation Is Like the 1970s

Back in the 1970s, the “real” return on cash (the return after inflation) was negative. So money flowed out of cash and into gold. Today, for the first time since the late 1970s, we’re seeing the same thing. The “real” return on cash is negative. It’s gold time. No fear-mongering necessary.

Gold and silver coins are an excellent value right now… but not just any coins. The “secret currency” ones – the “hybrid” coins – are the coins that I believe have the lowest downside risk and the most upside potential.

Make sure you take advantage of today’s incredibly low premiums… Don’t miss out!

Steve Sjuggerud, PhD

True Wealth.