THE

GOLD
BOOK
Your Guide to Investing
in Precious Metals
Special Report THE GOLD BOOK

Table of Contents
i. The Giant Global Monetary Experiment............................................................................... 3

ii. Why Gold is Money............................................................................................................... 6

iii. Gold Holds Its Value. Paper Money Doesn’t........................................................................ 11

iv. How Gold Protects You in a Monetary Crisis...................................................................... 14

v. Should You Buy Gold ETFs?............................................................................................... 17

vi. Gold With Leverage – Gold Stocks..................................................................................... 20

vii. Doug Casey on Why Gold Could Go Hyperbolic............................................................... 27

viii. Gold Stocks With the Lowest Risk...................................................................................... 31

ix. Silver: Gold’s More Volatile Cousin..................................................................................... 33

x. Buying Silver Bullion............................................................................................................ 37

xi. Should You Buy “Paper” Silver?............................................................................................ 39

xii. Should You Buy Collectible Coins?...................................................................................... 41

xiii. The Perth Mint..................................................................................................................... 46

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CHAPTER 1

The Giant Global Monetary

Experiment
by casey research

We’re living through the most dangerous financial experiment in the history of mankind.

And you’re a guinea pig.

In the years during and after the 2007 – 2009 credit crisis, the U.S. Government engaged in a
desperate attempt to stave off a global financial disaster.

Acting through the Federal Reserve, the government’s defining act during this time was to drop
the federal funds rate to effectively zero.

It was an extreme act…one that made it very easy for businesses, consumers, and real estate
buyers to borrow money.

Americans took the Fed’s lead. They borrowed trillions of dollars to fund businesses, stock
purchases, commercial real estate projects, and single-family homes.

They also borrowed to buy consumer items like cars, jewelry, furniture, and electronics.

By making enormous amounts of credit available, the Fed stoked the economy, stocks, and the
real estate market.

Stocks tripled from their 2009 lows.

Commercial real estate prices jumped to new record highs.

Companies with poor credit ratings borrowed record amounts of money...far more than they
did before the 2008 crisis.

In the first quarter of 2017, the net worth of American households reached $94.8 trillion, an
all-time high.

On the surface, things look good. But the long period of low interest rates has created an
extremely dangerous situation.

By taking interest rates to zero and holding them there for years, the Fed has created an epic
amount of malinvestment and reckless speculation.

Not billions...but trillions.

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For most of the 80s and 90s, the Fed funds rate was between 5% - 10%. This relatively high cost
of borrowing acted as a “brake” on funding bad business ideas, foolish real estate purchases, and
“want, not need” consumer items. It didn’t eliminate these things, but it did limit them.

Now, there is no brake. Just runaway borrowing and spending. The prolonged period of zero
percent interest rates has completely warped the economy.

We are now Alice in Wonderland.

Since borrowing is ridiculously, laughably cheap, no business idea is too dumb to fund...no
$120,000 car goes unsold to someone who can’t afford it…and no overpriced house sits on the
market for more than a month.

The old question “Does it make sense to borrow this much money?” has been replaced with
“How much can I get?”

The U.S. government isn’t the only player in this story. It’s just the biggest and most powerful. The
governments of Japan, China, Europe, Canada, and South America are doing the same thing.

For the first time in history, all major governments have dropped interest rates to effectively
zero.

This has never been done before. It’s a reckless, global experiment in easy money. And it’s
already destroyed trillions of dollars in wealth…

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In the just the last four and a half years, the Japanese yen is down 14%...the Canadian dollar is
down 28%...the Australian dollar is down 35%...and the euro is down 5%.

These are stupendous moves for major currencies.

After all, we’re not talking about small volatile stocks. We’re talking about the value of money in
peoples’ bank accounts.

It’s a stunning loss of wealth…in a very short period of time.

And given that most governments are still going full-throttle with easy-money policies, it’s only
going to get worse.

This book will show you how to protect yourself from this massive loss of wealth by owning
gold.

It will teach you everything you need to know about gold, like why gold is money…

Why gold has held its value for thousands of years…

Why gold has protected millions of people from monetary crises over the years…

How to amplify your profits on gold…

And why higher gold prices are a lock.

The giant global monetary experiment will end in a catastrophe. It will disrupt the lives of many
people.

But it doesn’t have to be a catastrophe for you.

By owning a healthy amount of gold and taking the other steps explained in this book, you’ll
make it through the great global monetary experiment, no problem.

You might even be richer by the time it’s over.

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CHAPTER 2

Why Gold is Money

by doug casey

It’s an unfortunate historical anomaly that people think about the paper in their wallets as
money. The dollar is, technically, a currency. A currency is a government substitute for money.
But gold is money.

Now, why do I say that?

Historically, many things have been used as money. Cattle have been used as money in many
societies, including Roman society. That’s where we get the word “pecuniary” from: the Latin
word for a single head of cattle is pecus. Salt has been used as money, also including in ancient
Rome, and that’s where the word “salary” comes from; the Latin for salt was sal (or salis). The
North American Indians used seashells. Cigarettes were used during WWII. So, money is
simply a medium of exchange and a store of value.

By that definition, almost anything could be used as money, but obviously, some things work
better than others; it’s hard to exchange things people don’t want, and some things don’t store
value well. Over thousands of years, the precious metals have emerged as the best form of
money. Gold and silver both, though primarily gold.

There’s nothing magical about gold. It’s just uniquely well-suited among the 92 naturally
occurring elements for use as money...in the same way aluminum is good for airplanes or
uranium is good for nuclear power.

There are very good reasons for this, and they are not new reasons. Aristotle defined five reasons
why gold is money in the 4th century BCE (which may only have been the first time it was put
down on paper). Those five reasons are as valid today as they were then.

When I give a speech, I often offer a prize to the audience member who can tell me the five
classical reasons gold is the best money. Quickly now – what are they? Can’t recall them? Read
on, and this time, burn them into your memory.

Money
If you can’t define a word precisely, clearly and quickly, that’s proof you don’t understand what
you’re talking about as well as you might. The proper definition of money is as something that
functions as a store of value and a medium of exchange.

Government fiat currencies can, and currently do, function as money. But they are far from
ideal. What, then, are the characteristics of a good money? Aristotle listed them in the 4th
century BCE. A good money must be all of the following:

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• Durable: A good money shouldn’t fall apart in your pocket nor evaporate when you
aren’t looking. It should be indestructible. This is why we don’t use fruit for money. It
can rot, be eaten by insects, and so on. It doesn’t last.

• Divisible: A good money needs to be convertible into larger and smaller pieces without
losing its value, to fit a transaction of any size. This is why we don’t use things like
porcelain for money – half a Ming vase isn’t worth much.

• Consistent: A good money is something that always looks the same, so that it’s easy
to recognize, each piece identical to the next. This is why we don’t use things like
oil paintings for money; each painting, even by the same artist, of the same size and
composed of the same materials is unique. It’s also we don’t use real estate as money.
One piece is always different from another piece

• Convenient: A good money packs a lot of value into a small package and is highly
portable. This is why we don’t use water for money, as essential as it is – just imagine
how much you’d have to deliver to pay for a new house, not to mention all the problems
you’d have with the escrow. It’s also why we don’t use other metals like lead, or even
copper. The coins would have to be too huge to handle easily to be of sufficient value.

• Intrinsically valuable: A good money is something many people want or can use. This is
critical to money functioning as a means of exchange; even if I’m not a jeweler, I know
that someone, somewhere wants gold and will take it in exchange for something else
of value to me. This is why we don’t – or shouldn’t – use things like scraps of paper for
money, no matter how impressive the inscriptions upon them might be.

Actually, there’s a sixth reason Aristotle should have mentioned, but it wasn’t relevant in his age,
because nobody would have thought of it…it can’t be created out of thin air.

Not even the kings and emperors who clipped and diluted coins would have dared imagine that
they could get away with trying to use something essentially worthless as money.

These are the reasons why gold is the best money. It’s not a gold bug religion, nor a barbaric
superstition. It’s simply common sense. Gold is particularly good for use as money, just as
aluminum is particularly good for making aircraft, steel is good for the structures of buildings,
uranium is good for fueling nuclear power plants, and paper is good for making books. Not
money. If you try to make airplanes out of lead, or money out of paper, you’re in for a crash.

That gold is money is simply the result of the market process, seeking optimum means of
storing value and making exchanges.

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Gold’s main use, contrary to the belief of some, isn’t in jewelry or dentistry – although those
uses are important. Its main use has almost always been as money. But gold’s ancillary uses are
growing in importance because, given its physical characteristics, it’s a high-tech metal. It’s one
of the most resistant to chemical reaction, one of the most ductile, the most malleable of all the
elements, and it’s an exceptional electrical conductor.

There are lots of other advantages to gold as money. It’s by far the most private kind of
money; gold coins, unlike paper currency, don’t even carry serial numbers. That makes it
truly untraceable. At current prices, it’s more portable than cash, even in the form of $100
bills. It doesn’t retain traces of drugs, as does currency, which makes it less liable to arbitrary
confiscation. Although efforts have been made to counterfeit gold bars, with tungsten filler and
such, it’s much easier to authenticate than currency.

Until quite recently, 90% of the world’s people were either flat-out prohibited from owning gold
(Russia, China and the rest of the ex-communist world) or simply too poor to consider it (most
Indians and other residents of the Third World). But these people are now allowed to own gold
and have a fast-increasing ability to buy it. And they’re rapidly doing so. Their cultures have
long histories with the metal and recent histories of living in a police state; they understand
the value of real money. Although common people are now the biggest gold buyers, their
governments and central banks are accumulating it as well.

I expect that gold will soon become the preferred medium of exchange for many. Early adopters
will include dealers in drugs, armaments, and other prescribed merchandise; these folks are very
security-conscious. They will be joined by all manner of people who just want to do business
below government radar. And in the years to come, paper currency is gradually going to be
eliminated by governments in favor of debit cards, credit cards and other media of electronic
transfer. Governments prefer these things, for obvious reasons. People, therefore, are going to
need a private way to trade when paper cash is unavailable.

It’s not just that cash will be harder to come by and harder to use. People won’t want to hold it
as inflation gets serious; as U.S. dollars are increasingly viewed as hot potatoes, people around
the world will gradually go to gold. In 100 or so countries, the dollar is already the de facto
currency for large purchases and long-term saving. What will people in these countries do as
the dollar starts losing value rapidly? They won’t go back to their local currencies; their only
reasonable alternative is gold. All these things will add to demand for the metal. This is good
news for those who own gold in size now.

Almost everybody, even gold bugs, has far too little gold. Most people have no gold at all. Pity
the poor fools. Gold is going to be reinstituted as money within our lifetimes, simply out of
necessity. But that can only happen at higher prices, since only about six billion ounces exist
above ground in the entire world.

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Debt
Now that we’ve defined what money is, let me further define what money is not: debt. All
U.S. dollars, which is to say Federal Reserve Notes, are debt. They are neither redeemable for
anything by their issuer, nor is there a limit on how many can be created. They represent only a
vague claim against the “good faith and credit” of the United States government, which is to say
the government’s ability to extract taxes from its subjects. But Uncle Sam has shown himself to
be remarkably lacking in good faith and is currently embarked on a course to destroy his credit.

The dollar is literally an “IOU nothing.” It’s true that your grocer and your barber have to accept
the dollar because of “legal tender” laws, and because they currently wouldn’t know what else to
take in payment. But that’s not true of foreigners, who own something like six trillion dollars.

Paper money is an excellent means for governments to tax people indirectly, surreptitiously,
through inflation. That’s one reason central bankers love paper money, but also, phony economic
theories, like those of John Maynard Keynes, hold that the government not only can but should
meddle with the economy, and the ability to print paper money gives them a means to do that.

In today’s world, not only do people around the world take it for granted that paper is money,
but that it should be so.

But it’s all nonsense. After the current system collapses, as every paper money system in the past
has collapsed, some form of money will have to replace it, and it’s almost certainly going to be gold.

You know, in the 19th century, the “paper money” you carried in your wallet was called
banknotes. Why? Because they actually were notes from your bank representing a specified
amount of real money on deposit. People carried these things because they were much more
convenient for large amounts of money than chests of gold. Dollars today say “Federal Reserve
Note,” not “XYZ Bank Note” on the back, because they aren’t redeemable for anything
besides more Federal Reserve notes. That’s why today’s paper money substitutes are called fiat
currencies; they have zero intrinsic value and are not redeemable for anything, but are accepted
because the government will put you in jail if you don’t. It’s a fiat accomplished by force, not real
value recognized by those who accept the notes.

Hundreds of years ago, people accepted bank notes because they knew the reputations of the
banks issuing them (when you traveled, you went to a reputable local bank, which knew the
reputation of the bank that issued your notes, and the local bank could issue you new notes in
local currency, etc.). There was no central authority to certify these notes. But today, people don’t
think that way. They think it takes a government to assure the value of money.

Of course, anyone in Zimbabwe can tell you a government’s guarantee is not necessarily worth
anything. A collapse of the dollar – the world’s de facto reserve currency – could spark such a
change in that way of thinking.

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Gold is also the only asset class that is not also simultaneously someone else’s liability. And in a
world as financially unstable as today’s, you just don’t want to hold on to someone else’s liabilities
any more than you have to. Especially if that’s a liability of an entity like the U.S. government.

Other currencies are no better; most are worse, and many of them are backed largely by dollars.

Governments, however, are not the only ones who think that debt is money. It seems that many
people who get a bunch of credit cards, enabling them to spend beyond their means, imagine
that they have money. And they also think that owning the debt of others – like government
bonds – means they have money. A bank deposit isn’t really cash; it’s a debt of the bank. There
are about three trillion dollars in money market funds; 100% of that money is invested in the
short-term debt of banks, corporations and governments. I would be very leery of these things.
Debt is not always repaid. Money, however, simply “is.” That distinction is lost on almost
everyone. Don’t be among them.

So you should own gold because it’s money, because of its security, and because it’s an excellent
speculation. If you think of your gold as cash, and the dollar as a merely temporarily fashionable
means of exchange, you’ll find yourself loading your portfolio with much more gold and gold
proxies. That will protect you against the very rapid loss of value the dollar faces in years to
come. Inflation is going to truly get out of control.

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CHAPTER 3

Gold Holds Its Value. Paper Money

Doesn’t.
by justin spittler

Nothing holds its value like gold…

During the time of Jesus Christ, an ounce of gold bought a toga, a leather belt, and a pair of
sandals.

Today, an ounce of gold buys the modern equivalent: an expensive suit, a belt, and a pair of
shoes.

Or consider an example from more recent times…

In 1913, an ounce of gold bought 157 gallons of gas.

Today, more than a hundred years later, an ounce of gold buys over 546 gallons of gas.

That’s a 248% increase in purchasing power.

Compare that to the US dollar…

In 1913, a twenty-dollar bill bought 167 gallons of gas.

Today, a twenty-dollar bill will buy you…8.5 gallons of gas.

That’s a 95% drop in purchasing power.

The next chart shows the purchasing power of an ounce of gold vs. a twenty-dollar bill over the
last 100 years.

In 1913, a twenty-dollar bill was worth slightly more than a 1oz gold coin.

But today, a 1oz gold coin is worth 6,436% more than a twenty-dollar bill.

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It couldn’t be clearer. Gold holds its value, and usually increases in value, over long periods.

Paper currency, like the U.S. dollar, loses value over time.

This is because gold is extremely hard to debase…

“Debase” means to make less valuable. It’s easy for a government to debase paper currency by
creating more of it. The central bank of the United States, the Federal Reserve, can press a
button and create $500 billion out of thin air. Each dollar created makes existing dollars worth
less.

Governments can’t create gold from thin air. Thanks to the laws of nature, the world’s gold
supply is barely growing.

Most of earth’s easy-to-mine gold has already been mined. The rest is in hard-to-access places
like the bottom of the ocean.

The next chart shows the world’s gold supply versus the “M2” money supply, a common
measure of the number of U.S. dollars in existence, since 1959.

As you can see, the amount of dollars has grown exponentially. But the amount of gold barely
moved.

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This is a big reason why, in 1913, one single U.S. dollar could buy…

• a dozen eggs

• plus a pound of sugar

• plus a pound of bacon

• plus a pound of rice

• plus two pounds of potatoes

• plus a pound of pork chops.

But in 2018…$1 can barely buy a pack of gum.

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CHAPTER 4

How Gold Protects You in a

Monetary Crisis
by casey research

It can completely destroy your savings and ruin your life…

In 1989, inflation in Argentina reached 5,000%.

Supermarkets couldn’t update their prices fast enough. They had to announce price increases
over the intercom.

Rioters looted supermarkets just to get food. People’s bank accounts became worthless.

This is what a monetary crisis looks like. It’s when the value of a nation’s currency drops rapidly.
And it’s happened to dozens of countries in the last few decades.

Monetary crises happen when governments create too much paper money.

Most governments are careful not to create so much paper money that it causes a monetary
crisis…

Instead, they’ll create paper money at a rate that causes prices to increase 2-4% every year.
That’s why almost all developed countries experience slow, creeping inflation most of the time.

The truth is, gold is just one of many assets that protects against slow, creeping inflation. The
value of assets such as farmland, a business, or stocks tend to keep up with slow inflation, too.
Putting your money in these things will likely protect your savings from slow inflation over a
long period.

But a monetary crisis is different. During a monetary crisis, the value of a currency drops
rapidly. A gallon of milk might cost $10 one morning and $20 that night.

What’s worse, people find they don’t have nearly as much “purchasing power” as they thought
they did…

You may think you have enough money saved up to pay for six months of living expenses. But
when the value of the currency plummets, you’ll find you only have enough money to live on for
a couple weeks.

This often results in riots... and violence…and harsh government actions.

Under these crisis conditions, many assets that are valuable in normal times lose their value.

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For example, a business located in a violent country usually isn’t worth much. And you can’t
easily sell it to buy groceries for your family.

A desperate government can take your farmland. Stocks will crash during a monetary crisis.

Gold is the only financial asset that doesn’t have these problems…because it is small and
anonymous.

Gold packs huge value in a small amount of space. You can easily hide $100,000 worth of gold
in your house. Or buried in your backyard.

And no one (including the government) has to know that you own it.

This makes gold better than every other asset during a crisis.

Gold isn’t special because it holds its value over time. A lot of assets hold value over time.

And gold isn’t special because it protects against slow inflation. A lot of assets protect against
slow inflation.

Gold is special because it is the only asset that protects against the rapid drop in value of paper
money during a monetary crisis…and against the day-to-day chaos that always comes with it.

Spending Money
A monetary crisis can last weeks or months. One of the keys to surviving is making sure you
can buy necessities for yourself and your family.

You’ll need to buy things like food…medicine…and fuel.

Gold is too valuable to pay for these things.

Buying everyday items with a gold coin is like paying for coffee with a $100 bill and getting no
change.

This is why you should also own silver.

Silver is just as good as gold at preserving wealth. It has also retained its value for thousands of
years.

But silver is far less valuable than gold. This makes it far more useful than gold for buying small,
day-to-day items during a crisis.

Silver is the perfect “walking around” money during a crisis. You could buy a week’s worth of
food for your family with a handful of silver coins. Or you could buy canned goods with one
silver coin at the grocery store. And diapers at the drugstore with another silver coin.

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You can’t do that with gold.

Owning gold ensures that that a monetary crisis won’t destroy your wealth. But having silver on
hand means you can buy the things that matter most if we enter a monetary crisis.

We recommend owning both physical gold and silver. If the “crap hits the fan,” keep your gold
hidden. Use it to store your wealth.

And use silver to buy the things you and your family need.

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CHAPTER 5

Should You Buy Gold ETFs?

by adam crawford

A gold exchange-traded fund (ETF) is a financial product designed to track the price of gold.
Some people call gold ETFs “paper gold.”

Gold ETFs trade on major exchanges, just like stocks. A share in a gold ETF represents a fixed
amount of gold. For example, one share of SPDR Gold Trust (GLD), the most popular gold
ETF, represents roughly one-tenth of an ounce of gold.

A company called ETFS Metal Securities Australia launched the first gold ETF in 2003. Today
there are over a hundred gold ETFs worldwide worth nearly $100 billion.

The big advantage of gold ETFs is convenience…

If you have a standard brokerage account, you can buy and sell gold ETFs the same way you
buy and sell stocks. This allows you to buy and sell gold without leaving your house.

When you buy a gold ETF, you don’t have to…

99 Drive to the coin shop

99 Deal with the hassle of shipping physical gold

99 Pay storage fees or buy a safe

99 Dig a hole in your backyard in the middle of the night so your neighbors won’t notice

99 Worry about someone stealing your gold ETF

99 Worry about forgetting where you hid your gold

You can also “trade” gold ETFs. It’s easy to buy and sell them in the same day. You can sell them
short. You can even buy and sell options on gold ETFs.

But gold ETFs also have a huge disadvantage…

Doug Casey has said, “Gold is the only financial asset that’s not simultaneously someone’s liability.”

What sets gold apart from other financial assets is that gold is valuable in itself. Its value doesn’t
depend on someone else keeping up their end of a bargain.

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Consider this…

A stock is only valuable if management executes its business plan well.

A bond is only valuable if the borrower pays you interest and keeps its promise to pay back the
principal.

U.S. dollars only hold their value if the U.S. government doesn’t print too much money.

Physical gold is different. It doesn’t need someone to keep a promise to be valuable.

But gold ETFs do not have this advantage.

When you buy a gold ETF, you technically own the underlying gold. But that’s not the same
as owning physical gold. The gold you “own” through a gold ETF isn’t under your control. You
have to rely on the ETF company to store it and keep it safe. You have to trust that the gold is
really there.

During ordinary times, the gold likely is there. But one of the reasons we own physical gold is
to protect against an extraordinary event: a monetary crisis.

Many gold ETFs are run by large financial institutions. There’s a very good chance some these
institutions could blow up when a monetary crisis hits. That could leave you unable to access
“your” gold when you need it most.

Please remember this. It’s extremely important:

A gold ETF will not protect you during a monetary crisis. A gold ETF is not a substitute for
owning physical gold.

If you understand that a gold ETF is not a substitute for physical gold…

And you still want to own a gold ETF…

Here’s what to look for in a good gold ETF:

High correlation with the price of gold: The purpose of a gold ETF is to track the price of
gold. Most gold ETFs track gold within a percentage point or two.

Before buying a gold ETF, check how well it tracks the price of gold. Most gold ETFs post this
information on their websites.

There’s no reason to own a gold ETF that can’t even track the price of gold.

High volume: Volume is the number of shares an ETF trades per day. High volume is better
than low volume because high volume means an ETF is more liquid. Liquidity helps you enter
and exit a position at a fair price. It makes it harder for one large buyer or seller to push the
price around.

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Avoid gold ETFs with low volume. We recommend only buying gold ETFs with at least ten
thousand shares traded per day. The two most liquid gold ETFs are the SPDR Gold Trust
(GLD) and iShares Gold Trust (IAU).

Fees: All gold ETFs charge fees. It’s how they pay for things like the salaries of the people who
run the ETF.

Fees are typically between 0.25% and 0.40% per year. At 0.25% per year, iShares Gold Trust’s
(IAU) fees are at the low end. At 0.39% per year, SPDR Gold Trust (GLD) and ETFS Gold
Trust (SGOL) fees are at the high end.

Redemptions: Many gold ETFs advertise that they will “redeem” your shares for physical gold.
This means the company will give you physical gold in exchange for your shares if you ask.

But there’s a big catch. All gold ETFs that we know of will only redeem very large quantities
of gold. SPDR Gold Trust, for example, will only redeem 100,000 or more shares. That equals
roughly 10,000 ounces of gold…which is worth roughly $11 million.

For practical purposes, assume that you can’t redeem your gold ETF shares for physical gold.

Options: As I mentioned earlier, you can buy and sell options on liquid gold ETFs. If you want
to trade options on a gold ETF, SPDR Gold Trust (GLD) is your best bet. It has the biggest
and most liquid selection of options.

The bottom line…

Don’t be afraid to use gold ETFs. Use them to trade the ups and downs of the market. Trade
options on them.

Just don’t confuse gold ETFs for physical gold. Gold ETFs will not protect your wealth in a
crisis like physical gold will.

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CHAPTER 6

Gold with Leverage – Gold Stocks

by casey research

You can make more money with your gold investments…

As much as two to three times more.

It’s simple. You don’t have to buy options or futures or anything complicated.

And it only involves a bit more risk than buying bullion. But the potential upside could ignite
your portfolio…

Gold Stocks Offer Leverage

Gold stocks are shares of companies that produce gold. These companies dig up the ore that
contains the metal and sell it to refineries.

If you’ve ever bought a gold coin, a gold necklace, or gold earrings, that metal came from a
producer’s mine.

Gold stocks offer leverage to the gold price. That’s the reason to hold them.

There are three ways a producer can deliver leverage. First, it can grow production. Second, it
can reduce costs. These are both good.

But there’s a third, more explosive way a gold producer can deliver leverage…

We call it “slingshot profits.”

Imagine a gold company. Let’s call it Gold Digger Corporation…

Gold Digger produces gold for $1,000 per ounce. If the gold price is $1,200 when they sell,
Gold Digger makes a $200 profit on every ounce.

The company’s earnings are calculated from that $200 profit. Assuming the company has low
debt, it’ll earn a decent profit. And its stock would be attractive to investors.

Let’s say the gold price rises to $1,300. Now Gold Digger has a $300 per ounce profit ($1,300 -
$1,000 = $300).

But look at what happened to their profit: it grew by 50%...while the price of gold only
increased by 8.3%.

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Put another way, Gold Digger’s profit went up $100 per ounce, from $200 to $300. And the
company didn’t do anything different.

That’s with a modest jump in the gold price. If gold rises to $1,500, Gold Digger’s profit would
grow by a whopping 200%.

This is why gold stocks often rise two to three times more than the price of gold.

It’s happened before…

Four Big Boom Cycles

Below, we’ve listed historical returns for gold producers during four separate cycles when gold
boomed: 1979-1980; 1981-1983; mid-1990s; and, 2001-2006.

These are not hypothetical returns. They are real.

First up, the granddaddy of all gold bull markets: 1979-1980…

Gold more than tripled during this period. But gold stocks more than quadrupled.

Returns of Producers from 1979 to 1980

Company Price on 12/29/1978 Sept. 1980 Peak Return
Campbell Lake Mines $28.25 $94.75 235.4%
Dome Mines $78.25 $154.00 96.8%
Hecla Mining $5.12 $53.00 935.2%
Homestake Mining $30.00 $107.50 258.3%
Newmont Mining $21.50 $60.62 182.0%
Dickinson Mines $6.88 $27.50 299.7%
Giant Yellowknife Mines $11.13 $39.00 250.4%
AVERAGE 322.5%
Gold 214.0%

This wasn’t the only time gold stocks surged…

From 1981 to 1983, gold producers returned over 70%, on average. And this happened in less
than two years.

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Returns of Producers from 1981 to 1983

Company 1981 Price Price Peak Date of High Return
Agnico-Eagle $9.50 $21.00 Aug. 83 121.1%
Sigma $14.13 $24.50 Jan. 83 73.4%
Campbell Red Lake $16.63 $41.25 May. 83 148.0%
Sullivan $3.85 $6.00 Mar. 84 55.8%
Teck Corp Class B $17.00 $21.88 Jun. 81 28.7%
AVERAGE 85.4%
Gold 10.8%

These profits stemmed from a mere 10.8% rise in gold.

There was another boom in the 1990s. The average gold producer went up more than 200%...
while gold only rose 8%.

Returns of Producers in Mid-1990s

Company Pre-Bull Market Price Price Peak Date of High Return
Kinross Gold $5.00 $14.62 Feb. 96 192.4%
American Barrick $28.13 $44.25 Feb. 96 57.3%
Placer Dome $26.50 $41.37 Feb. 96 56.1%
Newmont $47.26 $82.46 Feb. 96 74.5%
Manhattan $1.50 $13.00 Nov. 96 766.7%
Cambior $10.00 $22.35 Jun. 96 123.5%
AVERAGE 211.8%
Gold 8.0%

The most recent big run up in gold stocks happened in the 2000s. Gold rose 158%, but gold
stocks soared over 400%.

Returns of Producers from 2001 to 2006

Company Pre-Bull Market Price Price Peak Date of High Return
Barrick $14.48 $31.46 Jan. 06 117.27%
AngloGold Ashanti $16.18 $59.85 Jan. 06 269.90%
Newmont $16.46 $61.80 Jan. 06 275.46%
Goldcorp $3.83 $36.04 May. 06 840.99%
Goldfields $3.66 $22.30 Apr. 06 509.29%
AVERAGE 402.58%
Gold 158.00%

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While many things can affect a gold company’s stock price, an increase in the price of gold
(even a small one) can lead to enormous profits.

Gold Stocks Are Not Heirlooms

These are explosive returns, without a doubt. However, unlike physical gold, gold stocks are not
good long-term investments.

Here’s why…

• Mines don’t last forever.

While most producers continue to explore for gold around their existing mines, sooner or later
a mine will run out of ore. Think about it: every day a miner operates puts him one day closer to
being out of business.

Compare that to Apple Computer. It won’t run out of chips, screens, or motherboards. Apple
can keep making snazzy products as long as people want to buy them.

• You can’t move a mine.

Ecuador is home to one of the richest mines found in the last decade. The company that
discovered it sold the project to an experienced gold producer. But before this company started
mining, the local government increased taxes and royalties. Their demands were so high that the
mine never began production.

Because of the increased taxes, the producer couldn’t make any money. The mine is still sitting
there today, idle. The company had no choice but to shut down production. They couldn’t move
the mine to a more favorable jurisdiction.

Companies in most other industries can move if they run into this problem. If the local
government tries to shake down a crew filming a movie, they can pick up and film somewhere
else. Actors and sets are mobile. Gold mines are not.

Many governments have also increased mining regulations over the past few years. Every new
rule makes it more difficult to comply. Some even delay the start of a new mine.

Environmental restrictions have also increased and made many projects more expensive to operate.

There’s another big reason gold stocks are not long-term holds. If you want to make lots of
money in this sector, you must know where we are in the cycle.

Bull, Bear, Repeat

Gold stocks move in cycles, more so than most other markets. Raging bull market, crippling
bear market, repeat.

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External factors—a big discovery, government interventions or good ol’ supply and demand—
can impact the price along the way. But where we are in a cycle determines how much money
you’ll make in a given period.

We charted the major cycles for gold stocks from 1975, when gold again became legal to own
in the U.S., to present. Eight distinct cycles played out during this time.

Gold stocks cycle up and down repeatedly. And the percentage gains for those who buy at the
bottom of a cycle can be downright mouthwatering.

In 2016, gold stocks were exiting their second-deepest bear market since 1975. It was even
worse than the selloff following the 1980 mania.

In other words, this is an opportunity.

And it means three things.

1. For the recent bear market, the bottom for gold stocks has almost certainly happened.

2. The next major cycle in gold stocks will be an UPCYCLE.

3. The profits could be spectacular. As the pattern shows, triple-digit gains are common
during an upturn. Of the past eight cycles, gold stocks more than doubled during six.
And they shot up 99.9% in a seventh.

Gold stocks are preparing for the next boom. You just have to wait for the next cycle to begin.
No timing required.

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But, don’t buy any old gold stock…

What to Look For in a Gold Stock

It’s important to pick the right gold stocks. They won’t all perform equally well.

Like any other industry, the stocks of stronger companies will go up more than the weaker ones.

Some management teams run their operations better than others. Some gold deposits have
higher-grade ore than others. Some operate in more favorable political jurisdictions. There are a
number of factors other than the gold price that impact the price of a gold stock.

So, how can you choose a solid company?

At Casey Research, we start by looking for companies that have…

1. Strong Management. This is the #1 factor when deciding if a company is worthy of your
investment dollars. An experienced management team with a successful track record of
growing value for shareholders is essential. We would rather have a mediocre project
with strong management than a strong project with mediocre management.

2. Low Costs. A miner’s profit margin is critical. To make a profit, its costs must be
sufficiently below the price of gold. This is especially true when gold stocks are at the
bottom of a cycle, like they are now.

3. Production Growth. Remember, every day a miner operates, it’s one day closer to
running out of product. So it’s important for miners to plan ahead. They need ways to
grow their production output.

4. Low Political Risk. Many strong management teams with attractive gold projects have
failed solely because the local government interfered. Right now, the safest jurisdictions
are Sweden, Finland, Ireland, Canada, the U.S., the UK, and Australia. Sometimes we
invest in other countries, but only after carefully weighing political risk against profit
potential.

How to Buy Gold Stocks

To buy gold stocks, you’ll need a brokerage account. You can use a full-service broker, but most
investors use an online broker.

We recommend Fidelity, Scottrade, Charles Schwab, and TD Ameritrade, among others. You
might also consider Interactive Brokers. Their site is geared toward sophisticated users.

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Once you’re ready to buy, we strongly recommend that you buy in tranches. In other words,
stagger your purchases and buy in several parts. Don’t rush in all at once, and don’t buy after a
big run-up. There are always pullbacks.

Our basic strategy is to buy when gold is falling, not rising. We want the best price we can get
so we can make as much money as possible.

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CHAPTER 7

Doug Casey on Why Gold Could Go

“Hyperbolic”
Justin Spittler, editor of the Dispatch, interviews Doug Casey…

Justin: Doug, U.S. stocks took a beating recently. Where do you see things going from here?

Doug: Well, I hate to make a firm prediction of timing. The fact that things have held together,
against all odds, since 2009, has underlined the old saying about just because something is
inevitable doesn’t mean it’s imminent. Predictions of disaster, and all these things unwinding,
have been wrong over the last half a decade. And the smart bet is always for muddling through,
in the direction of progress. But it seems that we’ve finally reached a peak, a major turning point.

Justin: So, what have you done to protect your wealth?

Doug: At the beginning of the year, I took all my original capital out of cryptos, plus 150% profits.
I also took profits on crypto stocks. I got in late, and out a bit late. But it was a happy experience.

They were bubbly. Every company that could possibly do so has gotten into this game. Now
XYZ ice cream company is XYZ blockchain company. That was one tipoff.

Another was that everybody and their dog was talking about them. Because it had gone up 1,000%
in the last year, they expected a repeat performance. It’s always that way in financial markets.

Look, the last time I saw anything quite this goofy was during the internet bubble. Dozens of
failed mining companies in Vancouver were turning themselves into internet companies. It was
happening weekly, almost daily.

That was the bell ringing at the top of the market for the internet companies. It was also the
bottom of the market for the mining companies.

So, I’m frankly trying to liquidate at this point. I really only want to own gold, silver, and other
commodities to preserve capital. And mining stocks, as speculations. And more cash than I’m
accustomed to. But that only leads us to another problem. The dollar itself is a hot potato.

Justin: What do you mean?

Doug: Keeping dollars in banks is very dangerous. The whole world is like Cyprus a few
years ago. You don’t actually own anything in a bank or broker anymore—your assets are the
unsecured liability of an institution that’s likely bankrupt. This is especially true if you have
more than $250,000 in any given account, which the FDIC insures. But it’s bankrupt too, with
assets that cover like a half percent of their liabilities.

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The problem is systemic risk, and it’s worldwide. It’s like Joe Louis said: you can run but you
can’t hide. The only place you can hide today is gold and silver. That, and cheap real estate, if you
can find it.

Justin: Yeah, gold is doing quite well.

What do you attribute this to? Is it because investors are taking shelter? Is it due to the weak
dollar? Or is it simply because we’re in the early innings of a new commodity bull market?

Doug: Well, I think all the indications are aligning at this point. It’s been a rough bear market.
As a group, commodities are 50% below their 2011 highs. It’s been a deep bear market as well
as a long bear market.

As a result, commodities have never been cheaper relative to financial assets like stocks and bonds.

It’s a great time to be in commodities. And gold is the foremost commodity. It’s historically
been used as money. And it will continue to be used as money because none of these
governments should, or do, trust each other. Or each other’s phony paper fiat currencies.

There could be a buying panic in gold and it could go much higher. We’re in a new bull market
for gold at this point, but nobody cares. Or even knows that’s true. The same is true for silver.
Although, silver is primarily an industrial commodity. It’s the poor man’s gold for many reasons.

Justin: How much higher could gold head?

Doug: Well, these things usually move in a hyperbolic curve. They start out slowly. Then, they
accelerate. Same type of thing we saw with cryptocurrencies.

I think gold will do the same, although not to the same extent. My prediction by the end of
this year is that gold will hit $2,000. In 2019, $3,000. In 2020, $4,000. By the time this bull
market peaks, gold could reach $10,000. But I hate to say things like that…because it sounds so
outrageous.

But look at the number of dollars in existence ($3.635 trillion in the M-1 money). Divide that
by the 260 million ounces of gold the U.S. Government is supposed to own, and you get a gold
price of $13,982/ounce.

Look at the number of dollars that are outside the U.S.—$10 trillion, $20 trillion, who
knows?—and that liability is growing by $50 billion annually with the balance of trade deficit.

At $1,300 per ounce, the U.S. gold holdings can’t even cover a year’s deficit. And consider the
fact that at some point those dollars will need to be redeemed by something if they’re going to
retain any value.

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The price of gold—if gold is going to be fixed to the dollar again, at least for the purpose of
trading with foreigners, with foreign governments—is going to have to be much higher than it
is today. Of course, I don’t think the dollar should exist, nor should the U.S. government even be
in the money business; it just confuses the issue.

Money is a medium of exchange and a store of value—it shouldn’t also be a political football,
and a means for the State to finance itself. Gold itself should be used as money. Remember that
the dollar—like the franc, the pound, the mark, and what-have-you—were just names for a
specific quantity of gold.

So a six-to-one shot from here is not at all unreasonable over the next several years. And that
would mean very good things for gold stocks.

Justin: So, it’s safe to assume you’re buying gold stocks?

Doug: Resource companies are essentially the only stocks that I’m buying right now. And that’s
because nobody’s interested in them. They’re very cheap. Of course mining itself is a crappy
business. You can’t invest in it, only speculate. But it’s a great speculation now.

I probably do, on average, a private placement a week in mining stocks, which is quite a lot.

The only thing I’m afraid of is having too many stocks. You can’t effectively monitor more than
15 or 20 stocks. And then you lose track of them. You can’t keep up. You forgot why you bought
them.

Unless I really like the stock and I’m planning on following it in particular, I sell the basic stock
after the four-month hold period and keep the warrants in case I get lucky.

Justin: What else are you buying right now?

Doug: Well, I buy gold coins whenever the opportunity presents itself. I try to be disciplined
about that. I just put them away and forget they exist. Unlike gold stocks, you can do that with
gold coins.

I think it’s wiser to buy small gold coins, of a quarter-ounce or less, as opposed to the one-
ounce-size coins that are so popular today.

Paying the premium is worth it. Incidentally, I also prefer to buy semi-numismatic coins, like
British sovereigns, French Louis d’or, Danish crowns, and the like, as opposed to the currently
minted ones.

I treat gold, physical gold, as a savings medium, an insurance medium. To speculate, I buy small
mining exploration issues. Because they’re so cheap. But if we have a 1929-style credit collapse,
however, I’m sure most of them are going to get washed away.

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But the odds are much better that the dollar’s going to lose value at an increasing rate over the
next few years. Because we have Keynesian academics at the helm of the financial world. People
with no experience in the real world. They shouldn’t even be allowed to teach a freshman class
in economics. Some of them should be, and quite possibly will be, hung by their heels from a
lamppost when things come unglued.

The world economy is going to wind up crashed on the rocks. It’s going to be very ugly. And soon.

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CHAPTER 8

Gold Stocks with the Lowest Risk

by casey research

There’s one group of gold companies that’s safer than any other.

The companies in this group pay dividends. And they offer the same upside as most large gold
stocks...with much less risk.

They’re called royalty companies.

Gold royalty companies make money by selling the production of gold.

They don’t mine gold of their own. Instead, they finance a lot of early-stage exploration or
production projects. When a mine they finance starts producing, the royalty company gets a cut
of the cash flow.

We explained earlier that gold mining is an expensive and risky business.

If you want to build a gold mine, you have to first pay geologists to scour the Earth in search
of prospective ore bodies. You have to rent or buy pricy drilling equipment. You have to rent or
buy chunks of land...often in dangerous countries.

And what do you get for all this searching? Fewer than one in 3,000 “discoveries” result in an
economical deposit.

Even then...if you actually find a big deposit...it can cost more than $1 billion to build a mine.

Royalty companies avoid all of these huge costs. They simply collect revenue streams from other
companies that do that hard work for them.

And they pass part of these revenue streams on to their stockholders as dividends.

How Royalty Companies Lower Risk

No operational headaches. Workers calling in sick or demanding higher pay? Truck tires need
to be replaced sooner than budgeted? Unexpected complications? Literally hundreds of issues
arise when operating a mine. But the royalty or stream holder simply waits for the next check to
arrive.

Fixed costs. Once a royalty company negotiates a contract with a gold producer, the royalty
company’s costs are fixed. And since most royalty and stream agreements continue for as long as
there’s production, this offers a real advantage.

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A gold producer makes less money if energy costs rise, wages increase, or taxes rise. But royalty
and stream companies are unaffected. As long as the mines don’t shut down, royalty companies
still collect on whatever metal is produced. This is a very appealing arrangement…especially
when costs are rising.

Diversification. Most royalty companies have stakes in a greater number of projects than a
typical mining company, which reduces project-specific risk. If something goes wrong with one
asset, there are many others still operating and paying.

The Proof
The bottom line is that royalty companies have less risk than any gold producer.

And we can show you by looking at a period when gold prices and companies struggled.

From 2012 to mid-2015, the price of gold fell 30%.

And GDX, an ETF that tracks large gold mining stocks, dropped 71%.

But during that same period, two of our three favorite gold royalty companies made double
digit gains.

Osisko Gold Royalties (OR.TO) gained 80% in that time…

Franco-Nevada (FNV) gained 20%...

And one of our other favorites, Royal Gold (RGLD), lost just 20%... significantly less than gold
lost during the same time.

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CHAPTER 9

Silver: Gold’s More Volatile Cousin

by casey research

You should own silver for the same reasons you own gold: currency devaluation, negative real
interest rates, and unsustainable government debts and deficits.

These trends won’t have a happy or pain-free ending. Severe inflation is virtually guaranteed.
Gold and silver are two of the best ways to protect yourself from the fallout.

People have used silver as money for more than 3,000 years. In fact, the word for “silver”
translates into “money” in many languages, including French, Spanish, and Hebrew.

But silver is more than money. Unlike gold, silver is mostly used for industrial purposes. And its
number of practical uses is growing.

The silver market is also much smaller and more volatile than the gold market. This is why silver
is riskier than gold...but has the potential to produce higher returns.

From Photography to Hygiene

Like gold, silver is rare in nature. Gold is mostly used as money and for storing value. Silver’s
largest use is in industry.

Roughly half of all silver is used for industrial purposes such as…

• Water purification systems

• Radio frequency identification

• Supercapacitors

• Medical applications

• Solid-state lighting (SSL)

• Public hygiene

• Consumer products

• Food packaging and preservation

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The chart below shows the growing amount of silver used for industrial products since 1999:

The amount of silver used for electronics, solar panels, and biocides has more than tripled in
recent years. We expect this trend to continue.

For a long time, photography created the main industrial demand for silver. At its peak,
photographic demand made up about 50% of the market. That percentage is dwindling.
However, silver now has roughly 10,000 different industrial applications.

Silver’s industrial demand means two things for investors:

1. The health of the global economy impacts silver demand and price. Recessions will
dampen demand. Robust economies will increase it.

That said, take another look at the chart above. Note that demand for silver increased
even during the financial crisis of 2008-09. Because of the growing number of uses for
silver, a recession would have to be especially deep and long lasting to hurt industrial
demand.

2. Unbeknownst to many investors, approximately 90% of all silver ever produced has been
consumed. Most of the gold ever mined, on the other hand, has not.

Right now, mine production cannot meet the world’s annual demand for silver. This
makes supply dependent on scrap and recycling—a precarious situation for a widely
used metal.

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The bottom line is that growing industrial demand is competing with growing investment
demand. This scenario is very bullish for silver’s price.

The Small Silver Market

Silver has a much smaller market than gold. This makes the price more volatile. This is true of
silver stocks as well.

The next chart shows the total assets of all silver ETFs around the world. For perspective, we
compared it to the common stocks of well-known companies like Pepsi and McDonald’s. As
you can see, silver ETFs are worth a total of about $7 billion. This is smaller than many popular
individual stocks.

The next chart compares the total value of all primary silver producers to other industries. The
market cap of all primary silver producers is around $46 billion.

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Even the dying newspaper industry is twice the size of the entire silver industry.

With a market this small, it only takes a small amount of money to push the price around. And
large amounts of money can dramatically impact prices. This makes the silver market much
more volatile than the gold market.

We can see this in the difference in daily price movements for both silver and gold. From 2003
to today, gold’s average daily price movement has been 3.9%. Silver’s has been 5.4%.

Gold’s daily volatility has been 1.2%...Silver’s has been 2%. In other words:

1. Silver’s daily price movements are bigger than gold’s.

2. Big moves in silver occur much more often.

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CHAPTER 10

Buying Silver Bullion

by casey research

A great way to buy silver is to buy the most popular silver bullion coins. These include
American Eagles, Canadian Maple Leafs, and Austrian Philharmonics.

Silver bars are also a good option. They have lower premiums than coins.

Junk silver is another option. This refers to dimes, quarters, and half dollars that were minted
prior to 1965 and contain 90% silver. Junk silver’s main appeal is that it’s highly divisible. Its
main drawback is that it’s expensive to ship and bulky to store.

If you’re new to investing in silver, we recommend starting with one-ounce coins. They are the
most recognizable form of silver. You won’t get questions about their authenticity if and when
you need to sell.

Where to Buy Physical Silver

You can buy silver online or from a local dealer. Either way it’s important to use a reputable
dealer. As in every line of business, there’s no shortage of crooks.

The U.S. Mint publishes a Coin Dealer Database. If you know an honest, reputable coin dealer
in your area, that’s a good place to make small purchases.

While we like local dealers, they often have higher prices than online dealers, even after
shipping costs. A brick-and-mortar store has expenses an online dealer doesn’t have.

We’ve listed our preferred physical silver dealers below (be sure to tell them Casey Research
referred you to get the best deal):

1. MilesFranklin.com (1-800-822-8080). Miles Franklin has some of the deepest

contacts in the industry. It can source metal when many other dealers can’t. With some
of the best prices, it’s one of our top picks.

2. FisherPreciousMetals.com (1-800-390-8576). A national bullion dealer that offers

highly competitive pricing and a full Authentication Guarantee to protect against
counterfeit products. They are also ISA certified precious metals appraisers.

3. DavidHall.com (1-800-759-7575). We go to one place for rare coins: Van Simmons

at David Hall Rare Coins. He actually helped create the Professional Coin Grading
Service. We don’t recommend entering the numismatic world unless you are (or plan to
become) a knowledgeable investor.

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4. Money Metals Exchange (1-800-800-1865). Reasonable prices on common gold and

silver coins like American Eagles and Canadian Maple Leafs.

Keep in mind that premiums and delivery times fluctuate with the market.

There are other dealers, of course. And some may have good prices. Watch for total costs
(including product, shipping, and insurance) and availability. If a dealer claims it will take
several weeks to “locate” the product, contact someone else.

It’s not uncommon for salespeople to push non-bullion products such as proof sets or rare
coins. These products have higher markups, and you should avoid them. It’s easy to overpay,
and they rarely return the extra premium. This is especially true of dealers that advertise on TV.
Shop elsewhere if you get a hard sell.

Storing Your Silver

There is no magic way to safeguard your silver. Every storage plan has its own risks. Physical
silver can be stolen or lost in a fire. Paper silver is subject to fraud and mismanagement. The
most prudent approach is to own more than one form of silver, in more than one location.

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CHAPTER 11

Should You Buy “Paper” Silver?

by casey research

There is no substitute for having physical gold and silver under your immediate control.

But as we explain in chapter 6, “paper gold” and “paper silver” can be a useful supplement.

Many exchange traded funds (ETFs) have emerged in recent years. Silver ETFs are designed to
mirror the price action of physical silver. You can buy and sell them easily, like stocks. However,
keep in mind that silver ETFs will not deliver physical silver to the average investor.

iShares Silver Trust (SLV) is the largest and most popular silver ETF. It buys and holds silver
bullion in several London vaults. Each share of SLV trades at approximately the spot market
price of one ounce of silver. SLV does a good job of following silver’s price. The annual fee is
0.5%.

But we like the ETF Physical Silver Shares (SIVR) even better. SIVR stores its metal in
Switzerland, and its custodial structure is less complicated. Its expense ratio is 0.45%.

Central Fund of Canada (CEF) is a closed-end fund. It holds roughly 55% gold and 42%
silver, and 3% cash.

There’s one major difference between a closed-end fund and an ETF. ETFs are structured to
keep the share price very close to net asset value (NAV). But closed-end funds respond more
strongly to market sentiment. This means that shares in a silver-based, closed-end fund can
trade at a discount to NAV…or at a premium.

CEF generally rises and falls with gold and silver. But over time, investors who buy at a
discount and sell at a premium will get an added kicker. And those who do the opposite will
lose money.

To watch for the best entry point, visit the CEF website from time to time and click on “Net
Asset Value.” The figure is updated daily. Annual fees total 0.48%.

Silver Stocks
Silver stocks are a leveraged way to profit from a rising silver price. It’s the same idea we
explained in chapter 7 for gold and gold stocks.

Think of physical silver as your defense and silver stocks as your offense. If the silver price really
heats up, silver stocks will rise exponentially higher. This could hand you life-changing profits.

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One bit of caution, though: with added leverage comes added risk. Silver stocks are more
volatile than silver.

Silver stocks are not family heirlooms that you hold into old age and leave to your children. At
some point, you’ll want to sell your silver stocks to lock in big gains.

But don’t over-trade. You might hear of investors who trade silver stocks often because of their
volatility. In our opinion, frequent trading is not a good way to capture big gains.

A Silver Fund is Not a One-Stop Solution

There are a couple dozen mutual funds out there that hold both gold and silver companies. But
no mutual fund invests solely in silver companies.

There is an ETF for silver producers, though: the Global X Silver Miners ETF (SIL).
However, as with all ETFs, it takes a basket approach. SIL adds a company when it meets
certain criteria for size and trading volume, regardless of whether that company is a good
investment. This is not the ideal way to invest in silver stocks. It gives you the bad with the
good. That’s why we don’t recommend this fund.

Instead, our metals and mining team recommends select producers that are more likely to do
better than the industry as a whole.

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CHAPTER 12

Should You Buy Collectible Coins?

by casey research

These are both true stories…

In the late 1970s, Luke Hanford [name changed] would ride his bicycle past a big, stately house
on his way to school. Even at that young age, he knew what he wanted. Someday I’m going to buy
that house, he said to himself.

A few years later, attracted by their beauty, Luke developed a keen interest in collecting rare
coins. He read up on the industry, and silver commemoratives captured his attention. He
bought a few every month and built a sizable collection. After about five years, he watched with
delight as the market got hot. His coins appreciated 600%!

The house he’d admired as a kid from behind his handlebars came on the market at that time,
priced at a quarter-million dollars. Luke sold part of his coin collection and paid cash for the
house.

In the 1990s, Jerry McDonald [name changed] read an article touting the “investment
potential” of rare coins. He hadn’t dabbled in the numismatic world much but called several
dealers and was told the market was “hot,” that he was “getting in at the right time,” and that it
was a “better investment than bullion.” One dealer told him he could make ten times his money
on one coin alone.

Jerry was excited. He bought a dozen rare coins from several different dealers. They all assured
him he was making a solid investment.

Six years later, he sold for a loss.

How did one investor win big while the other lost?

Why People Want Rare Coins

Let’s be upfront: rare coins are collectibles. They are more of a speculation than an investment.
Like any speculation, you can make money. And profiting from intelligent speculation is what
Casey Research specializes in.

When you speculate, you must be selective. But with sound research you can put the odds of
success in your corner. The same holds true with rare coins.

With that in mind, there are a number of reasons to consider buying rare coins...

• They’re liquid. You can buy, sell, and trade rare coins with relative ease.

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• They’re portable. You can take them anywhere in the world.

• They’re transferable. You can pass them to your heirs.

• They’re anonymous.

• They have profit potential beyond gold bullion (You should own a significant amount of
bullion before buying rare coins).

• They are collectible. This is where intangible, personal motives come in: you can literally
hold history in your hands.

For Americans, there are coins our founding fathers issued, starting with the first
mintage in 1792, that demonstrated to the world we were a sovereign nation.
Throughout history city-states, principalities, kingdoms, and countries have shown
independence by their coinage. A coin is a reflection of the age in which it was made. It
holds a story that can make collecting very appealing.

There are coins from the Civil War, the War of 1812, the pre-1800s, World War II,
the Depression Era, and on and on. The point is, there’s a wide variety of coins from
American history a collector may find fascinating.

Whether you decide to buy as an investor or as a collector, there are basic issues to keep in
mind…

Numismatics 101
A numismatic, or rare coin, is simply a coin that is no longer produced. It can be tens, hundreds,
or even thousands of years old.

Most modern rare coins date from the mid-17th century. This is when coin makers stopped
hand-striking coins and started striking them by machine. Most coins from this era are made of
gold or silver.

Coin pricing boils down to three things: rarity; condition; and demand.

Rarity. The rarer a coin, the higher the premium.

Condition. A coin’s condition is stated as a Grade on the Sheldon Scale. The Professional Coin
Grading Service (PCGS) and the Numismatic Guaranty Corporation (NGC) both grade coins.
Both are reputable, but PCGS-graded coins tend to command a slightly higher premium. There
are other grading service providers, but PCGS and NGC are the best.

If you buy a coin graded by another service, it will cost you less upfront but would be worth less
in the open market than if it had been graded by one of the more prestigious companies.

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Generally, grades run from G (good), F (fine), VF (very fine), EF (extremely fine), AU (about
uncirculated), to those known as MS (mint state), referring to uncirculated coins.

Mint state grades range from MS60 to MS70. The higher the number, the better the condition.
The differences among MS coins are tiny and difficult for a layman to discern. But once the
grade has been professionally established, it has a huge effect on value.

Demand. Predicting demand is like picking stocks; it’s not foolproof and anything can happen.
There are ways to effectively deal with this issue, though…more on that in a moment.

The industry is largely a collector’s market. It’s no different than the market for fine art or
baseball cards. In other words, it’s primarily driven by collectors, not investors or speculators.
That doesn’t mean investors don’t participate or that they can’t make large profits. The typical
buyer, though, is someone who wants a particular coin for his or her collection. The collector
sets the price by how badly he wants a coin…not by its gold content.

Buyer’s Checklist
If this intrigues you as an investor or you’re considering a new hobby, here’s how to get
started…

TIP #1: Education pays.

While this is true of any investment, it’s especially true with rare coins. The most successful rare
coin investors are themselves collectors. Once you become familiar with the rare coin market –
such as historical value, grades, populations, price trends, and the like – you are in a far better
position to judge their potential for appreciation than if you know nothing.

Conversely, a quick way to lose money is to buy without researching first, from a stranger in a
coin shop who says, “Now here’s a good one,” with no regard for date, type, or condition. And
definitely avoid the dealer who tells you rare coins are better than bullion (from our view, that’s
irresponsible). If you start feeling like you’re talking to a used-car salesman, trust your gut and
leave.

Keep in mind that not every rare coin is going to appreciate. Or it might take several years to
do so. That’s why knowledge of the overall market and of the coins that interest you is essential,
just like it is when buying stock.

We suggest starting your research at the following websites:

www.pcgs.com Professional Coin Grading Service

www.numismatics.org American Numismatic Society

www.money.org American Numismatic Association

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www.ictaonline.org Industry Council for Tangible Assets

www.pngdealers.com Professional Numismatists Guild

This is not meant as a complete list, but rather a good foundation.

TIP #2: Buy the best coin you can afford.

In general, higher-end coins appreciate more. If you have the option to buy five common-date
gold coins for $1,000 each or one much rarer coin for $5,000, go with the latter.

When you start researching coins, a good rule is to buy coins with a history of strong demand
from collectors and investors.

TIP #3: Only buy professionally-graded coins from a reputable dealer.

Stick with coins graded by PCGS or NGC, until you become highly proficient yourself. The
label of a “slabbed” coin (meaning the coin has been graded and enclosed in plastic casing)
states all of the important information: type, date, mint mark (if any), grade, and any other
pertinent details.

Although fraud with a slabbed coin is rare, it is not unknown. Use only a reputable dealer that
can spot a slabbed coin that has been tampered with or faked.

TIP #4: Stick with U.S. coins.

Buy U.S. coins. They have a broad and deep base of collectors. This makes them highly liquid. If
you have to sell quickly, you’ll be glad you own a U.S. coin.

Don’t Get Burned On Rare Coins

If you do some casual web surfing, two basic themes emerge. One, you’ll come across the
promotional broker with a “fantastic deal.” Second, you’ll see rants from people who’ve been
burned by the industry. Steer clear of both.

Most rare coin losses arise from unscrupulous dealers or customers who don’t do their
homework. You can avoid both problems…

Don’t buy rare coins as a replacement for bullion. Gold (and silver) bullion is for safety
and protection against inflation, dollar debasement, reckless government debt and spending,
economic malaise, etc. Rare coins, on the other hand, are like stocks. They may or may not offer
those same qualities. And they are inherently riskier than gold bullion.

Do not buy rare coins until you have a sufficient amount of gold bullion.

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We won’t name names, but a well-known dealer on TV got into hot water after persuading
clients who’d called to buy bullion to purchase rare coins instead. If a dealer says rare coins are a
better investment than bullion, walk away or hang up. He is trying to sell you a more expensive
product, likely one with an inflated price, in an attempt to pocket a fat commission.

When President Roosevelt confiscated gold from Americans in 1933, rare coins were exempt.
Could rare coins offer the same protection against a similar event in the future? We don’t know.
But if you’re concerned about a replay, rare coins might help hedge against the possibility. A
word of caution: do not let a dealer use the past exemption of rare coins from government
confiscation as a sales tactic. Buy on your terms.

Most dealers won’t tell you when to sell. I’ve heard this complaint more than once. Dealers
will advise on the appreciation potential of what they have for sale; only rarely will they call to
say it’s time to sell. Monitoring the market yourself will keep you familiar with a coin’s sales
price history to help judge good entry and exit points. Again, treat your coin purchase like you
would a stock purchase.

Avoid new issues and common coins. A common mistake is buying a brand-new product
hoping it will become a collectible. “Limited Edition” coins and coin sets in fancy boxes with a
“certificate of authenticity” are a good example. You’re much better off buying something that’s
been a collectible for 40 or 50 years and has a track record.

Also, avoid common coins in low or circulated grades. An example is silver dollars at $25. There
were millions of silver dollars made in late 1870s, so they’re very common in low grades and
thus unlikely to ever fetch a big premium.

Collectibles are cyclical. Price swings can be large. Demand for particular rare coins fluctuates,
often through a five-year period or longer.

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CHAPTER 13

The Perth Mint

by adam crawford

The British Empire had a problem…

In the late 1800s, most of its gold was mined outside of Britain and shipped to the Royal Mint
in London. There, it refined gold into British Sovereigns (coins) and shipped them to the
colonies.

This process was costly and time-consuming. So the Brits set up mints in the colonies,
including one in Perth, Australia.

In 1970, Britain ceded ownership of Perth Mint to the government of Western Australia.

The mint no longer makes British currency. Today, it makes gold products for investors. From
quarter-ounce gold proof coins to 50-ounce gold cast bars…you name it and the Perth Mint
makes it. It’s high-quality, investment-grade gold, too. The New York Commodity Exchange
settles gold futures contracts in Perth Mint kilo bars.

But Perth doesn’t just refine gold products. It stores them as well. Individual investors can store
gold through the Perth Mint Certificate Program. And, for investors living outside of Australia,
it offers a major benefit: international diversification.

Financial pundits rarely talk about holding assets in foreign locales. But they should. After all,
governments sometimes seize personal property. It usually happens in an economic crisis.

During the Great Depression, for instance, the U.S. government confiscated Americans’ gold
and banned gold ownership. When the next crisis hits, it could happen again.

There are other ways the government can hijack your assets. Currency controls, confiscatory
taxes…desperate governments can be creative thieves.

But there are steps you can take to protect yourself. One step is to store gold in a foreign vault.
The Perth Mint is a good place to do it. Here’s why…

Safety
Perth is perhaps the safest gold storage provider in the world. It offers the only government-
backed gold storage program. And the backer, Western Australia, is financially strong. It’s rated
AA+ by Standard and Poor’s. That’s not the top credit rating, but it’s still “high-grade.”

Plus, Western Australia has never confiscated gold. And it probably never will. The gold mining
industry is just too important to its economy.

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And, in the unlikely event that Western Australia did confiscate gold, it wouldn’t wipe you out
completely. Remember, diversification is the goal. That means storing only some of your gold in
a foreign country…not all of it.

Moreover, you might consider storing gold at other foreign vaults, in addition to the Perth
Mint. No matter how you go about it, we recommend holding 10%-20% of your gold outside of
your home country.

Affordability
Perth’s gold storage program is affordable. The initial purchase requirement is only $10,000. The
minimum for later purchases and sells is only $5,000.

There are fees, of course. But they’re not too bad. Perth charges $50 for a certificate fee, plus
$20 to send the certificate to international customers. There are also dealer fees of about 2.5%
for buying and 1.25% for selling.

Flexible Storage Options

Perth offers two gold storage options: allocated or unallocated. Allocated storage costs more
than unallocated, but it has better features. With allocated storage, you own specific gold coins
or bars at the Mint. You can even stop by Perth and self-audit your allocated holdings. But
there is a 1% storage fee. So storing $10,000 worth of gold, for example, costs $100 per year.

There’s a fabrication fee as well. That’s the cost to convert a block of gold into a finished
product, such as bars or coins. The fabrication fee varies by product.

With unallocated storage, you don’t own specific gold bars or coins. Instead, you are an owner in
common with other clients who own unallocated gold, too. Perth may use this gold in its operations.

Unallocated storage is not as safe as owning specific coins or bars at the Mint. But the Mint
says it has enough inventory to meet all outstanding claims. In other words, the gold is there if
you want to take it.

Unlike other gold storage programs, unallocated clients don’t pay storage fees. They don’t pay
fabrication fees, either. And at any time, they can upgrade to an allocated account. For these
reasons, ninety-five percent of Perth’s customers opt for unallocated storage.

With all storage options, Perth can arrange a courier to ship gold to most major financial hubs
across the globe, such as London, Shanghai or Zurich. That could come in any handy if things
get bad enough to warrant leaving your home country.

To purchase a Perth Certificate, you must contact an authorized dealer. There are 10 worldwide,
2 of which are located in the U.S. Our favorite: Asset Strategies International. Its fees are fair,
and its management is trustworthy. For more information, visit assetstrategies.com.

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© 2018 Casey Research, 55 NE 5th Avenue Suite 100, Delray Beach, FL 33483, USA. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is
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