Free-Market Wealth Building Solutions

Proudly Presents:

PERSPECTIVE
HOW TO PROFIT FROM THE COMING ECONOMIC TURMOIL
Prepared by:

SWISS

Scott Smith
with

Anton Wolfe

Understanding free market economics leads to exceptional investment success.

Meet Scott Smith, Editor of Swiss Confidential

Contributing Editor to TheDailyBell.com
Before his recent retirement, American-born Scott Smith spent nearly 30 years as a member of the Swiss investment banking community. He spent most of his long career at legendary investment banking giant Credit Suisse, where he was an executive working in the foreign exchange and derivatives departments. Over the course of his career, Scott became privy to the closely guarded, somewhat regimented, wealth building and asset-protection strategies that have made the Swiss among the wealthiest people in the world - wealthier even than Americans, according to the World Bank. In addition to writing special reports, such as this Swiss Perspective, Scott is also a contributing editor to the TheDailyBell.com and the editor of a membership based investment newsletter called Swiss Confidential. In each issue of Swiss Confidential, Scott shares with subscribers the valuable analytical techniques he learned while working within the fast-paced Swiss investment banking industry techniques that often enable him to uncover investment opportunities before other mainstream financial commentators. Scotts unique Swiss-inspired approach is to break down the propaganda and look for reasons not to invest. He was trained to humbly recognize that experts have a limited frame of reference for their so called expertise including his own. And since he accepts full responsibility for the investment opportunities he introduces in Swiss Confidential, you can be assured that he performs an extensive amount of due diligence. When analyzing the merits of a potential investment opportunity, Scott believes it is imperative to assemble a due diligence team comprised of third party experts specifically for the purposes of analyzing that particular investment. His team approach is designed to probe deeply behind the curtains of propaganda and ask the real questions - the tough ones most people dont ask the ones that allow for an intelligent decision to be made. Armed with common sense information, real facts and figures, Scott is able to confidently offer his premium investment analysis and conclusions to his subscribers. Its the kind of financial information and guidance that can help you protect and grow your wealth as the global financial crisis deepens over the next few years. Swiss Confidential also reflects Scotts reverence for personal responsibility and free-market principles. And in keeping with those principles, he accepts the duty to protect your personal information.

For more information about Scott Smiths Swiss Confidential, please visit www.SwissConfidential.com

CHAPTER 1 : CRISIS AND OPPORTUNITY

The Advantages of Gold Investing

Safety and Security in Uncertain Times

INSIDE
Introduction
.......................................................................................................

Chapter 1
Crisis and Opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 How the growing economic crisis has opened the door to the investment opportunity of a lifetime.

Chapter 2
Gold vs. Traditional Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Why gold is the most trusted currency in human history

Chapter 3
Approaching a Perfect Storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 How an unprecedented series of global events has made it critical to invest in gold NOW.

Chapter 4
The Future of Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Factors that could send gold past the $2,000-an-ounce mark.

Chapter 5
The 4 Ways to Invest in Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Your options for a stronger and more diversified portfolio

Copyright 2008 - 2009 Appenzeller Business Press AG. All Rights Reserved. DISCLAIMER: This white paper is an informative compendium of independent economic views and analysis, which is published by Appenzeller Business Press AG. The information contained in this white paper is for informational purposes only, is impersonal and not tailored to the investment needs of any particular person and should not be construed as financial or investment advice. As a business publisher, Appenzeller Business Press AG does form business relationships with third party companies some of which may be mentioned in this white paper. Appenzeller Business Press AG does not accept any liability or responsibility for, nor does it verify the accuracy of the information being provided. Readers must accept the responsibility for performing their own due diligence before acting on any of the information provided within this white paper regardless of the source.

SWISS PERSPECTIVE: HOW TO PROFIT FROM THE COMING ECONOMIC TURMOIL

INTRODUCTION

Introduction
The world is in the midst of uncertain times. An economic crisis is growing. And, like a roller coaster, the market swings up and down unpredictably. This uncertainty impacts stocks, bonds and mutual funds.
It is no wonder that many advisors, fund managers and financial experts are putting as much as 30% of their portfolio into gold. Gold is a hedge. Gold is safety. Gold is protection, and as you will see, gold can be a great appreciation tool. During the past few years, investors have made greater gains with gold than with stocks or bonds, and from our Swiss Perspective, we do not see this changing. Appenzeller Business Press AG has been providing some of the worlds leading banks and institutional investors with advice for buying, storing and managing hard assets, like gold, for their clients. It is a hallmark of our Swiss tradition to be cautious and conservative and to maximize profitability. In this white paper, youll discover why gold should be your source of financial security and asset diversification, and why it can bring you profits despite the economic climate. Youll discover the long connection mankind has had with gold; its use as the oldest currency in the world; its symbolism for wealth across cultures throughout time; and most importantly how gold has been used to protect wealth in times of war, crisis and economic uncertainty, and why the investing elite are now investing in gold.

Gold as an investment
With serious economic events coming together in the form of a declining dollar, recession, inflation and an uncertain market, it is more important than ever to look into gold as an alternative hedge to protect your wealth. Read on and discover the advantages of gold.

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Chapter 1

Crisis and Opportunity

How the growing economic crisis has opened the door to the investment opportunity of a lifetime.
Today, there is a growing fear among investors about economic attacks on their investments, savings and retirement funds. A series of poor choices by central bankers, large financial investment firms and governments across the globe have made the current economic environment tumultuous and highly risky. Here is what investors face: Crisis Scenario #1Inflation: Inflation is a rise in the overall level of prices of goods and services. Things get more expensive. Why? Because of the expansion of the money supply. As more money is printed, each existing dollar is worth less, and therefore has less buying power. The result is that your ability to buy the goods and services you need is stolen from you. Crisis Scenario #2Stagflation: This is extremely slow growth combined with high prices and high unemployment. The global stagflation of the 1970s is a perfect example. Central banks tried to battle economic disaster due to high oil prices. Their solution? Pump more money into the system. The result was a runaway wage-price spiral and a recession. Crisis Scenario #3Recession: A recession is a significant decline in economic activity spread across the economy, lasting more than a few months. Again, by pumping more money into the system, there is reduced spending power and an increase in prices resulting in reduced GDP, reduced industrial production and reduced wholesale-retail sales. And when no one is buying or selling, people lose jobs. Crisis Scenario #4Depression: A severe or long recession is referred to as an economic depression. A decline in the Gross Domestic Product (GDP) by 10% is a sure sign of a depression. The Great Depression of the 30s marked a decline in GDP by 33%. Keep in mind that it was during the Great Depression that private ownership of gold was made illegal. Money that is simply printed without something valuable to back it has always led to economic disaster. History proves this. Consider that since 1997, the supply of American dollars has doubled, lowering the value of the dollar and reducing your ability to save, to spend and to invest. So how did things get like this?

The Fiat Currency System

Almost all money exists today in the form of paper issued by a central bank. And those who control the central banking system too often find it in their best interest to create money out of nothing, in a fractional reserve banking system. In this way the federal government can spend more on programs without raising taxesbut the value of the dollar suffers. Over time this system takes wealth out of the hands of people who invest and saveand puts it into the hands of an elite few who control the system.

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CHAPTER 1 : CRISIS AND OPPORTUNITY

Since 1913 the U.S. Federal Reserve, a privately controlled corporation, has acted as Americas central bank. And, since that time their manipulation of the money supply has affected the price of goods and services, the value of your home, your buying power and the actual wealth you own. The system fell into total breakdown in 1971 when President Richard Nixon, without the advice of the members of the international monetary system or his own State Department, stopped the direct convertibility of dollars into gold.

Here in Switzerland we were shocked.

Without gold collateral to back it up, the dollar is just money without objective value. It is merely a piece of paper with a promise of value. Truth be told, todays paper money is not real money at all, but instead it is fiat currency. It only has value because the government and society say it has value. Until recently, the world looked to the U.S. dollar as the store of value. Not anymore. In the past six years, the dollar has lost nearly 50% of its value against the euro. And recently, the dollar traded for less than 100 Japanese yenfor the first time in 13 years! Another measure of the money supply is MZM (money zero maturity) all of the money readily available in the economy for spending and consumption. It is growing two and a half times faster than the economy. So every run of the currency printing press continues to dilute the value of the dollars in your wallet even further.

What does this mean for you?

Your purchasing power declines as prices rise. Your savings are decimated, as they do not keep up with the rate of inflation. Your investments are in jeopardy. But there is also opportunity in the midst of turmoil, uncertainty and crisis. In the next chapter youll learn about the advantages of investing in gold, why it is valued above all precious metals and why for over 6,000 years it has continued to be the most trusted currency in human history.

APPENZELLER BUSINESS PRESS AG, APPENZELL AR, SWITZERLAND

CHAPTER 2 : GOLD VS. TRADITIONAL INVESTMENTS

Chapter 2

Gold vs. Traditional Investments

Why gold is the most trusted currency in human history
Since the beginning of recorded history, gold has been the centerpiece of luxury and wealthand the most reliable form of exchange. Gold is the most malleable and ductile metal on the planet. Just a single ounce of gold can be hammered into a sheet of 300 square feet. Gold readily forms alloys with many other metals. It is an excellent conductor of heat and electricity. Heat, moisture, oxygen and most corrosive agents have very little chemical effect on gold, making it impervious to the ravages of time. Whats more, gold is beautiful and has been the medium of choice for artisans, jewelers and craftsmen for centuries. It has also served as the very definition of wealth for caliphs and kings, popes and pirates.

Its no wonder gold has been the currency of humankind for over 6,000 years.
Across continents, languages and cultures, gold has been the standard for wealth. No matter how economies fluctuated, there has always been value in gold. It has always been an accepted medium of exchange. And in times of economic and political crisis, gold has been the only money that matters. The protection and security of gold have often been entrusted to the stores of vaults here in Switzerland where these assets remained protected in times of crisis, economic upheaval and even two world wars.

So, why is gold such a strong investment option?

First, gold is a hedge against all other investments as well as economic downturns. It should be part of a well-diversified portfolio. Many advisors recommend 10% to 30%. Second, gold is not affected by the devaluation of the dollar. Third, gold offers a safety net against the uncertain ebb and flow of a volatile stock market. Fourth, gold retains value against the Federal Reserves monetary policiesactions that often reduce the value of the dollar and cause prices to rise. And finally, gold is protection against government spending deficits, which further lower the value of the dollar and push prices higher. Gold is a hedge against inflation and the dollars declining value, but also offers protection against an uncertain stock market and foolish government monetary policies. Here are the five compelling reasons why you should consider adding gold to your portfolioand why even in Switzerland, few of these reasons are well known.

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CHAPTER 2 : GOLD VS. TRADITIONAL INVESTMENTS

Reason 1: Gold has an insatiable demand

For any investment to hold (and grow) its value over time, it must be in demand. And for the last 6,000 years, gold has never lost its appeal as a valuable commodity. According to the World Gold Council (WGC), the demand for gold worldwide has doubled over the last four years. In U.S. dollar terms, its up 124%. Thats three times the nominal growth rate of the global economy. Where is this demand coming from? There is a huge demand for industrial gold usage for making electronics, communications equipment, jet engine parts, computers and even dental fillings and prosthetics. Approximately 53% of this demand is coming from just five countries: India, Italy, Turkey, the U.S. and China. And as China and Indias industrial needs grow, so will their demand for gold. There is also consumer desire for gold. According to the WGC, in 2007 alone, Indias demand surpassed 1,000 tonnes! And with Chinas ever-growing middle-class, their demand will reach record highs. (More on China shortly.) Annual mine production of gold over the last few years has been close to 2,500 tonnes. About 3,000 tonnes go into jewelry or industrial/dental production, and approximately 500 tonnes go to retail investors and exchange-traded gold funds (more on this later). This translates to an annual demand for gold that exceeds mine production by 1,000 tonnesa supply deficit that must either be made up by central bank sales or by acquiring gold from other above-ground sources. But gold is more than a commodity. There is such a demand for gold that it inspires people to pay substantially more for it than its mere commodity value. Thats because gold is a hedge against stock losses and inflation. It is a proven source of wealth protection and safety.

Reason 2: Gold is a finite resource

Unlike fiat currencies that devalue over time as more money is printed, gold is finite. There is only so much of it in the earth. The fact is that the high price of gold is due to its rarity. It cannot be created. It can only be found. In fact, only three parts out of every billion (0.000000003) in the Earths crust are gold. It has been said that if you were to melt down all the gold ever mined, it would only amount to a football fieldsized rectangle five feet high. Over the past few years, the major gold mining companies have had only a modest increase in gold production. As a matter of fact, in three of the last five years, production has remained flat, despite increasing demand.

Reason 3: Gold enjoys instant liquidity worldwide

As an investment, no other commodity has the liquidity of gold. Stocks and bonds are easily sold, but it could take many months or even years to sell real estate, art, antiques and other investment vehicles. Gold is accepted and actively traded in global markets, making it always easy to sell and easy to buy. And because gold is universally valuable, it retains its worth, no matter what borders it crosses. While countries, governments and stock investments rise and fall, gold is always desired and traded with solid, honest value.

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CHAPTER 2 : GOLD VS. TRADITIONAL INVESTMENTS

Reason 4: Gold ensures real portfolio diversification

Asset allocation is an important part of any investment strategy. By diversifying, investors hope to maximize returns while minimizing risk. Unfortunately, many investors believe their portfolios are adequately diversified, when they typically allocate funds to just three classes of assetsstocks, bonds and cash. To counter adverse movements in an asset class, many investment portfolio managers, financial analysts and investment experts recommend that gold should make up 10% to 30% of your portfolio. Because of the current economic crisis, a Swiss perspective would encourage 30% or more.

Reason 5: Gold is an investment with huge profit potential

In Switzerland, gold is viewed as a quality investment. As youll see in a minute, many are predicting gold could rise to between $2,000 to $5,000 an ounce. We would be very surprised if the gold price did not blast right through the old highs, and we reaffirm our old targets for gold of $3,000 to $5,000 an ounce (plus silver over $100 an ounce) gold is not merely a colorful trinket but a monetary asset, and when mass fear strikes at the heart of paper money, the stampede to gold will be awesome. James Dines, Editor, The Dines Letter Gold has shown strong returns over recent years. Its most valuable contribution to a portfolio lies in the fact that it is not correlated with most other assets. This is because the gold price is not driven by the same factors that drive the performance of other assets. This makes it the perfect addition to any portfolio for safety and profitability.

SWISS PERSPECTIVE: HOW TO PROFIT FROM THE COMING ECONOMIC TURMOIL

CHAPTER 3 : APPROACHING A PERFECT STORM

Chapter 3

Approaching a Perfect Storm

How an unprecedented series of global events has made it critical to invest in gold NOW.
There have always been cataclysmic events that have driven up the price of gold. In times of national crisis, people fear that their assets may be seized and that the currency may become worthless. They see gold as a solid asset that will always buy food and transportation. With our client base of leading international banks and high net worth individuals, Appenzeller Business Press AG knows firsthand the need to protect ones finances through the acquisition of hard assets like gold in times of severe political and economic crisis. Its also important to keep in mind that in times of great uncertainty, particularly when there is a war or natural disaster, the demand for gold will rise.

The Approaching Gold Storm

Today, it seems we are on the eve of events that could dramatically ignite an unprecedented gold boom. Any one of these events could push the demand for gold to remarkable new highs. But should they coincide, a rare investment opportunity could arise. These events include: The U.S. dollar crisis and economic distress Massive global instability, including unrest in the Middle East The aftermath of a central bank gold sell-off The China factor Growing inflation Gold can rise due to any one of these factors. But, when you combine two or more of them, you could have a new gold boom. Mix three or more of these factors together, and you could have a recordbreaking gold price of historic proportions.

Dollar decline and economic downturn

For the last 15 years, the main export of the United States has been dollars. These are the unbacked liabilities of the U.S., exported to the rest of the world in exchange for foreign cars, electronics and oil. But now, the international community is holding over $6 trillion of a currency in which they lack confidence. The dollar has become like a hot potato and they dont want to hold on to it for very long. These dollars will find themselves flowing back into the U.S., which in turn will inflate the currency already in circulation. The result? High interest rates and high inflation that will hurt the average American who is not prepared for this backlash.

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CHAPTER 3 : APPROACHING A PERFECT STORM

Other threats to the dollar include Immense federal budget deficit. The wars in Iraq and Afghanistan have a combined cost of almost $1 trillion dollars. Congress continues to overspend with an annual budget of $2.7 trillion. The U.S. national debt is currently $9.4 trillion. These factors have created enormous risks for investors. With an increasing government debt comes inflation and economic uncertainty. This will continue to weaken the dollar. Rock-bottom interest rates. Just like in the 70s, we are witnessing these today. Low rates wont protect todays homeowners and investors from the ravages of inflation; rather, these rates contribute to it. Watch for the resulting inflation to trigger a run on precious metals, particularly gold. Why? Because as gold prices rise, the dollar weakens. Talk of OPEC switching to the euro. Since 1971, OPEC oil has been exclusively quoted in U.S. dollars (called petrodollars). This creates a permanent demand for dollars on the international exchange markets. But recently, OPEC members Iran and Venezuela have been pushing for a switch to the euro because of the weakening dollar. In fact Iran already requires euros in payment of exports being sent toward Asia and Europe. And on May 10, 2006, Russian president Vladimir Putin announced the creation of the petroruble to trade oil and gas. As the dollar weakens worldwideyour only protection is gold. U.S. real estate bubble. After this bubble and the resulting credit crunch, many investors are leery of real estate. These investors are looking to place their money into solid investments they can trust. Fear of a massive stock market meltdown. Currently, the market has been quite volatile, keeping investors guessing. Many investors are looking for more security and safety, and they are finding it in gold.

Massive global instability

Wars, fear of war and the current global War on Terror have increased the likelihood of a gold boom. It isnt necessary to have all-out hostility. There just needs to be enough uncertainty and instability to fuel the fear we see on the evening news. Here is just a short list of existing global conflicts and concerns: The ongoing war with Al-Qaeda and, with it, the fear of another 9/11 A nuclear North Korea with madman Kim Jong Ils finger on the button as well as the backing of his army, the fourth largest in the world A near-nuclear Iran controlled by Islamic extremists bent on destroying the West Instability and violence in the petro-rich Niger Delta, which has led to a drop in world oil production and a rise in oil prices Ongoing saber-rattling from Venezuelan dictator Hugo Chavez, who controls the largest oil reserves in the Western Hemisphere Unsecured nuclear weapons facilities within the territories of the former Soviet Union Any one of these situations or any combination of them could be the spark that leads to global conflict. Will you be prepared if or when it does?

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CHAPTER 3 : APPROACHING A PERFECT STORM

Central bank gold sell-off

Central banks around the world hold about 33,000 tonnes of gold. Unfortunately, central bankers concluded that all this gold sitting in their vaults is useless as it is not earning interest. Their answer to the problem is to loan it to various business entities in order to earn a modest rate of interest. This availability makes gold seem more accessible for manufacturing, dentistry, jewelry and other uses. This creates the illusion that gold is in plenty of supply. But as we revealed in Chapter 2, gold is finite. In fact, the amount remaining above ground, is less than half of what has already been found and produced from the beginning of civilization. According to the U.S. Geologic Survey, there are only 50,000 tonnes of gold left to mine in the earths crust. With the rate of gold consumption at 3,760 tonnes per year, the worlds supply will be fully mined before 2022. And as investors come to that realization, existing gold supplies are going to become increasingly more valuable, coveted and hoarded.

The China factor

Imagine having an instant market of over 1 billion consumers virtually overnight. According to the World Gold Council, the demand for gold worldwide nearly doubled in 2007and much of that demand rests on the shoulders of China. Gold ownership for Chinese citizens was legalized in 2004. Now a system for selling bullion to the largest population in the world is in operation. The demand for gold in China increased sharply last year, hitting 326.1 tonnes, a 26% growth from the previous year, and according to the China Gold Association, China has become the third-largest consumer of gold in the world. Whats more, the Chinese central bank is also diversifying out of U.S. dollars and into gold. (That spells more trouble for the dollar.) And in March 2006, the National Development and Reform Commission of China said that China intends to more than double its gold reserves to 1,270 tonnes this year.

Change is coming
It is very possible that people in the future will look back at this time and clearly see the convergence of events that led to a run on gold. An economic downturn is in our midst. The world has never been more dangerous. And the demand for gold continues to grow. NOW is the time for you start investigating how to incorporate gold into your portfolio.

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CHAPTER 4 : THE FUTURE OF GOLD

Chapter 4

The Future of Gold

Factors that could send gold past the $2,000-an-ounce mark.
In 1979, Jimmy Carter was president. Americans were being held hostage in Iran. Oil prices were escalating on a weekly basis. Inflation was in the double digits, and the U.S. dollar was under siege. In the 12 turmoil-filled months leading up to January 1980, gold went from $240 per ounce to $850 per ounce. Gold fell back during the economic stabilization of the Reagan presidency, but has been slowly rising since then. In fact, the price of gold more than tripled since 2000 to its all-time high of $1,002 per ounce in March 2008. But could gold today really make the same kind of price spike that it did back in 1979? The truth is, at the time, gold in 1979 dollars was worth $850 an ounce. But, adjusted for 2008 inflation dollars, the same gold would be worth $2,200 an ounce today. So it is possible that the price of gold could hit $2,000 an ounce. But is it probable? Consider how todays events parallel those of 1979. America is at war with Islamofascism. Iran is exporting terrorism and is now nearly nuclear. Inflation is a real hardship. Oil prices have increased the cost of virtually every product and service. And the dollar is again in decline. The bull market for gold is just beginning. According to Morgan Stanleys top-ranked financial advisor Rick Blosser, Weve been in gold five or six years now and we dont think the bull market has run its course yet. Lets take a look at gold since the year 2000

Gold London PM Fix 2000 Present

1000 900 800 US$ per ounce 700 600 500 400 300 Jan 00 Jul 00 Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Sep 08 200

Table courtesy of Kitco.com

As the chart above shows, in 2006 gold broke a critical benchmark when it hit the highest average monthly price in history. And as you know that trend has continued significantly higher with gold reaching an all-time high of $1,002 in March of 2008.

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CHAPTER 4 : THE FUTURE OF GOLD

So where will it lead? Lets take a look at 4 concrete factors that have boosted gold prices in the last five years and which promise to further increase gold values from already historic benchmarks to levels of $2,000 an ounce and beyond.

1. Lowered overall mining production

Global gold mine production was at an 11-year low last year. This is the second consecutive year of decline. Whats more, total production costs were up by $99 per ounce, which means lower output from major mines. Worldwide production is simply slowing as the aging mines yield less gold and as mining exploration companies struggle to discover new mines. Investors would be wise to look to more efficient small cap mining companies that employ unique business strategies, working with less overhead, exploring prospects that are too small for the gold giants.

2. Political instability in South African mining

Since the 1880s, South Africa has been the source for a large portion of the worlds gold supply, with about 50% of all gold ever produced coming from this area. In 1970, South African production accounted for 79% of the worlds supply, for a total of about 1,000 tonnes. However, by 2007, production was just 272 tonnes. The decline in supplies from South Africa has resulted in an overall global gold production slowdown. Labor unrest, political instability and high costs have all taken their toll. Recently, and for the forseeable future, the South African government is expected to ration electrical power to mining outfits. The Financial Times reports this could slow production by as much as 15% to 20%. If this happens, it could reduce worldwide gold output by another 55 tonnes, creating a severe supplydemand imbalance. The result would most likely be a dramatic price spike.

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

Another reason for the increase in the price of gold is that many of the worlds gold-producing countries are holding on to their gold for economic reasonsor domestic demand is simply so strong that the country has none left for the world market. Consider China again. China is currently the worlds largest gold producer at 275 tonnes of gold a year, yet it still imports another 50 tonnes! Not only is Chinas retail demand ravenous, there are rumors that its sovereign wealth fund is buying up all the gold it can. Russia is another example. As the worlds fifth-largest producer, its still a major importer of gold. In fact, Russias central bank chairman recently said the bank would be purchasing gold on all markets on which it is available. The intent is to use it for the nations financial reserves and serve as a bulwark for the ruble.

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CHAPTER 4 : THE FUTURE OF GOLD

The bottom line? Although China and Russia are two of the worlds largest gold-producing countries, the rest of the world doesnt actually have access to their production. So the total production number of 2,447 tonnes for 2007 is misleading, since large amounts of this total dont figure into global supply. This factor alone speaks to the potential for a severe gold shortage in the coming years.

4. Increased demand for investments and jewelry worldwide

Political uncertainty, the threat of economic crisis and the failing dollar have led to widespread investment demand. In 2001, 400 tonnes of gold were purchased for investment. By 2007, that figure had climbed to 1,000 tonnes. Currently 28,800 tonnes of gold are held by private investors and 28,500 by the official sector (primarily central banks), and jewelry consumption has skyrocketed. According to the World Gold Council, Jewelry consumption in the developing markets has been expanding rapidly in recent years [and] several countries, including China, offer considerable potential for future growth in demand.

$2,500 goldare you ready?

When you take a look at all of these the factors that are driving actual gold investment and purchase, one must conclude that golds uptrend is being caused entirely by increasing demand coupled with decreasing supplya trend showing no signs of abating. These factors have the potential to ignite a remarkable bull run on gold. A price of $2,500 per ounce is quite possible. In fact, one can argue that it is a probable outcome. Now that you understand the dramatic demand for gold, the history of its value and the causes for the current developing bull run, lets take a closer look at the best ways for you to get involved in the gold market.

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CHAPTER 5 : THE 4 WAYS TO INVEST IN GOLD

Chapter 5

The 4 Ways to Invest in Gold

Your options for a stronger and more diversified portfolio
In the previous chapters we have looked at the economic, historical and geopolitical factors driving the need to prudently invest in gold. In this chapter, youll look at various strategies for investing in gold. The strategy that is right for you depends largely on two goals: capital preservation and wealth accumulation and growth. A capital preservation strategy is a conservative way to protect your wealth. It is a strategy often preferred by investors who intend to leave their assets for heirs. It is also considered a defensive strategy designed to protect ones portfolio. If you have 30% of your assets in gold, we recommend 10% for capital preservation and 20% for wealth accumulation. Wealth accumulation and growth is a more aggressive strategy that could produce significant returns over time. Not counting investments in gold futures (which, for many investors, are simply too risky and unpredictable), there are four major gold investment options. Gold bullion Gold coins Gold ETFs (exchange-traded funds) Shares in gold mining companies Investments in any of these strategies, particularly low-cost gold exploration companies, can be started with as little as $5,000. Note: Many conservative financial advisors recommend 10% to 15% of your total portfolio in gold. Still many advisors and wealthy investors have 30% to 50% in gold due to the dollars decline and the current U.S. economic crisis. Some of these investment options are suited toward portfolio stability, while others are capable of dramatic returns of 100%, 200% or even 1,000% over periods as short as six months to a year.

Gold bullion
Of all the gold investment options, bullion is the safest and simplest way to invest in gold. If you are looking for maximum capital preservation, own gold bullion. Bullion can be purchased in units as small as one-tenth of an ounce or as large as a 400-ounce gold bar. Your investment gains will be largely determined by the rise and fall of the spot market price of gold, plus the fees levied by the exchange where you purchased your gold.

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CHAPTER 5 : THE 4 WAYS TO INVEST IN GOLD

While gold bullion is extraordinarily safe (remember gold will almost never lose value over the long term, though it can go down in price), the profit potential for bullion has the kind of modest returns youd expect from such a safe investment. Remember youre buying a physical amount of gold, which means you have to actually put it somewhere. This can present one of two problems. First, it leaves you open to theft if you keep it at home. Second, you could store it in a secure location, but that involves storage fees, which will eat into your profits. Still, even though there are other options for making larger returns, it is always best to have some assets in bullion (real or honest money).

Gold bullion coins

There are two types of gold coin investments that can be made - numismatics and gold coin bullion. Numismatics are rare gold coins, which at one time were in circulation and used as money. Their value is based on their age, condition, scarcity and overall aesthetics. This investment is for the collector who knows and fully understands the risks of this highly speculative investment. Gold coin numismatics have transaction costs that can be as much as 100% over the spot price of the gold used to make the coin. And, this premium pays no dividends. If you are looking to protect your wealth, you cannot achieve it with numismatics. With the strongest possible emphasis, Appenzeller Business Press AG does not recommend investing in numismatics. If you are looking to protect your wealth, we recommend gold coin bullion. These coins derive their value from the gold content only (not from their rarity as in numismatics). Among the most famous of these coins are the South African Krugerrand, the Canadian Gold Maple Leaf and the American Gold Eagle. Gold bullion coins are also produced in fractions of an ouncetypically half, quarter and onetenth. Their value is mainly dictated by their troy weight and the prevailing market price for gold. Gold coin bullion is an extraordinarily safe investment that can be traded just about anywhere in the world. And, it can be traded at only about 5% over the spot price (a huge advantage over numismatics). Thats the upside. The downside is the risk of theft and the potentially modest returns. Again, its smart to consider your investment goals. Gold coin bullion is excellent insurance against hyperinflation and other calamities. Gold coin bullion is an option for those investors who are more savings-minded, those who are looking to protect their wealth.

Gold ETFs (exchange-traded funds)

An ETF is a type of mutual fund that trades on a stock exchange like an ordinary stock. They differ from mutual funds in that shares of ETFs can be traded at anytime while the host stock market is open. The ETFs exact portfolio is fixed in advance and does not change. The rise or fall in the gold ETF price will closely track the spot price of bullion.

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Typically a commission of 0.4% is charged for trading in gold ETFs, in addition to an annual storage fee. The annual expenses of the fund, such as storage, insurance and management fees, are charged by selling a small amount of gold represented by each certificate. Thus the amount of gold in each certificate will gradually decline over time. If you are interested in taking advantage of the real value of gold assets you will not find it in ETFs. They are still paper and represent merely a promise of value. If youre interested in the real value of physical gold, look into buying bullion rather than ETFs, and, if you are looking to maximize your wealth accumulation potential, look to gold mining stocks over ETFs.

Gold mining stocks

Gold mining stocks offer maximum opportunity for profitability. They are the ideal choice for wealth accumulation and growth. Thats because they have the ability to offer tremendous leverage you just cant get from bullion or numismatics or even ETFs. The reason is simple. Assume for a moment that gold is selling for $1,000 an ounce. If it rises to $1,250, youve just made 25% on your money, or $250. Not bad. But now assume youve invested in a carefully selected gold stockone that spends about $200 to mine an ounce of gold. If gold is selling for $1,000 an ounce, the company is making $800 for every ounce it mines. So, if the price of gold rises to $1,250, the company now makes $1,050 for every ounce it mines, and that increase in profits should quickly be reflected in the companys stock price. Whats more, the costs are fixed. If it takes $200 to mine an ounce of gold at $1,000 an ounce, it will still cost $200 to mine an ounce of gold when its $1,250 an ounce. There are 3 types of mining companies you can find that offer shares. 1. Large gold producers 2. Intermediate companies 3. Junior companies Large gold-producing companies are in actual production, removing gold ore from the ground. These are often huge companies with large operations, high overhead and significant operating costs. In fact, even with the price of gold trending upward, operating expenses can eat a significant portion of profits. Take a look at the gains some of the biggest gold mining companies in the world have made in just the last five years: AngloGold Ashanti (up 214.9%) Newmont Mining (up 201.5%) Agnico-Eagle Mines (up 369.9%) Gold Fields (up 200.7%) Harmony Gold (up 216.1%)

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Still, when it comes to mining stocks, consider the intermediate and junior mining companies as your best opportunity to profit from a coming gold boom. Intermediate and junior mining companies have the advantage of being able to operate quickly and efficiently with less overhead than large gold mining producers. They operate with smaller capital needs, and maintain a bare bones overhead. They also tend to take on projects that appear to be too small for the larger gold producers. However, these projects yield major profit opportunities for small- or medium-sized companies. Among these mining companies are those with actual resourcesgold thats been discovered or purchased. Then, there are mining companies in full exploration. They have yet to find gold but have the potential for a major new discovery. Investors must be cautious of companies without established resources and recognize that with this potential comes a higher level of risk. Here are 3 advantages to intermediate and junior mining companies with resources: 1. Low overhead. These companies typically are very small and keep costs low. They also tend to be fast-moving operations, free from the slow-moving bureaucracies of bloated production companies. This means they can make quick decisions, both in the boardroom and in the field. 2. Leaders in discovery. Mining exploration lives or dies on its management team and its geologists. These arent boardroom people sitting behind a desk. They are gifted explorers who actually get their hands dirty. The best of them have almost a sixth sense that drives them to find mines rich with potential. 3. Easy share accumulation. If an investor is looking for low-cost stocks poised to hit a megaboom, these companies offer incredible value and potential. Some trade for under $2 a share, making it much easier to double, triple or quadruple your money in a very short period of timesomething thats nearly impossible when your money is locked into a gold-producing behemoth priced at $57 a share or more. This is a demonstrable fact. The shares of large gold mining producers typically rise two to four times more than the price of gold itself. Smaller exploration companies often soar higher than that on the basis of new gold discoveries, sometimes as much as 5 to 10 times more than the increase in the price of gold itself. Here are a few examples: Take the case of one gold exploration stock that was trading for $1.17 a share. They hit upon a major find and the stock jumped to $2.48, turning every $10,000 investment into $21,197. And thats on the small side of the scale. Another stock went from $0.61 in March of 2006 to a breathtaking $40 in November of the same year. A $10,000 investment would have led to a whopping $655,737.70. Still a third stock with a small market cap of just $15.96 million and trading for as little as 16 cents leaped 31.35% in a single day on news of a gold price spike. The best examples of this type of wealth accumulation and growth strategy may be found in companies like Seabridge Gold. Seabridge Gold Inc. was created to provide its shareholders with exceptional leverage in relation to a rising gold price. From 1999 through 2002, when the price of gold was lower, Seabridge acquired nine North American projects with substantial gold resources, including the multimillionounce Courageous

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Lake and Kerr-Sulphurets deposits. Subsequent exploration by Seabridge has significantly expanded this acquired gold resource base. The Seabridge strategy measures its performance in terms of gold ownership per common share. Thats why project acquisitions and exploration programs are carefully chosen to ensure that the share dilution required to fund these activities is more than offset by additional ounces of gold resources. In contrast to most other gold companies, Seabridges gold ownership per share has risen for six successive years, providing its shareholders with exceptional leverage to a rising gold price. As a result, Seabridge shares have outperformed the Toronto Stock Exchange Gold Index by nearly 3,400% from 2002 through 2006.

How do you find quality mining exploration companies?

Consider the mines geographic location. Gold resources are found around the world, but much of the globe is still dangerous and unstable. There is also the risk of a mines operation being nationalized by a tinhorn dictator. For the time being, steer away from mining companies operating in risky parts of the world. Instead, look for excellent investment opportunities in the Western Hemisphere where political risk is low, mining laws are favorable and property rights are respected. Some of the most profitable mining opportunities can be found in Peru (one of the worlds largest gold producers), Chile (one of the largest mining countries in the world), Argentina (an underdeveloped mining location with huge potential) and Brazil (a place filled with underdeveloped gold fields). In Latin America, youll find smart, well-managed junior and intermediate companies in addition to the gold giants, who will often buy out these smaller companies once there is news of a significant find. These giants in Latin America include: Newmont Mining Barrick Gold Noranda GoldCorp Compaa de Minas Buenaventura BHP Billiton There are also opportunities in the U.S. as well as in the gold-rich districts of Canada. Consider the cost of mining. Open-pit and underground mining costs have soared in recent years. In order to be more efficient and deliver higher profits, some companies employ placer mining techniques. Placer mining is an extraction technique used in the search for gold to explore and process alluvial depositsthat is, material deposited in the soil and fans of ancient riverbeds. These deposits are created by millions of years of water movement and erosion.

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Typically, delta regions surrounding ancient riverbeds have been ideal locations for alluvial gold. Areas receiving attention for their alluvial gold potential include the Northern Amazon region in Peru as well as areas of Colombia and Brazil. Placer mining operations have been the basis of the biggest gold rushes in the world has ever seen. Whether its the 49ers of California or the Alaskan gold rushes, all the major gold rushes were around placer mining discoveries. Case in point is the 2006 purchase of Placer Dome, Inc. by gold giant Barrick Gold Corp. for $10.4 billion. Placer Dome started as a placer mining operation. Consider the management. Management is critical. It is the key to developing these projects into highly prosperous ventures. Strong leadership knows and understands the necessity of securing in-theground resources, finding more of them and then developing them. There is also an understanding that production is not the main focus. Too often companies try to be all thingsexplorers, developers and producers. They often fail because of the differences between managing a production opportunity and managing an operation focused on building more gold value behind its shares. Ultimately, you need to perform your own due diligence. Research the management. Check out their previous accomplishments. Look to see if they have established a successful track record. These will be good indicators of the companys future. Look at the properties and study their history. Read all you can about the surrounding properties. Look at the market cap and the stock price. Try to spot a bargain waiting to be snatched up. With a junior exploration company, a significant find can take a $2 stock and rocket its price 400%, 500%even 1,000% or more. Ideally, you want to consider the number of shares outstanding (hovering around 50 million), and look for a share price under $2and preferably closer to $1 than $2.

Now is the time to act

The team at Appenzeller Business Press AG hopes we have added to your knowledge of gold investing in these times of economic uncertainty. We are dedicated to ensuring that investors like you have the facts you need in order to make a well-educated investment decision. With serious economic events coming together in the form of a declining dollar, recession, inflation and uncertain markets, it is more important than ever that you look into investment alternatives and consider gold as an option in the creation of a well-diversified portfolio.

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APPENZELLER BUSINESS PRESS AG Appenzell Ausserrhoden, Switzerland www.ARBP.ch

Welcome to the Intersection of Free-Market Economics and Investment Profitability

My name is Albert Kessler and I am proud to be the chairman of one of the most unique publishing houses in all the world, Appenzeller Business Press AG (ARBP). ARBP is located in the scenic Swiss region of Appenzell - one of the last bastions of free market thinking, culture and tradition. Appenzell is renowned for its free market traditions, respect for personal liberty, rejection of government intervention and reverence for Austrian economic principles. Still to this day, Appenzellers gather each year in the village square to take part in one of the worlds oldest and purest forms of direct democracy, the Landsgemeinde. Its a centuries old tradition that happens just minutes from our offices. Eligible citizens meet openly in the village square to decide on laws and expenditures by the council. Everyone can debate a question. And those in favor of an issue signify their vote by simply raising their arm in the air for all to see. In that same tradition, ARBP is dedicated to supporting savvy and hardworking people who fully realize the danger of blindly entrusting their own welfare to government. We do this with publications and tools we create to help support investors and entrepreneurs who still believe in privacy, personal responsibility and personal freedom. Each service we offer is based on Austrian economic principles. These principles, developed by Ludwig von Mises and Frederich Hayek, have proven over time to reflect human nature, the real world and economic progress. For investors, these free market principles help us understand the business cycle, the investment and economic results of government involvement in the economy and how investment and cash flows react to geopolitical events. This results in an investment advantage, an early forecasting and early warning system for investors. Ultimately, investors find greater profitability and safety. By creating products designed to support liberty and economic freedom, we like to think ARBP is offering people around the world an opportunity to have a voice in their own Landsgemeindejust as their like-minded friends in Appenzell. Freedom works in all cultures and countries. Free market economics can help all people prosper. That is why we try hard to support freedom and free enterprise around the world. Sincerely,

Albert Kessler
Chairman, Appenzeller Business Press AG

P.S. Thank you for taking the time to read through this Special Report. We are confident you find many practical ideas and useful solutions that can help empower you to a make betterinformed social, political and financial decisions.