In Jim Cook's Archive


“The price of gold has slipped to $426 – just a dollar above our current buying target. We hope it slips some more today – we’ll buy some. If inflation was a growing problem – the gold market doesn’t see it. The price is in no hurry to go up. We don’t buy gold because we think it is going up. We buy it because we think – over the long run – it won’t go down. And we fear that almost every other asset will go down – stocks, bonds, the dollar, real estate, collectibles. We buy gold. We watch. We wait.”

Bill Bonner

Over thirty years of selling gold and silver I’ve heard some amazing stories. A client once recounted to me that in the Nazi occupation of Paris, his family made it through because of a small stash of gold coins. Another customer fled from Hungary in 1956 after the Russians suppressed the freedom uprising. At the border she used her gold jewelry to bribe the guards and gain freedom. A Chinese client told me of a moment in 1949 when he and his family tried desperately to escape the approaching Communist army. At a ramshackle airstrip a lone DC-3 sat with propellers whipping up clouds of dust while a crowd of people clamored to get on board. Those who waved handfuls of paper money were pushed back by the guards. When they saw his gold, they grabbed him and his family and tossed them aboard. A few hours later they were safe in Taiwan.

A Latvian immigrant told me that in the 1930s in Riga his father would purchase U.S. $20 gold pieces and plaster them into the wall of their house. When the Russians invaded they stopped people on the street and checked their hands. If they were soft, they shot them. If they were callused hands of workmen, they let them go. He hid in the woods for several weeks and twisted tree branches in his hands until they were callused. He left the woods, and when the Russians checked his hands at a barricade, they allowed him to go through to his home. He took an axe to the wall of his house and retrieved the gold coins. Then he went to the harbor, and with the gold coins he bribed a ship captain to smuggle him on board. The vessel went to Sweden where he spent the war and eventually came to the U.S.

In these kinds of dire circumstances, gold has proven its merit over and over again. It’s also been the best protector against currency debasement. Although nobody seems to believe that inflation will be a big problem, we believe otherwise. In fact, it could get out of hand. Walter Levy, an oil consultant, once wrote about hyperinflation in Germany. “My father was a lawyer and he had taken out an insurance policy in 1903. Every month he had made payments faithfully. It was a twenty-year policy and when it came due, he cashed it in and bought a single loaf of bread.”

My Mom and Dad were born in 1910. In the “dirty thirties”, as they called it, my Father bought a $10,000 life insurance policy. They scrimped and saved to pay the premiums on that policy, believing that $10,000 would take care of them in their golden years. When they retired, the $10,000 didn’t go very far.

One of our clients grew up on a farm in Germany. Years ago he told us about what happened in 1921. His parents had a large mortgage on the farm. One day, at the peak of the hyperinflation, they took ten dozen eggs to market and sold them. With the proceeds they went to the bank and paid off the mortgage.

We currently have major inflation going on in assets such as real estate. New mortgage money to keep the real estate boom going could be considered a form of money printing similar to what was prevalent in earlier inflations. We may not see hyperinflation, but the value of the dollar will continue to depreciate and lose purchasing power, as it has since we went off the gold standard. A 1932 dollar is worth about a nickle today. Lately this trend appears to be accelerating, and holding gold instead of paper makes good sense.

A nice diversification for you into gold exists with the four major gold coins struck by the U.S. Mint in the nineteenth and twentieth centuries. These coins were minted with gold found by the 49ers in California, and from discoveries in the Black Hills and the Klondike. They were the money of America when a twenty dollar bill was convertible into a $20 gold piece. These gold coins fueled the great industrial growth in America from the end of the Civil War to the Great Depression.

The $20 Liberty Head was struck until 1907 when it was replaced by the $20 Saint Gaudens. Both coins contain 96/100 of one ounce of gold. The earlier coin has a large Lady Liberty on its obverse with an eagle on the reverse. Teddy Roosevelt wanted a new design after 57 years of the Liberty Head. He commissioned a famous sculptor of his day, Augustus Saint Gaudens, whose design of a new standing Liberty is considered to be the most beautiful gold coin ever minted. This coin is known as the Saint Gaudens.

The Ten-Dollar Indian Head gold piece was also designed by Saint Gaudens and came out in 1907. This beautiful gold coin has Liberty on the obverse wearing a fully-feathered Indian war bonnet. It too is considered to be at the pinnacle of numismatic art. It replaced the $10 Liberty, which has the same design as the $20 Liberty Head. The $10 gold coins contain 48/100 of one ounce of gold.

We have these coins available in a set of four in a nice uncirculated grade of MS62. They are all beautiful coins sealed in plastic holders to protect them and secure the grade. These coins appear to be at a low price currently, compared to periods in the past. It’s probably an excellent time to acquire one or more of these four-coin U.S. gold sets. Call us today at 1-800-328-1860 and secure these prized gold items.

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