The signs are everywhere. Have you noticed? Counting your stack of physical gold coins lately? This Reuters article was from last Wednesday. From the article:

“The United Nations warned on Wednesday of a possible crisis of confidence in, and even a "collapse" of, the U.S. dollar if its value against other currencies continued to decline.”

And this:

“The 17-page report referred at another point to the "still looming risk of a collapse of the United States dollar."

Don’t ignore these strong warning signs folks! Call your coins dealer today – Lear Capital!

Those figures? Well, that is our current annualized inflation rate. Can you feel it? I sure can. John Williams of ShadowStats publishes the real figures. I subscribe to his newsletter and you should too. The great financial reporters at The 5 Minute Forecast found it too. Here’s what they had to say last week:

“Looking at the CPI figure the way it was calculated back when Billy Carter was embarrassing his brother in the White House, prices have risen 10.7% from a year ago.”

Last Friday, Julian Phillips wrote the above article – something on everyone’s minds, no doubt! I had to concur with the following statements he made about investing in safe haven gold at a time like this. Here's a couple excerpts:

“It is very difficult to see what will happen next.”  

AND:

“What is clear is that the ‘ripples’ from this and other crises will spread far and wide, throughout the global economy and global politics.”

Julian finishes with this about the ongoing gold bull market:

“How will all this affect the gold and silver markets?

Do not be surprised to see major levels of speculation rise in the oil market in expectation of the worst.

In the past the gold price followed by the silver price has only been indirectly influenced by the oil price. The uncertainty that the oil situation posed to the global economy had a direct impact on the two precious metals. The recession and credit-crunch followed, pulling all markets down and causing a 20% + correction in the gold and silver prices. But this time, we would expect to see far less of a reaction in the precious metals should the worst happen. After all, the precious metal markets have continued their uptrend, despite these crises. In fact it is these crises that have prompted more accumulation of the precious metals while other markets have stalled.

This time investors have tasted the bad times before, so will not react as precipitously as they did then. We feel they will turn to precious metals quickly, from other markets. After all, the potential of these situations points to extreme times in which precious metals come into their own.”

Agreed! Your uncertainty hedge? Physical gold and silver. Accumulate for your portfolio today at Lear Capital. Make us your coins dealer today!

Here’s Jeff Clark at Casey Research’s enlightening newsletter, “Big Gold”: “The numbers for silver demand are starting to make some market-watchers nervous. The U.S. Mint sold over 6.4 million silver Eagles in January, more than any other month since the coin’s introduction in 1986. China’s net imports of silver quadrupled in 2010, to 122.6 million ounces, roughly 13.7% of global production. Meanwhile, mine production can’t meet worldwide demand; the only way demand gets fulfilled is from scrap supply.

And it’s not like the U.S. is just brimming with a supply of silver scrap. You can’t exactly drive around and see towering piles of silver odds and ends surrounded by coil-topped fences and crazy junkyard dogs. It is startling, though, just how much silver comes out of the woodwork when the price of silver goes north. We all seem to own something silver.

I remember back in 1980, at an obscure Woonsocket, Rhode Island coin shop, people were lined up around the block at midnight looking to either sell silver stuff -- like silver tea sets -- at those record high prices (back then, silver had reached $48; it’s now at $30) or else they were looking to buy silver and gold as an antidote for the rarely-seen-in-this-country 9% to 14% inflation at the time.

At the height of all this buying and selling madness, the precious metal market began having problems getting people in and out. Dealers actually ran out of bags of "junk silver" and gold anything to sell. True story. Values moved so fast it was hard to affix a price tag on precious metal items. Silver and gold liquidity, which is usually excellent, suddenly was a sporadic case-by-case situation. Many dealers had nothing left to sell. It was a prime example of what happens when a whole lot of people suddenly, frantically, want something of rapidly shrinking availability.

Was that midnight-line-around-the-block a preview of coming events? Stay tuned.

When everyone wants something -- say, Hanna Montana tickets -- its price can go right through the roof. And though Ms. Montana's glittering performance may not exactly thrill you, the fact that it used to thrill about 50 billion young girls has, in many cases, literally sent the price of her otherwise $60 tickets to upwards of $2,000.

That may soon be gold's story.

Like Hannah Montana, gold coins certainly aren't everyone's favorite. For a good number of traditional stock-and-bond investors, the precious metal may as well be radioactive. "Gold? It's a barbarian's relic. Why on earth would I want anything to do with that?" is what one of these stuffy investors might utter, while looking down his nose at you.

But with the dollar in unprecedented inflationary danger under QE2, it's not out of the question to, one morning, find our economic world turned upside down...and, with it, the attitude of those investors who've looked down at gold coins all their lives.

If that happened, it could motivate these people to become official card-carrying gold bugs virtually overnight...not that there'd be an abundance of gold coins to buy at that point.

MODELING THE PRICE OF GOLD IN A FLIGHT FROM THE DOLLAR

The trouble here is that gold has a notoriously inelastic supply. You'll never hear, "Sure, go ahead, buy that 1,000 ounces of gold. We'll dig more up tomorrow."

It doesn't work that way. While people are mining the precious metal all the time, worldwide production has stagnated these last few years and is now running at a relative snail's pace. A flight from the dollar to gold would quickly eat up its current inventory and could, like those Hannah Montana tickets, send the price of the metal to the moon.

Analyst Doug Dillon, in his article, "There's Just Not Enough Gold; Modeling A Dollar Flight To Gold" gave us a picture of what this might look like. If there were just a 1% shift of the assets of US households (now in stocks, bonds and funds) into gold, maybe representing an "I'm worried about the dollar" attitude (but still falling far short of a panic), Dillon's model points to inelastic gold hitting $4,769 an ounce.

On the other hand, if there were a flight from the dollar that amounted to, as Dillon put it, a "minor panic," his model literally has gold ascending the $10,000 an ounce throne pretty readily.

As astonishing as all this may sound, without enough gold around to satisfy panicky investors, these kinds of unreal prices might be quickly achievable.

LINED UP AT MIDNIGHT FOR GOLD

Although it never fell under Dillon's "minor panic" category, the last time we had anything resembling a run on gold was back in 1980. Oil prices were way up, Inflation was out of control, the Russians were invading Afghanistan and a smiling Jimmy Carter had no answer for any of it.

As a result, gold and silver coins both reached record territory. At one obscure Woonsocket, Rhode Island coin shop, people were lined up around the block at midnight looking to either sell their gold and silver stuff -- like silver tea sets -- at those record prices or else buy gold coins as an antidote for the swelling inflation all around them.

At the height of it, the precious metal market began having problems getting people in and out. Dealers actually ran out of gold coins, bars and bags of "junk silver" to sell. True story. Values moved so fast it was hard to affix a price tag on precious metal products. Gold liquidity, which is usually excellent, became extremely sporadic in the face of such urgent buying and selling. Many dealers had nothing left to sell. It was a prime example of what happens when a whole lot of people suddenly want something of rapidly diminishing availability.

Was that midnight-line-around-the-block a preview of coming events? Will we see a full-blown flight from the dollar in our lifetime? Will Doug Dillon's $4,000 or $10,000 gold come to pass?

Think about all that the next time your daughter or granddaughter asks you to cough up $2,000 so she can go see Hannah or whoever takes Hannah's place.

Wheat prices closed today at $8.08 per bushel up from $4.72 per bushel in June. That is a 71% increase in the price.

The effects of helicopter money? Certainly this has a lot to do with it. Wheat cannot be printed on a printing press. Gold coins can’t either. Neither numismatic silver coins. Numismatic gold coins on a printing press? Not on your life. They are simply showing their true value as the paper US dollar buys less. Unfortunately, we all need to get used to a new term in our vocabulary – agflation. Read about it here. Keep a watchful eye on gold supply and demand. As your coins dealer, Lear Capital brokers can discuss how gold coins as an investment can be the gold inflation hedge you need today. Your coins dealer? Lear Capital - the precious metals leader! Buy gold!   

This was written on 6/9/10 by Bill Bonner, editor in chief of The Daily Reckoning, and it is entitled

A Gold Medal in Economic Incompetence. Here’s an excerpt from Bill’s piece:

“You can fight a correction. You can delay it. You can distort it. You can make it bigger and nastier. But you can’t beat it. Eventually, mistakes have to be corrected…one way or another.

Usually, the mistakes take the shape of bad investments or bad loans. You can pretend that they’re still worth what you have in them. You can bail out the lenders and/or the investors. You can default and inflate. But somehow, someone, sometime is going to take a loss.

That’s when you need gold. Every other asset could have bad debt behind it…in it…or standing so close beside it that a blow-up would be damaging.

The correction that began in ’07 was needed to address all the bad debt built up in the bubble years. The feds tried to stop it. Since they didn’t have any money they had to fight it by borrowing more money – that is, by increasing the level of debt!

We knew that wasn’t going to work.

And now, there’s bad private debt…and bad public sector debt too. And now we’re approaching a Keynesian “endpoint” when lenders are growing wary. They’ve already cut off Greece. They’ve warned the rest of Europe. And when they stop lending…then, all your props fall down…along with the economy…and the markets too…”

Here’s the link Don’t get caught holding paper assets when the props fall down. Own physical gold. Like Bill Bonner says, every other asset could have bad debt behind it. Hold gold coins. Develop a plan to diversify and develop a relationship with a precious metals dealer. Watch gold supply and demand closely and act!

Folks, there is a reason why for over three months now I have had this statement as a part of the signature on my e-mails. It is this: "What if – to put it simply – you couldn’t get out of a debt crisis by creating more debt?” said by Bill Gross, Managing Director of Pacific Investment Management Company (known as PIMCO), the largest bond fund manager in the world with over $1,000.1 billion in assets under management. That is over $1 trillion! One of his top lieutenants named Anthony Crescenziv recently said that solving a debt problem with more debt accumulation is now “being seen as a magic elixir that has morphed into poison” and that “Time, devaluations and debt restructurings might be the only way out for many nations.”

How do you not become involved in the Great Debasement that we are all witnessing? Buy gold! Accumulate physical gold from your precious metals dealer in the form of a small gold coin or coins, rare gold coins and definitely stay on top of today’s gold news!

Just today I read a recent interview with Jim Rogers conducted by Hera Research, LLC.  I still hear comments, from time to time, about there being no inflation and therefore no reason to buy gold, just yet.  Yes, it is agreed that inflation and gold have a very intimate relationship, but if there is no inflation . . . what is a gold coin going to protect you from?

Jim Rogers is a well known investor and founder of the Quantum Fund.  He has long been recognized as a commodities guru.  While he will not go as far as to say gold should be the world's reserve currency, he has acknowledged that inflation is coming and it will drive gold prices higher. 

He was asked some pointed questions during a recent interview about inflation.  I thought you have heard enough from me so perhaps this time you don't have to take my word for it - take it from Jim.  Here's an excerpt from that interview.

HRN: You mentioned that the US is the largest debtor nation in the history of the world.  Do you think that will lead to high inflation or hyperinflation in the US?

Jim Rogers: Well, there will be inflation.  First, you have to have inflation before you can have hyperinflation.  I mean, we have inflation now.  If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything.  The government lies about it in the US.  Some countries lie, many countries don’t: Australia, China, India and Norway.  Many countries don’t lie about it and acknowledge that we have inflation.  Others lie about it, the UK and the US, but if you go shopping you know prices are up.

HRN: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

Jim Rogers: In my opinion, yes, of course it is.  Have you looked at it?  They’ve changed their accounting several times in the past few decades.  When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it.  It’s the same with many things.  It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years.  When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money.  I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.  As I said, in other countries, they acknowledge that there’s inflation.  I don’t know how there could be inflation in Australia and not in the US; how you can have inflation in Norway or India and not in the US, but the US says there’s no inflation.

I think this sentiment is gradually being shared by more and more people.  Make no mistake, it's not just your friendly coins dealer that talks about inflation.  

The publication Whiskey & Gunpowder is written by the folks Agora Financial. Here is how they discuss it’s direction: The independent Investors Daily guide to Gold, Commodities, Profits and Freedom. 

Sounds interesting & right up my alley! I have read their wisdom for years. Wow – did they find a strong one in this below article. They entitled it: Hyperinflation is Guaranteed. The author himself is Egon von Greyerz who wrote this on the 24^th for Switzerland Gold. He entitled it Past the Rubicon and the Point of No Return

I am posting a lot of this article, as I feel it is important. I feel you will find it is important as well. It might move you to take heed and buy gold! Your precious metals dealer is really someone you should meet, if you have not yet!

Here’s the main points of the article:

“Yes this is it! We have crossed the Rubicon and events in the world economy are now likely to unfold in a totally uncontrollable fashion. Clueless governments still don’t understand that it is their ruinous actions that have created a credit infested and bankrupt world. They will continue to prescribe the same remedy that caused the problem in the first place, namely more credit and more printed money. The consequences are clear; we will have hyperinflation, economic and human misery as well as social unrest.

When will the world finally begin to understand that we have reached the point of no return and that “the voyage of their life is bound in shallows and in miseries” (Shakespeare, Julius Caesar)? Sadly, we are probably not very far from that point. It is already starting to happen in many countries.”

This is how contagions begin – note that this does not mean new gold coins are cloning themselves

Egon continues:

“So the world is now on its road to ruin and there is no action, no leader and no new amount of printed money that can save the world or prevent a hyperinflationary depression.

Never in history has the world been in a situation when virtually all industrialized countries are bankrupt. Therefore there is no precedent for what will happen in the next few years. What we can be quite certain about is that events will happen in a seemingly random pattern and that it will be impossible to forecast where the next crises will start.”

My addition here – it took three days. Germany had a Bund market auction failure today.

Egon continues:  

“So, if virtually bankrupt nations don’t cut their deficits, they will definitively go under and if they try to cut, they will also go under due to collapsing output and tax revenues and colossal debts. Thus whatever actions governments take or don’t take, they are damned.”

Regards,
Egon von Greyerz

Well, strong words. Now is a time for strong words!

Bill Bonner, Editor in Chief at The Daily Reckoning, the flagship of Agora Financial wrote Friday an article entitled A Successful Collapse. He started his discussion with this line:

“The fixes are more costly than the problems.”

Yes, I see his logic!

Later in his article he said this:

“Bob Janjuah, chief strategist at RBS, sees where this leads:

We are trapped in some horrendous Keynesian/monetarist nightmare, where policymakers, aided/abetted/advised by their buddies in the media, in the lobbyist cabal and in financial system, have YET AGAIN decided to go down the route which merely delays the problem/pushes it down the road, but which virtually guarantees that when the NEXT bubble collapses...there is NO pleasant way back."

Yes, the dustbin. That is where all fiat currencies end up. Without a precious metal to back them up - it is where this helicopter money eventually ends up.

Trace Meyer had an interesting article in the Run to Gold website yesterday. It was called The Euro is Evaporating.

I found it quite enlightening, especially in light of the fact that all of the talking heads on the cable business news programs last night were discussing that Europe’s problems are a dress rehersal for what the US will experience in another 3-6 months.  

Here are a couple sentences that stuck out to me:

 “Fiat currencies represent the common stocks of nations, or in the Euro’s case the common stock of a weak coalition of nations.

AND:

A few weeks ago when I was around Doug Casey he remarked that the Euro will be gone in about five years. As the above chart shows (a chart of gold priced in Euros), the Euro has lost about 75% of its value in the last 10 years. Mr. Casey may be slightly optimistic about this particular intrinsically worthless colored coupon that represents the common stock of that monetary union.

AND:

The Euro is broken. This was its destiny. This is the destiny of all fiat currencies.

AND HE CONCLUDES:

Like the Euro the FRN$ is destined to evaporate…..”

Here’s the quick and dirty on the SEC’s suit against Goldman Sachs (from the Agora Financial 5 Minute Forecast today):

• Uber-billionare hedge fund manager John Paulson -- the guy that was oh-so “smart” to see the subprime fiasco coming -- allegedly pays Goldman to assemble a CDO of destined-to-fail mortgages, which Paulson then bets against. No problem there, happens all the time. Paulson is not named in the suit
• Goldman pockets Paulson’s fee (in some way or another) then turns around and sells these securities labeled triple AAA to investors in Europe. They end up spread across banks in Holland and Germany. The SEC claims no party was informed the CDO -- called Abacus 2007-AC1 -- was built to fail. Oops. Fraud by omission
• Goldman, at some point, also bets against Abacus 2007-AC1. “Hedging” Goldman calls it. Following Paulson’s lead… meh, maybe not such a bad move, but not exactly on the up and up, either. Still not likely criminal.

Paulson banked a billion when Abacus 2007-AC1 blew up. Goldman got to keep Paulson’s fee, the profitable sales of Abacus and its own hedge profits… though it still claims the lost money in the long run.

Meanwhile, some commentary today on this subject, by Eric Fry for The Daily Reckoning which is also an Agora Financial publication: “Citing Goldman's "moral bankruptcy," Britain's Prime Minister Gordon Brown called for a full inquiry by Britain's Financial Services Authority in conjunction with the SEC. Germany also said it would ask for detailed information about the case. Both governments had to bail out banks that lost hundreds of millions of dollars on investments marketed by Goldman.”

Folks, it is times like this when I begin to lose my patience. The loss of a moral compass by one of our largest investment banks (if all of this is true, as alleged) at a time when we as a nation need to ATTRACT monies to our capital markets – not drive it away – boggles the mind. A nation that is more based upon a service economy, rather than a manufacturing economy needs to have a stellar reputation for handling money. Nothing other than excellence will do – the gold standard, if you will.   

Is every bullion dealer without blemish? No. Is every coins dealer perfect? No. But let me draw an important distinction between paper investments you buy on the paper markets and hard assets like Gold coins that you buy from a coin dealer.  If you own the physical, tangible asset, that asset never has and never will be worth zero.  Mark my words on this: a gold coin has NEVER been convicted of fraud.

Chuck Butler of EverBank who writes the Daily Pfennig is back and had this to say last Friday the 2^nd:

"There's a good story in the Wall Street Journal this morning that talks about what I've been telling you for a few months now... That the Fed's program of buying troubled mortgage backed securities is over now, as it came to an end on March 31st... Now... The Fed knows what it's like to be a bank that owned these stinkin' bonds! Here's a snippet of the report...

"The Federal Reserve Bank of New York doesn't have to look far to understand the woes of banks and investors that hold loans and securities underpinned by real estate.

It can look at its own books.

A review of the portfolios the regional Fed bank assumed as part of two financial bailouts in 2008 shows a complex hodgepodge of souring commercial-property loans, securities backed by U.S. subprime loans, credit insurance written on troubled bond and mortgage insurers and loans tied to struggling hotels in Georgia and California.

The takeover of the Bear assets effectively leaves the New York Fed as holder of credit-default swaps on bonds issued by the states of Nevada, California, and Florida.

To say this portfolio is a pile of junk is being unkind to junk," David Zervos, Jefferies & Co. global fixed-income strategist, wrote in a note Thursday."

Wow. Now I know why so many analysts are discussing how to “short” the bond market (to bet against it). What is one of the best ways to short the bond market? Buy gold, my friend. Gold coin dealers are your ally in a washout of the biggest market in the world – bonds. Chuck Butler has it right with this assessment. Gold coins as investment right now makes sense.