Several years in the making, the new exhibition of U.S. coins and currency titled, "Stories on Money", was unveiled June 10, 2009 at the recently renovated Smithsonian National Museum of American History. Located on the first floor of the museum, the exhibition has a fresh new look dedicated fully to numismatics in American history.

"Stories on Money" displays a vast array of items from the National Numismatic Collection and walks you through time, from Colonial Americana ... the California Gold Rush ... the Great Depression ... and finally, to modern America – all pivotal events in American numismatics. As I toured the exhibit on the day before its grand opening, my thoughts quickly began to compare the changes in coin designs over time, and I couldn't help but recognize the visible changes in attitudes and philosophy of the American people and the government in charge of making these changes.

Mark Salzberg of NGC and Adam Crum of Monaco Rare Coins cut a red ribbon to officially open "Stories on Money." From left to right: Brent Glass, Adam Crum, Richard Kurin, Mark Salzberg, Edmund Moy, Jeff Garrett, and Elizabeth Little.

It's interesting to think about the time when George Washington was shown a proposed pattern of early coinage depicting himself on the obverse, similar to the coinage of England portraying the King, and he ordered it destroyed. Washington instead preferred and advocated symbols of liberty and other important ideals supporting those of the peoples wishes and dreams. Those ideals are depicted on these early coins now displayed at the Smithsonian for all to enjoy. Rightly or wrongly, the designs of coins of the mid- to late-20th century changed dramatically from our founding fathers' wishes and began to immortalize individuals rather than the ideals of a nation.

These changes in American currency are a reflection and a record of our history. "This display illuminates history in fresh and unexpected ways and will allow visitors to think of how money tells stories about different historical periods," said Brent D. Glass, director of the museum.

Adam Crum addresses the attendees at the grand opening event of the "Stories on Money."

Although each individual who visits the exhibit will be touched in their own way, I have my own personal favorites. For me the love of coins extends from my interest in financial history. I look at coins and think about the times in which they were made and imagine the hopes and dreams of those living at the time. I believe it is important to understand our nation's financial history to fully appreciate our current state of economic affairs and effectively predict the future.

Entering the exhibit, it excites me to look at the early colonial coins and paper currency and ponder the hardships of those living in this exciting, but difficult era, and it is amazing to think that these objects symbolize the birth of a sovereign nation soon to be known as "America." Just two steps over, I can then see a case full of classics from the California Gold Rush era and am fascinated by the unique coin designs such as the Baldwin $10 Horseman. Examining the beauty of the objects, I find my mind drifting to the incredible hardship yet extremely exciting times that the California gold rush thrust onto the hopes and dreams of the entire world.

Michael Carabini, Jim Hughes and Adam Crum get a close up look at box of the legendary $20 gold coins minted in America. These legends will be on display at the ANA in August. The 1849 will be among them.

Continuing through the exhibit I come to the case sure to garner the most attention: the display housing "America's Legendary Coins." Included among these legendary rarities are all three types of the 1804 silver dollar ... both extant gold 1877 $50 Half Unions ... two versions of the 1907 Ultra High Relief $20 St. Gaudens ... a 1933 $20 St. Gaudens ... and finally, the hero of the entire collection, the unique 1849 Proof $20 gold Type I Double Eagle, described in the exhibit simply as follows: "Many consider this the most historically significant U.S. coin because it is the very first twenty-dollar gold coin...ever made." To be sure, the 1849 $20 gold Double Eagle is widely considered to be the single most valuable coin in existence.

Lastly, I see the exhibit case which portrays the many images of "Lady Liberty," from the early coins of the Roman Empire, all the way through to the coins of today, dramatically showing how early coinage continues to play a key role in thoughts and designs of coins and currency, even in modern times.

At the end of the night I sat and thought about my day (and night) at the museum. From our private tour of the back room vault, home to 1.6 million numismatic related items, to the grand opening event that evening, I found myself a little overwhelmed by the whole experience.

Adam Crum gives a thumbs up for the new "Stories on Money" exhibit. The exhibit was made possible by the financial donations of NGC, NCS and Monaco Rare Coins.

I cannot begin to express what an honor it has been to have had the privilege of being involved in the efforts to get this historical and wonderful collection back on display for the public to enjoy. The Smithsonian's "Stories on Money" exhibition explores the importance of our country's sovereignty, heritage and financial independence. The beauty of the coins is obvious, but the history witnessed by these little objects is what excites me the most.

I want thank Mark Salzberg, President of NGC, for sharing in Monaco's vision and joining our efforts in supporting the collection and bringing this new Smithsonian exhibit to life. But keeping this exhibit in public view is a responsibility which falls on all numismatists. In these very difficult financial times, it will take sincere efforts from all of us to see that these wonderful items are never locked away in some vault somewhere.

I hope this important event challenges industry leaders to continue our educational efforts to share the real value of collecting coins, not just as an asset, but also to see the value in educating people on the "history of money" and its important role in a developed society.

For more information on the Smithsonian's "Stories on Money" exhibit and to view many of the coins of the National Numismatic Collection on-line, log on to: http://www.americanhistory.si.edu

What is considered to be the greatest New Orleans minted coin in existence set a record on May 29th for the highest price ever realized for a proof Double Eagle. The 1856-O Type I $20 gold piece – certified Specimen-63 by PCGS – is the rarest New Orleans-minted Double Eagle, and is by far the finest known example of this famous American coin.

Entering the auction as the featured specimen of the sale, it did not disappoint the crowd and certainly lived up to its billing. At more than $1.4 million, it is the most ever paid at auction for a New Orleans Double Eagle, eclipsing the 1854-O Type I Double Eagle which sold in November 2008 for just over $600,000. This new record for a New Orleans-minted coin will no doubt continue to stir the imagination and drive interest from both collectors and investors for these highly-desired branch mint coins. Many specialists believe that this is the single most important New Orleans Double Eagle in existence, and the most important O-mint coin of any denomination.

The seven-figure price is even more impressive when you consider the price journey this particular coin has taken just over the past decade alone, where it sold twice before, bringing $310,500 in 2002, just months after the tragedy of September 11th, and then again for $542,800 in 2004.

Only 19 coins (of any type) have ever sold at auction for more than this one, and none of those were struck in New Orleans. Monaco Rare Coins is honored to have purchased the first million-dollar piece of Southern branch mint gold. While the value of this coin is important, the sheer beauty of the piece cannot be overlooked. It exhibits deeply mirrored fields and sharply-struck devices which jump off the surface of the coin. By any standard it's a work of art and is arguably more important, and certainly more impressive, than coins like the 1894-S Barber dimes, two of which have sold over the past two years for more than $1.5 million, with the most recent selling for a record $1.9 million.

I used the sale of the 1894-S dime at $1.9 million and the 1861 "Paquet" Reverse Type I Double Eagle, which sold in January 2008 for $2.5 million, to help determine the price to bid for the 1856-O. After careful market analysis and much discussion with my staff, I determined that anything under $2 million would be a good value. We are so excited to have acquired this important rarity for only $1,437,500 and believe it to be one of the best values in numismatics today.

Whomever we place this coin with will have the honor of being the custodian of not only a great portfolio cornerstone coin, but will also be acquiring an asset of outstanding value and time-tested appeal of an important part of American history.

Two years ago, a company that performs financial research and analysis on commercial and government entities and has a 40% share in the world credit rating market warned the United States government that it risked losing its triple A rating if it didn't get its finances under control. That company was Moody's and the warning was motivated by the future of healthcare and Social Security costs and long before the present financial upheaval.

Does our government deserve a triple A credit rating?

While the U.S. government has had a triple A credit rating since 1917, there are those who feel that if the United States were any other country, its coveted top-tier credit rating might have been stripped away by now.

"For too long, the U.S. has delayed making the tough but necessary choices needed to reverse its deteriorating financial condition," David Walker, chief executive of the Peter G. Peterson Foundation and a former comptroller general of the United States, recently wrote in the Financial Times. "One could even argue that our government does not deserve a AAA credit rating based on our current financial condition, structural fiscal imbalances and political stalemate."

"The triple-A rating is undeserved," suggests Peter Morici, a professor of international business at the University of Maryland. "If Washington were a state capitol, we would have lost the AAA with the current budget."

Here are just some of the reasons Mr. Walker and Professor Morici would make such statements.

• Equal to about 80 percent of total output of the United States, the Treasury Department recently reported that the total U.S. government debt is $11,270,547,397,564.64.
• With the U.S. relying on foreign buyers to keep its borrowing costs low, China and Japan alone hold more than $1.4 trillion of U.S. Treasury bonds as of March, according to U.S. Treasury data. A sovereign downgrade would certainly alarm at least some of those buyers.
• The Fed is now burdened by the same kind of toxic paper that has been plaguing private U.S. banks for several quarters.
• Leveraging its capital 48-to-1, Fed banks are holding total capital of just $45.7 billion against the sum total of $2.19 trillion in assets. Two years ago the ratio was only 27-to-1.
• The government's $787 billion economic stimulus package and $700 billion bank bailout fund have strained the country's resources and the jury is still out as to whether any of this will actually make a difference.
• The International Monetary Fund expects the debt-to-GDP ratio to hit 97.5 percent next year. Standard & Poor reaffirmed its AAA sovereign rating for the United States in January; however, the ratings agency also cautioned that the hundreds of billions of dollars committed to bailing out the banking sector would lead to a "noticeable deterioration in the U.S. fiscal profile."
• The Chinese premier and the head of the People's Bank of China have expressed concern over America's long-term credit worthiness and the value of the dollar. China has also called for the creation of a new international reserve currency to replace the U.S. dollar.
• With a loss of 5.7 million jobs since December 2007, the number of workers collecting unemployment checks increased to a record of more than 6.6 million in the week ending May 9, the highest level of unemployment since 1983.
• The present economic situation in the U.S. is taking a huge chunk out of tax income, reported to be down 34%.
• Manufacturing in the U.S. Mid-Atlantic area shrank in May for the eighth straight month.
• States like California have been hit hard by the credit crunch and are struggling to arrange backing for municipal bonds and short-term debt.

Then there is still that two year old warning of Moody's. The significance of that warning appears to be even greater now. A government report released on May 12 found that the Social Security trust fund would be exhausted by 2037, four years earlier than previously estimated, and the Medicare hospital trust fund would become insolvent by 2017, two years earlier than estimated. All of that in light of the fact that the first big wave of the 72 million strong Baby Boomers (folks born from 1946 to 1964) will soon become eligible to start collecting retirement benefits.

Is losing a triple A rating that big of a deal?

The answer to whether it's a big deal or not for the United States to lose its triple A rating would be a resounding "Yes, it is a big deal!"

• A credit rating reflects the risk of default. A downgrade will raise the cost of borrowing for the United States government, could have a spillover effect on corporate debt and investors will buy fewer U.S. Treasuries.
• There could be a massive outflow of foreign investment. Some global funds are mandated to invest only in AAA debt and if the U.S. loses its AAA rating, it loses those investors.
• A credit rating downgrade provides a perfect excuse for an alternative reserve currency to replace the dollar. China, Russia and other countries are already suggesting creating a "basket of currencies" that would replace the U.S. dollar.
• Interest rates will increase. Should the United States lose its AAA credit rating, it will trigger rising interest rates in an already unfrozen credit market.
• The risk of inflation increases. Philadelphia Federal Reserve President Charles Plosser has warned that the U.S. government's emergency programs for the economy undermined central bank independence and raised the risk of inflation. "When a nation's treasury or finance ministry and its central bank work too closely together, there is a clear risk that the government's spending will end up being financed by the central bank's power to create money," Plosser cautions. "History shows us that you can get very bad economic outcomes with rapidly rising inflation."

The ultimate outcome depends upon the reaction of the capital markets and the actions of the Federal government.

• Will investors continue to aggressively bid on U.S. Treasuries at auction?
• Will foreign creditors start balking at supporting the country's irresponsibility?
• Will the AAA credit rating of the United States come under even greater scrutiny?
• Will the dollar start to reflect the fact that the Fed is throwing money around like never before — and taking on any and all kinds of bad assets?
• Will the federal government enact tough spending, tax and budget control measures after we turn the corner on this shaky economy or will we discover that the government and our political system is not up to the task of addressing the economic imbalances that confront us?

Don't look for answers to these questions anytime soon. But that doesn't mean we shouldn't discuss the risks now. The reality is that you must start taking protective steps immediately if you haven't already. I recommend you consider buying gold.

Are you hedged against this very real possibility?

In the 19th Century, the gold standard was the monetary system that dominated the developed world. Then with the final breakdown of the Bretton Woods system in 1971 and exchange rates "floating," investors searched for investments that provided a "safe haven." It is ironic and not surprising that among the ways investors found security was by returning to gold in its many forms, such as rare gold coins.

• Rare coins have always provided an ideal hedge against inflation, thrived in times of insecurity and rising interest rates and provided a long-term storage of wealth that has consistently outperformed other assets in times of turmoil against the dollar.
• Numismatic quality rare gold coins have proven time and time again to be an excellent hedge because they have become a standardized asset easily traded in a market that is always open.
• Rare gold coins have become a solid asset because governmental authorities cannot produce and thus debase them. Because of this characteristic they have acquired long-term wealth preserving properties over the centuries.
• Gold coins have intrinsic, aesthetic and historic value as well. They are, quite honestly, works of art and pieces of history, making them highly collectible and desirable.

I encourage you to call one of Monaco Rare Coin's account executives toll-free today at 1-888-900-9948 to initiate or enhance the rare coin portion of your portfolio. Monaco's investment professionals can:

• Assist you in planning your rare coin investment strategy or reviewing one that is already established;
• Recommend the best coins for your investment objectives and help ensure that your rare coin portfolio is balanced;
• Update you on market news, what America's top numismatists are recommending and new offerings.

by Adam Crum

In October of 1865, six months after the end of the Civil War, the side-wheel steamer S.S. Republic was bound from New York to New Orleans.  Aboard the former Civil War blockade ship was precious cargo to aid in the rebuilding of the war-ravaged city of New Orleans to its prewar glory.  Unfortunately, the ship never made port, sinking in a massive hurricane off the coast of Georgia.  The ship and its cargo, including a reported $400,000 in gold and silver coins, came to rest 1,700 feet deep in the Atlantic Ocean.  Nearly 140 years later a team of salvage experts, aided by state-of-the-art electronics and recovery equipment, found and brought to the surface a stunning treasure trove of numismatic classics.

The quality of the coins recovered cannot be overstated.  You see, during and just after the Civil War, in both the North and especially the South, gold and silver coins were a valued but extremely scarce commodity.  Rampant inflation, caused by both sides financing their huge war costs through the near-nonstop printing of paper currency, resulted in the widespread hoarding of “hard money.” At the end of the war, the South, for all practical purposes, was broke… its paper money was worthless, its hard money virtually gone.  The years following the Civil War saw wild fluctuations in the value of gold and silver.  As a result of these fluctuations, many of the coins of this era were melted or saw heavy circulation.

The wonderful and rare S.S. Republic treasure gold in the small collection we recently purchased are available today only because of the tragic loss of the S.S. Republic.  The coins offered here are all beautifully preserved in their pristine condition due to the fact that they were locked in a time capsule at the bottom of the deep blue sea.

Each gold coin in this small collection are of the $10 denomination, or more commonly known as gold “No Motto” Liberty Eagles” minted prior to the 1865.  Many of these coins have the highly collected New Orleans mint mark which is denoted with the letter “O” on the reverse below the tail feathers.

I am excited to announce that Monaco Rare Coins has been able to acquire this near complete date and mint mark collection in tact and they are ready for immediate acquisition and delivery.  The average grade is AU53-AU55, which is amazing given the fact that many of these rarities are nearly impossible to find in ANY condition.

Here is the most exciting part of this deal:  We are now offering these last remaining coins for BIG savings over what many S.S. Republic coins have been sold for by the discovery group in their initial offering, which has been sold out for years.  How can we do this?  Very simple: “Cash is King”, especially when negotiating for an entire collection.

Don’t miss this exciting opportunity to own a beautiful and certified piece of Civil War history.  This collection of only 29 coins, all different dates and mint marks, will not last long.  Call your Monaco representative as soon as possible at 1-888-751-1933.

WASHINGTON, May 11—A new exhibition at the National Museum of American History invites visitors to explore the development and meaning behind American coinage and currency.  “Stories on Money” demonstrates the interplay among people, money and history, from the earliest times to the present day. The display of coins and other related objects will open June 12 in a new first-floor gallery.

“Stories on Money” explores the museum’s vast numismatic collections from seven vantage points. The main section shows what money looked like in Colonial America and at pivotal times, including the Gold Rush, Great Depression and in the current era. Visitors will compare the coin designs of the 19th century with those produced during the renaissance of American coinage in the early 20th century. The section called “The Power of Liberty,” presents an array of coins from the United States and the world depicting Liberty, the feminine personification of freedom; coins with real and mythological women are also featured.

“American currency is a reflection and a record of our history,” said Brent D. Glass, director of the museum. “This display illuminates history in fresh and unexpected ways and will allow visitors to think of how money tells stories about different historical periods.”

“Stories on Money” was made possible through the generosity of the Numismatic Guaranty Corporation of America, Numismatic Conservation Services and Monaco Rare Coins.

“Having this wonderful space at the museum is very meaningful to the entire community of numismatists, and we are very proud to be a part of it. ‘Stories on Money’ is an especially fitting exhibition since it illustrates the close interplay between coins as objects and the personal history of their use,” said Mark Salzberg, chairman of sponsoring organizations Numismatic Guaranty Corporation and Numismatic Conservation Services.

“The ‘Stories on Money’ exhibition explores the importance of our country’s sovereignty, heritage and financial independence,” said Adam Crum, president of Monaco Rare Coins. “The beauty of the coins speaks for itself, but the history witnessed by these miniature objects is often epic.”

The exhibition draws from the museum’s National Numismatic Collection, which consists of more than 1.5 million objects, including coins, medals and paper currency and preserves the role of money in economic history. Featured objects include a colonial Massachusetts shilling from 1690—the first paper money in the Western hemisphere, the unique 1849 $20 gold coin and a clam shell used as currency during the Great Depression.

The exhibition uses objects and interactive media to immerse visitors in these stories on money, including an opportunity to view enlarged images and delve further into numismatic history. In “A penny for your thoughts?” visitors can cast their opinion about the future of the most-produced coin in the world.

Two books based on the National Numismatic Collection have been published in conjunction with the exhibition. Exhibition curator Richard Doty’s “America’s Money, America’s Story” and “The Encyclopedia of U.S. Gold Coins” by visiting researcher Jeff Garrett substantiate the scholastic value of the National Numismatic Collection. Doty and Garrett, a lifelong coin collector, have spent their careers working in numismatics and have written several books on the subject.

The National Museum of American History collects, preserves and displays American heritage in the areas of social, political, cultural, scientific and military history. After a two-year renovation and a dramatic transformation, the museum shines new light on American history, both in Washington and online. To learn more about the museum, check http://americanhistory.si.edu For Smithsonian information, the public may call (202) 633-1000, (202) 633-5285 (TTY).

Considering these downright frightening economic times, the last thing most of us want to think about are the global challenges facing us as well.  Yet, no matter how overwhelming the times are, it doesn’t help to live in denial.  And, while predicting the future is risky at best, if we don’t attempt to ascertain at least some of the trends for the future in light of the past and the present, there is no doubt we will be caught entirely off guard...not just somewhat off guard.  Somewhat is certainly better than entirely.  Still, there’s no getting around it, as Margo Channing so aptly put it in All About Eve, “Fasten your seatbelts.  It’s going to be a bumpy ride.”

World shift towards multi-polar system with a less dominant United States

Like it or not, according to the report Global Trends 2025 generated by The National Intelligence Council (NIC), “the world is shifting towards a multi-polar system with a less dominant United States and a more powerful China and India.” This shift includes an “historic” transfer of wealth from west to east.

The National Intelligence Council analysis concluded that while the U.S. will remain the most powerful country in 2025, it “would be ever more constricted by scientific advances in other countries, the expansion of irregular

According to the report Global Trends 2025 generated by The National Intelligence Council (NIC), “the world is shifting towards a multi-polar system with a less dominant United States and a more powerful China and India.” This includes an “historic” transfer of wealth from west to east.

warfare by state and non-state actors, the proliferation of long-range precision weapons and the growing frequency of cyber warfare.  The multiplicity of influential actors and distrust of vast power means less room for the U.S. to call the shots without the support of strong partnerships.” It would appear that this scenario has already begun to unfold.

The NIC analysis warned “such multi-polar systems have historically been more unstable than bipolar or unipolar ones.” It added that while there were “likely to be strategic rivalries over trade, investment, technological innovation and acquisition, it could not rule out a 19th century-like scenario of arms races, territorial expansion and military rivalries.”

The Middle East...the gift that keeps on giving

The United States is already burdened with Afghanistan and Iraq.  Pakistan, with an estimated 100-200 nuclear weapons (no one really knows for sure), has been pushed to the brink and Gaza has erupted yet again after Israel decided enough was enough.  Muslim extremists continue to want our western way of life eradicated as Iran moves ever closer towards military nuclear capability.

• The U.S. and NATO troops in Afghanistan can probably prevent the Taliban from taking the cities, but to accomplish more, Pakistan must deny the Taliban sanctuary and cut its supply lines.  Pakistan, however, has moved many of its troops to the border of Kashmir because of the Mumbai incident.  In addition, the United States must develop effective relationships with anti-Taliban tribal groups and that involves Iran.  And, it must convince these tribal groups that it will remain in Afghanistan indefinitely, which will require the support of the American public and the new administration.  If you remember, 120,000 or so Russian troops were unable to bring Afghanistan under control.  In all reality then, while more troops will make the job easier, it is extremely unlikely that 60,000 troops or even more will get the U.S. even close to ending the mission.  Afghanistan is a great deal more complex than Iraq due to the Taliban’s low opinion of U.S. capabilities, a more challenging terrain and lack of Pakistani cooperation.

  Do you know what countries comprise the Middle East?
  
  Iran (Persian Plateau); Iraq (Mesopotamia); Kuwait, Bahrain, Oman, Qatar, Saudi Arabia, United Arab Emirates and Yeman (Arabian Peninsula); Israel, Jordon, Lebanon, Syria, (The Levant); Egypt (North Africa); Gaza Strip, West Bank (Autonomous region).  Sometimes considered Middle Eastern: Turkey (Anatolia), Cyprus (Mediterranean Sea); Armenia, Azerbaijan, Georgia (Caucasus); Afghanistan, Pakistan (Persian Plateau); Algeria, Libya, Morocco, Tunisia (North Africa); Djibouti, Eritrea, Somalia, Sudan (Northeast Africa).  According to The World Factbook, United States Central Intelligence Agency.

• Unlike North Korea, the Iranians continue a very public nuclear program despite threats from other countries.  While some believe Iran does not possess the complex technical knowledge to explode a nuclear device, the country is enriching uranium, which ultimately can be used for that purpose.  Of course, Iran’s real objective is Iraq, and its nuclear program is a bargaining chip.  The seemingly insurmountable challenge is that the United States needs Iran to commit to a neutral Iraq for it to withdraw even some of its forces.  More significantly, the U.S. cannot afford for Iran to enter into an agreement with the new, assertive Russia, although there are those who believe that Russia and Iran have already formed an alliance and have entered into some sort of clandestine agreement.  Frankly, that almost seems a fait accompli.
• Then there is the complicated situation between the United States and Turkey.  A long-time U.S. ally, Turkey has participated in the occupation of Iraq, although not necessarily enthusiastically.  Turkey’s military is substantial and its influence is expanding.  So it is not difficult to understand why Turkey is concerned about being caught between Russia and the United States, a position that will be difficult to avoid.  Turkey will be critical as the U.S. deals with the Islamic world and the Russians.
• Finally, there is the issue of oil.  As this article is being written, “storage tanks are filling up onshore, so private and national oil companies, refiners and trading companies are storing another 80 million barrels aboard 35 supertankers and a handful of smaller tankers, the most in 20 years,” according to Frontline Ltd., the world’s largest owner of supertankers.  Iran alone is reportedly storing crude oil in as many as 15 tankers believing that higher prices will prop up its economy, which is dependent on oil exports.  While Goldman Sachs has predicted the slumping global economy will soon drive the price of oil down to $30, a top Kuwaiti oil official predicted recently that big production cuts by the Organization of the Petroleum Exporting Countries would soon push oil prices back up.  Considering the sharp swings in recent days, both will be right.  Analysts foresee prices staying volatile.  Just get ready for the higher price swings.

Ladies and gentlemen, meet the “new-old” Russian Empire...

While Islamic terrorism continues to be a threat, the newly-evolving Russian Empire strikes an ominous chord as it reasserts its influence.  Russian Prime Minister Vladimir Putin now calls the collapse of the Soviet Union a geopolitical catastrophe and has made it clear that he intends to reassert his influence in the former Soviet Union.

• In addition to what you already know about the invasion of Georgia, Israel halted weapon sales to Georgia the week before the war as the Russians met with Syrian President Bashar al Assad letting the Israelis know that Moscow would support Syria if Israel supported Georgia.
• According to Bill Wilson in The Daily Jot, “there are plenty of protests around the world against the Israeli defense of its citizens from terrorists in Gaza, but relatively nothing has been said about Russia’s move to cut heating and cooking gas supplies to 20% of Europe during the coldest part of winter.” The annual haggling over the gas that passes through a pipeline in Ukraine carries 80% of European gas from Russia.  Shutdowns on the part of Russia affect a whole host of countries.  Austria, for example, is getting only 10% of its usual supply.  Other countries are using their energy stockpiles and encouraging conservation practices.  Three years ago Russia interpreted Ukraine’s turning to the West as unwelcome meddling in its own sphere of influence.

  Where is Europe in all this?
  
  One of the big challenges the United States faces is that for all intents and purposes there is no European foreign policy, only the foreign policies of that continent’s individual countries.  For example, while the United Kingdom is more willing to confront Moscow, Germany does not want a confrontation with Russia under any circumstances.  The Europeans, especially the Germans, are dependent on Russian natural gas.
  
  In addition, the European community has neglected its military for 15 years and those forces that do exist are committed to Afghanistan.  NATO’s military power, or rather lack of military power, has become especially obvious after Russia’s invasion of Georgia.  To make matters even more complicated, by law, NATO requires a consensus of its members in order to do anything.  If a member refuses to commit to any sort of confrontation, NATO involvement becomes a moot point.
  

• Apparently, in the court of world opinion, according to Wilson, “it is more inhumane to snuff out terrorists that kill innocent civilians and use their families as shields against attack then it is to purposely try to freeze people in mid-winter to gain a financial advantage...” In fact, those AK-47s and Qassum rocket materials used by the terrorists must originate somewhere.  Wilson also suggests that “perhaps Russia is the one that the UN Security Council should be dealing with for world unrest.”
• Then there’s Russia’s $5.43 billion loan to Iceland.  The combination of Iceland’s current economic collapse and geographical location offers Russia an opportunity to simultaneously make friends with Reykjavik and challenge the West.  If nothing else, the United States may be sorry that it abandoned its military base in Iceland.
• On top of that, Prime Minister Putin has vowed to make relations with Latin America a top foreign policy priority, a pledge backed by arms sales to Venezuelan President Hugo Chavez and the first Russian naval deployment to the Caribbean since the Cold War.  This would appear to be a pointed response to what Putin perceives as U.S. encroachment near the borders of his own country.

It is fairly obvious where this is leading.  You don’t need a BRIC (the new acronym for up and comers Brazil, Russia, India and China) wall to fall on you.

South of the border down Mexico (and Central America) way

The situation in Mexico continues to deteriorate and it is impossible to understand why our government seems to be in denial.  In fact, Mexico is one of two countries that “bear consideration for a rapid and sudden collapse,” according to a report by the U.S. Joint Forces Command on worldwide security threats.  The U.S. Joint Forces Command, based in Norfolk, Virginia, is one of the Defense Department’s combat commands comprised of members of the different branches of the military, active and reserves, as well as civilian and contract employees.

Then there’s Latin America.  With no interference from a global power in that part of the world for a decade or so, Latin America has generally been off U.S. radar.  However, with the Russians back in the Caribbean, the region suddenly has become important again.

The command’s “Joint Operating Environment (JOE 2008)” report, which contains projections of global threats and potential wars, states that “two large and important states bear consideration for a rapid and sudden collapse: Pakistan and Mexico.” The report goes on to say that the Mexican “government, its politicians, police and judicial infrastructure are all under sustained assault...by criminal gangs and drug cartels.  How that internal conflict turns out over the next several years will have a major impact on the stability of the Mexican state.  Any descent by Mexico into chaos would demand an American response based on the serious implications for homeland security alone.”

The report is one in a series focusing on Mexico’s internal security problems, mostly stemming from drug violence and drug corruption.  The Department of Homeland Security and former U.S. drug czar Barry McCaffrey have also issued similar alerts about Mexico.

China...now the world’s third largest economy

Surpassing Germany, China became the world’s third-largest economy after China’s National Bureau of Statistics revised growth figures for 2007’s GDP for the second time, reporting their economy expanded by 13 per cent, a dramatic increase over the 11.9 per cent growth rate that had been originally reported.  (Some suspect the Chinese exaggerate growth when conditions are tough, underestimating it when the economy is booming.  And, it is important to note that Germany’s economy has also slowed sharply.)

Despite rapid growth and hundreds of millions of people lifted out of poverty, China remains relatively poor.  In the World Bank’s rankings of GDP per capita for 2007, using purchasing power parity, China was 122nd at $5,370, behind Egypt, El Salvador and Armenia.  While this is partially attributable to a rapidly aging population and the

According to the forecasts of Goldman Sachs, the Chinese economy will overtake the U.S. economy by about 2040.  The Economist Intelligence Unit forecasts that, in terms of purchasing power parity adjusted for price differences between countries to reflect actual buying power of local incomes, China will outstrip the U.S. by 2017.

costs of environmental damage, with only the U.S. and Japan larger than China, the new figures underscore the dramatic transformation the Chinese economy has undergone during the past 30 years since Mao-era controls were eased and in spite of the present global financial crisis.  “It is symbolically significant that China is now bigger than Germany and it will not be too long before its economy overtakes [that of] Japan,” said Mark Williams at Capital Economics in London.  This only reinforces the prediction that China and other large emerging economies will be given and/or take a bigger role in financial decision-making process globally.  The report by the U.S. Joint Forces Command states that China has already increased its influence in places where oil fields are present.

Contrary to the perceptions of many, by the way, while China is certainly an economic power, it is not a global military power.  Its army, though substantial, is essentially confined by geography and its navy is not an effective force, although China, along with India, is taking steps to rectify that.  Of course, there will continue to be economic and political issues with China, but in the end, China will continue to sell to the United States, and the United States will continue to buy.

Have we covered it all?  Hardly!

If nothing else, we have seen what a volatile and challenging place the world is right now and will be in the future.  Of course, it always has been that way.  There is nothing new under the sun.  Just check the history books.

With the mountain of new debt, the continuation of the credit crisis, involvement in additional conflicts around the globe (a conceivable scenario after reviewing the geopolitical situation), the possibility of radicals testing a new president, the dollar going even lower when the U.S. cannot meet its obligations, sliding equity values, rising

The bottom line for the astute investor is that gold should be one of the foundational elements of any portfolio to reduce overall risk and create the ultimate hedge against inflation and economic hard times.

mortgage failures, the threat of “inflation holocaust” when the truth sets in that our debt has ballooned to Twilight Zone proportions, entitlements sending deficits higher and higher, outsourcing and the growing economic power of Asia...the future for the U.S. looks grim indeed, especially if we are not growing our economy and creating jobs.

The bottom line for the astute investor is that gold should be one of the foundational elements of any portfolio to reduce overall risk and create the ultimate hedge against inflation and economic hard times.  You will never see the government having to bail out gold.  And, while past performance is no guarantee of future results, it is well documented that gold in its various forms has generated strong long-term increases in value.

The case for gold coins is stronger than ever.  Precious metals and commodities specialist Jim Sinclair agrees that the dollar will decline since it is no different than any other commodity.  As the dollar falls, gold will skyrocket.  If you do nothing else, Monaco Rare Coins encourages you to make sure your portfolio is appropriately diversified...and Monaco welcomes the opportunity to provide you with the assistance you may need.

The money floodgates have begun to open.  The Federal Reserve is now printing money — hundreds of billions of dollars worth — like never before.  So the only logical question left is, “What are the long-term consequences?”

Warren Buffett’s answer…

“Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation.”

This echoes a point that I’ve been making in many of my recent oral updates and articles I have written, long before even this legendary investment guru sounded any alarms.  The truth is that the money supply has grown at a substantial rate for years to support the spending spree of our growing welfare state and the war in the Middle East.  In my opinion, the recent explosion in debt due to the “bail out” has only served to guarantee the eventual collapse of most, if not all, western currencies.

Deflation appears to be in the driver’s seat at the moment, and “cash is king,” according to the “talking heads” on Wall Street.

But when things do turn, I believe the central banks will remain behind the curve, as they have been all along.

And that means renewed inflation… and possibly, substantial inflation.

Famed billionaire investor Jim Rogers says we have an “inflationary holocaust on the horizon.”

You may ask, ”Who is Jim Rogers?”

Jim Rogers is perhaps one of the most successful investors of the past 30 years.  He is a self-made billionaire, and he did it through smart investing and predicting trends.  He is not a billionaire who made it through building a company and taking it public.  He has created his wealth by staying WAY ahead of the “pack” and simply investing wisely.  Often controversial and always outspoken, Jim Rogers has told investors for years now that investing in commodities and tangible assets should be the primary place for your money over the next 20 years.

What is the “tangible advantage?” Well for starters, tangibles are not likely to go from $28 to $1 like Citigroup… or $148 to $2 like Las Vegas Sands Corp. (LVS)… or worse, $54 to ZERO like the one-time darling of Wall Street from 2008, which used to be called Wachovia.  Putting their performance into the proper perspective, $300,000 invested evenly into these three stocks, once all high-fliers on Wall Street, would be worth approximately $4,500 today.

And people ask me, “Why do you collect rare gold coins?”

Tangible investments, like those in rare gold coins (and especially, key date rare coins), have substantially outperformed the likes of equities and real estate for decades, and for that matter, for centuries.  They are easy to store and manage, and they are hard tangible assets unencumbered by the likes of more traditional leveraged assets.

Maybe it is time to do what Jim Rogers is doing.  And that is, stop listening to the talking heads who are educated and controlled by the very institutions that got us into this mess.  Of course they want you to keep your money in their banks, their investment firms, their mutual funds and the like.  They are the ones making the most money with your money.  And when they lose, it is only your money that goes away; they still get paid!

I am absolutely disgusted by the recent bonuses reportedly paid out to money managers employed by the firms who just screwed taxpayers out of over $1 trillion.  One I read about, actually paid by a company who received billions in bail out money, was $138 million… and that was to one manager!  This is crime of epic proportions!

If you do not yet own tangibles now, I have to ask you, “WHY NOT?”

If Jim Rogers and countless other non-Wall Streeters are right, and all this newly printed money leads us to a round of high inflation, then I believe that rare gold coins will lead the pack of winners to success.  But even if that doesn’t occur, the worst thing that could happen to you in my opinion is that you would still own a proven winner with centuries-old value and outstanding long-term investment potential.

And that, as we say in Texas, is the “proof in the pudding.”

WAKE UP PEOPLE!  The inflation bells are ringing.

Do you think the U.S. government is planning to infuse (spend) an amount grand enough to cripple taxpayers and make the dollar worthless?

If not, think again.  The Fed/Treasury has ‘infused’ $2.7 trillion in just a year, but more telling is that they have allocated $7.2 TRILLION!  [See the CNN chart of all the bailout elements here: Follow Link ]

Based on the present combined Federal and State personal and corporate tax burden, it would take a fraction of this amount of spending to cripple taxpayers, which leaves the other option… the printing press.  It is no secret that this deceptive tool governments use to finance overspending will make the dollar worthless and wealth held in dollars will become “wealthless,” while wealth held in tangible assets become increasingly more valuable and sought after.

The present allocated amount of $7.2 Trillion is rarely compiled and reported.  Obviously, it is a figure so grand that it does not take a mathematician to understand its extraordinary magnitude.  What’s even more shocking and symptomatic of the coming run in tangibles is that central bank monetary inflation is a global epidemic.

Just imagine even a small portion of the massive dollar-based wealth held in U.S. bonds moving out of that market and into the relatively small coin market.  Now imagine what a rational and newly-diversified portion of funds flowing into rare coins from bonds, equities, mutual funds, hedge funds, money markets, and even suspect bank holdings and global investor money.  It boggles the mind what coin prices could do in the next few years to come!

Consider that gold was up last year for the eighth straight year in a row, as compared to the absolute devastation seen last year in securities and funds, and it is not hard to see that investors should look for tangible alternatives.

In the last 10 years, rare coins, as measured by the Key Dates & Rarities Index [see following chart below] is up an astounding 145%! As investors become aware of how easy it is to take a position in certified coins as a private store of wealth, rare coin prices could easily skyrocket.

Many shrewd investors will have the insight, courage, fortitude and good fortune to take action… before the “diversification wave” and price increases hit.

Remember… frightening news sometimes presents fantastic opportunities for those who choose to be aware!

Concentrate on popular, rare, historically significant quality coins as part of an overall investment plan in good times and bad . . . and history suggests that the rewards are great. There are numerous reasons why the demand for rare coins is growing among collectors and investors alike. Here are fourteen of the most fundamental:

Fundamental Reason #1: Diversification

Investment professionals recommend ten to twenty percent (and sometimes higher) of an investment portfolio be devoted to tangible assets in order to maintain diversification, reduce overall risk and create a hedge against inflation. Rare coin investing, and owning hard assets, should be one of the foundational elements of any portfolio.

Fundamental Reason #2: Stability

There is little history of dramatic sudden price shifts with truly rare and popular rare coins. This is partially due to the huge collector base…an estimated 35,000,000 and new ones entering the market all the time…who create a steady, consistent demand for the coin market. And, since a collector/investor takes physical possession of his or her coins, there are none of the destabilizing forces that exist in other markets.

Fundamental Reason #3: Rarity

It is estimated that only 2% of all the rare U.S. coins ever minted still exist. This existing supply is consistently being reduced as collectors/investors buy more, hold them longer and take them off the market. By the year 2015, experts believe that there will be some 100,000,000 coin collectors/investors worldwide, or nearly three times the number that exist today. Since there will be no more new coins available for these new collectors/investors, prices should continue to rise to meet the increased demand - a basic supply/demand fundamental.

Fundamental Reason #4: History

Since coins have commemorated heroes, great achievements and significant events throughout history, a collector/investor is essentially purchasing a piece of history AND a piece of art.

Fundamental Reason #5: Affordability

Despite consistent price gains over the years, rare, popular and historically significant rare coins are still affordable for the masses.

Fundamental Reason #6: Liquidity

Rare U.S. coins have become the most liquid of collectibles due to independent grading by the Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC). With over 35,000,000 buyers and sellers in the market and annual estimated sales of more than $5,000,000,000, there are abundant opportunities to liquidate rare coins when the time comes.

[While rare coins can be liquidated relatively quickly, they are not meant to be speculative or short-term investments. Investors should view rare coins as a long-term investment (5 to 7 years or longer). Of course, the longer the investment is held, the better the investment is likely to perform.]

Fundamental Reason #7: Security

The value of most U.S. rare coins is almost solely based on condition, demand and rarity, yet rare coins also possess the security and intrinsic value of bullion. We will never see the government having to bail out gold.

Fundamental Reason #8: Ownership

In 1933, with one exception, taxpayers were required to turn in all gold to the government when private ownership was banned. Coins struck before 1933 were the exception. The government still has the power to ban private ownership of bulk gold coins like the Krugerrand, American Eagle and similar types of gold bullion coins. But, by law, private ownership of rare U.S. coins struck before 1933 cannot be prohibited.

Fundamental Reason #9: Privacy

There are no reporting requirements to any federal, state or local governmental agencies as a consequence of a purchase or sale of a rare coin. A true private storage of wealth!

Fundamental Reason #10: Portability

A small box can hold a substantial value of rare coins, and since coins are in bearer form, they can be transferred quickly, easily and confidentially.

Fundamental Reason #11: Taxes

Coins can only be taxed when profits are actually realized, and there is no taxation on undistributed profits. There is no Federal income tax liability on like-kind exchanges. These are key considerations in light of the ever-increasing taxes imposed on the American public.

Fundamental Reason #12: Profitability

While past performance is no guarantee of future results, it is well documented that rare U.S. coins have generated strong long-term increases of value. Rare coins only get rarer and, consequently, more valuable. The U.S. rare coin market offers outstanding growth potential.

Fundamental Reason #13: Simplicity

Rare coins are essentially management-free investments that do not require daily buy/sell decisions or monthly statements to decipher. There is no need to think about interest rates, the national debt, credit crises or a myriad of other economic issues. The long term trend for rare coins has been, is currently and, when applying all fundamentals logically, will continue to be - up.

Fundamental Reason #14: Economics

In uncertain economic times like the present, getting serious about investing in rare coins makes more sense than ever. As the United States and a new administration confront extremely troubling financial problems that will not be easily solved . . . such as the mountain of new debt, the continuing credit crisis and mortgage failures, a volatile geopolitical climate, a dollar in trouble, threat of inflation as the U.S. debt skyrockets to over $11 trillion, increased government spending and much more . . . rare coin ownership makes economic sense.

I encourage you to contact one of Monaco’s account representatives toll-free at 1-888-751-1933 to initiate or enhance the rare coin portion of your investment portfolio. Among other services, Monaco’s investment professionals can:

• Assist you in planning your rare coin investment strategy or reviewing one that is already established;
• Recommend the best coins for your investment goals and portfolio diversification;
• Help you ensure that the rare coin portion of your portfolio is balanced; and
• Update you on market news, what America's top numismatists are recommending and new offerings.

Monaco Rare Coins is a member of the Monex family of companies, industry leaders in hard asset investments since 1967, with over $30 billion in client transactions. Monaco will always make you an offer to buy your certified rare U.S. coins, even if you purchased them elsewhere.

The Hoover Administration created the Reconstruction Finance Corporation (RFC) to stimulate economic activity in 1932.  In 1957, when its tenure came to an end, the RFC had loaned approximately $50 billion without burdening taxpayers significantly.  Under FDR in 1933, as part of the New Deal, the government actually made a small profit when it formed the Home Owners’ Loan Corporation to buy $3 billion worth of bad mortgages and refinance more than a million additional mortgages to stem the tide of rising foreclosures.

A series of government rescues occurred in the 1970s and 1980s, the most highly touted of which was the 1979 bailout of the nation’s tenth largest company, the Chrysler Corporation.  The Carter Administration arranged $1.2 billion in subsidized loans for the automaker and netted the government a profit when Chrysler paid off its obligations.

In 1989, the U.S. Congress established a government-owned asset management company, the Resolution Trust Corporation, to resolve the Savings and Loan crisis and pay depositors $125 billion in taxpayer money (approximately $200 billion in today’s dollars).

Obviously, government bailouts, guarantees and other financial machinations aren’t anything new.  However, the time has come for us to ask some critical questions.

J.  P.  Morgan gets Bear Stearns and Washington Mutual, the government gets IndyMac and AIG, and Pimco makes a whole lot of money on Fannie and Freddie

The Federal Reserve has guaranteed $29 billion of Bear Stearns’ assets in conjunction with a government-sponsored sale to J. P. Morgan Chase & Company.  Billions of dollars of equity were transferred to the balance sheet of one of the top five banks in America while the liabilities were guaranteed by the government (spelled U-S-t-a-x-p-a-y-e-r-s).  It has been reported that the executives of Bear Stearns walked away with bonuses and severance packages.  Government officials say that disaster was averted.

On July 11th, IndyMac Bank’s assets were seized by Federal regulators.  The Federal Deposit Insurance Corporation estimates the cost of the intervention at about $8.9 billion as IndyMac became runner up to the largest bank collapse in history at that point in time, namely Continental Bank.  [In 1984, Congress took over Continental Illinois National Bank and Trust and the FDIC paid $4.5 billion to buy bad loans.] The IndyMac debacle is devouring a large portion of FDIC reserves, and if too many other banks fail in the year ahead, taxpayers will be required to “help out.”

As I write this article, Washington Mutual Inc., has surpassed Continental when it was seized by government regulators on September 25.  Its branches and assets (not liabilities) were sold to J. P. Morgan Chase & Company for $1.9 billion in what is NOW the biggest bank failure in U.S. history and makes J. P. Morgan the biggest U.S. bank in terms of deposits.  We are being told that the net result of these bailouts is that the banking system is saved for now

Fannie Mae and Freddie Mac (not such cute sounding names anymore) were seized by the Treasury Department and temporarily put into a government conservatorship on September 7 with plans to inject up to $100 billion into each.  Investors like Bill Gross from Pimco had indicated that they would stop buying bonds unless the Treasury guaranteed all Fannie and Freddie obligations.  Gross and his firm are now $8 billion richer and the American taxpayers take on $200 billion (and probably more) in potential losses.

On September 16, the government announced an $85 billion emergency loan to rescue American International Group Inc., a major insurance company, in return for a 79.9 percent stake.

Eight critical questions (among many) that need answers

There are some serious questions that need answers regarding government bailouts, guarantees and over the top financial assistance.  I can’t include all of them in this article, but here are eight to start the process:

1. Will these huge bailouts really stabilize the markets? For some time now, there has been concern that Fannie Mae and Freddie Mac were building empires and operating with little oversight.  (Imagine that, government entities building empires?) As the financial crisis hit, Treasury Secretary Henry Paulson called for a bailout, asking Congress to guarantee all their loans.  If his approach works, the market will stabilize.  If it does not, or the housing crisis deepens, taxpayers could pay tens of billions of dollars in bailouts.  So far, none of the recent bailouts has affected the markets for very long.

2. Are some entities too big to be allowed to fail? Of course, we have already reviewed the Fannie and Freddie situation, and as I write this article, the U.S. auto industry will be receiving $25 billion in loan guarantees per U.S. Senate approval.  Attached to legislation funding U.S. military involvement in Iraq and Afghanistan, the loan guarantees are intended to foster automotive innovation.  Without intervention of some sort, General Motors might have been forced into bankruptcy; however, Chrysler Chairman Robert Nardelli has stated that the loan guarantees should not be considered a rescue package or bailout for struggling carmakers.  The new legislation also applies to suppliers and foreign automakers with plants in the United States 20 years old or older (e.g., Nissan and Honda). 

3. Don’t bailouts, guarantees and the like give the government the power to choose the winners and losers – a role usually reserved for the marketplace? In 2001, Congress authorized $5 billion in cash after the September 11 terror attacks to help prop up the airline industry with an additional $10 billion in loan guarantees.  While economists and airline experts agree that this was a unique case, how did the government decide to pick and choose?  Why not bail out the car rental companies which lost enormous sums with the airport shutdown?  Why not the airport hotels and restaurants?  Why not various tourism destinations?  Why not the television networks that lost hundreds of millions of advertising dollars as they ran advertisement-free coverage for days after the attacks?

4. What criteria determine who receives government support and who doesn’t? While the U.S. government has been involved in some manner with helping Bear Stearns, IndyMac, Fannie Mae and Freddie Mac and others, it allowed the market to do its job when it declined to back a deal that would have kept Lehman Brothers Holdings, Inc., the country’s fourth-largest brokerage firm, from declaring bankruptcy.  This earned the government praise from those who are concerned that government bailouts encourage various types of bad behavior because the taxpayer is always there to pick up the pieces.

5. Do government bailouts necessarily help troubled companies operate better, and isn’t it unfair to competitors who have been better managed? In 1971, the government bailed out Lockheed Aircraft, the nation’s largest defense contractor, saving it from bankruptcy with $250 million in government loan guarantees.  Critics say the government set a bad precedent by rewarding an inefficient corporation.  American carmakers, failing to meet competition from Japan, got government help through tariff protection in the late 1970s but did not respond with effective change.  And, while the Chrysler bailout is generally regarded as a success, many argue that it exacerbated the decline of the auto industry as automakers made very little change rather than learning a needed lesson about Chrysler’s decline and rethinking fuel efficiency and manufacturing quality.  Harley-Davidson, for example, instituted wholesale management changes, while the late 1970s auto industry did not.

6.Don’t government bailouts prevent the market from finding a bottom? Some financial experts worry that the government’s moves to bail out ailing companies are keeping the credit crisis from reaching a bottom, ultimately delaying an economic recovery.  Anything that slows down the deleveraging process prolongs the agony.  The government, by opening its coffers, may also be discouraging private sector lending and investing.

7. How should the government (which is supposedly made up of the people) be rewarded for helping? Should taxpayers (also known as government) merely put up money and provide guarantees, or will bureaucrats negotiate like hedge fund managers to make a big profit from taking on big risks?  In the past the government has made some profit on bailouts, but the risks are getting higher and higher.

8. What is going to happen to the dollar? Currently United States is running about a $500 billion dollar annual budget deficit.  This will be added to the national debt which currently stands at $10.2 trillion. And that doesn’t even take into account future Medicare and Social Security obligations, which now exceeds $50 trillion.  Oh, and then there are all those pesky baby boomers waiting in the wings.  Will we just run up the national debt to $15 trillion…$20 trillion…or more?  It is not as if the government has surpluses from which to draw all the needed capital to meet these obligations. We will have to borrow or print it. 

Can the U.S. dollar maintain world trust?

Can the U.S. dollar maintain world trust if the government continues to print, borrow and move dollars around from balance sheet to balance sheet ad infinitum?  Today the dollar is a note to pay debt that is exploding and apparently can be wiped away by the Fed in an instant or transferred to the backs of U.S. workers in the form of taxes.

Russia, China and the Arab nations possess enormous amounts of oil, gold and U.S. dollars.  What if these nations formed an alliance (much like NATO, WTO, etc.) and offered an “ARC” dollar backed by gold or oil?  The currency could be exchanged for a specified amount of gold or oil.  It is sobering to note that discussions are presently occurring with the Gulf Monetary Authority for just such a system.

In fact, the rumblings all over the world regarding the present financial situation in the United States are increasing and could serve to exacerbate global pressure.

• The Secretary General of the United Nations recently called for a new global financial system.
• A leading Chinese state newspaper reported in September, that threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States.
• Giulio Tremonti, finance minister of Italy’s conservative and pro-U.S. government party, has warned of a systemic breakdown and criticized the “voracious selfishness” of speculators and “stupid sluggishness” of regulators.  Singling out former Fed chairman Alan Greenspan, he stated that “Greenspan was considered a master.  Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. . . . It is clear that what is happening is a disease.  It is not the failure of a bank, but the failure of a system.”
• Prime Minister Vladimir Putin recently vowed to make relations with Latin America a top foreign policy priority (including nuclear energy cooperation with Venezuela), a pledge backed by the first Russian naval deployment to the Caribbean since the Cold War.  Putin and Venezuela’s Chavez suggested their countries are working to decrease U.S. global influence.  “Latin America is becoming a noticeable link in the chain of the multi-polar world that is forming,” Putin recently stated.
• German Finance Minister Peer Steinbrück, a Social Democrat and long-time champion of tougher financial market rules, told the German Parliament that “the U.S. will lose its status as the superpower of the world financial system” with the emergence of stronger, better-capitalized centers in Asia and Europe.  “The world will never be the same again.”

In order to be fair and balanced, it should be noted that the more optimistic school of thought sees the current financial events as an inevitable period of reconfiguration from which the markets and U.S. economic dominance will emerge reasonably unscathed.  “This time next year we’ll be seeing things back to normal,” said Eamonn Butler, director of the Adam Smith Institute.  From time-to-time, businesses fail and the worst thing a government can do is to bail them out because that just passes the cost on to the taxpayer and creates a moral hazard.”

The nation’s financial turmoil has many Americans worrying.

Nevertheless, the nation’s financial turmoil has many Americans worrying about the security of their savings and investments.  If the history of previous bailouts and other government financial interventions hold any single lesson, it’s that the outcomes are unpredictable and the problems will take years to work out. 

Free markets permit failure.  The government has a role to play when stakes are enormously high and the public welfare is in peril.  But, even that is difficult to assess.  We don’t know that the bailout plan just passed by Congress and signed by the President will actually accomplish anything...other than reward the bad players.

Diversification has never been more crucial.

Diversification has never been more crucial.  Most investment professionals agree that diversification is the most important component of reaching long-range financial goals while minimizing risk.

And, conventional wisdom says that to be truly diversified and safe, you must own gold in one of its various forms…such as rare gold coins.  Now is an opportune time to trade up and add to a collection. 

Call one of Monaco’s account representatives toll-free today at 1-888-700-7357 to initiate or enhance the rare coin portion of your portfolio.  Among other benefits, our investment professionals can:

• Assist you in planning your rare coin investment strategy or reviewing one that is already established.
• Help you ensure that your rare coin portfolio is balanced.
• Recommend the best coins for your investment goals.
• Keep you updated on market news, what America’s top numismatists are doing and recommending, and new offerings.

Monaco Rare Coins is a member of the Monex family of companies, industry leaders in hard asset investment since 1967 with over $25 billion in client transactions.  Monaco will always make you an offer to buy your certified rare U.S. coins, even if you purchased them elsewhere.,/em>