Superboom!

This is it!

The superboom in natural resources that Larry, Sean and I have been talking about unanimously and repeatedly is here.

Just yesterday, gold zoomed $13.40. Silver was up a whopping 54 cents! Copper catapulted higher by $4.70!

This superboom is spreading to virtually every natural resource under the sun. Its dramatic. Its just now gaining momentum. And investors are already making money hand over fist.

Strangely, though, Wall Street still doesnt get it. When it comes to natural resources, the typical broker uses every gimmick to pooh-pooh their rise, and every chance to herald the next bust.

Their favorite tactic: Neglect. So when the Dow makes multi-year highs, its trumpeted with great fanfare and big headlines. But when gold and silver blow away multi-decade highs, like they did this week, analysts give it the silent treatment.

For investors like you, this is actually a very good sign. Indeed, this kind of prejudice against metals has historically been the precursor to some of the most profitable times of all. Join me for a brief journey back in time, and youll see what I mean.

Our First Stop
The Year: 1931
The Place: Downtown Manhattan

We visit an independent research firm on Wall Street, where a meeting is in progress.

Attending are some of the leading gold experts of the early 1930s Bernard Baruch, Tom Bragg, Ben Smith, William Baxter, along with my father, a junior research analyst.

All five have been buying $20 gold coins and accumulating gold shares. But the gold market has gone nowhere. So theyre nervous. Theyre afraid of some big selling which could hit at almost any time. Their urgent question: Whos going to do the selling and how much?

Dad suggests they get the facts with a survey, and they agree. He polls the shareholders of big mining companies, asking: When did you buy your gold shares? How much do you own? What do you plan to do with them?

The results of the poll: We never got past the second question, Dad reports. About half the stockholders in mining companies didnt even know they owned the shares. None of the people had plans to sell the shares. The only big source of selling would have to be from one of us; someone right here in this room.

So they hold on to their gold investments, and their profits mushroom:

Homestake, which bottomed at $65 per share after the crash, surges to $130 and change in 1931. From there, it doubles again to more than $350 a share by 1933. By the time it peaks in 1936, it reaches $540 a share an astronomical gain of more than $470 per share, or a 7 fold increase.

In the meantime, the dividends also double, redouble and double again reaching $56 per share in 1935. The dividends earned in one year alone almost pay back the entire purchase price of the stock.

Dome, another large gold producer, does even better. You could have bought Dome for as little as $6 a share after the crash. But in the next 7 years, it pays $16.60 in dividends. The dividends alone are equal to more than two and half times the cost of the stock.

The price of Dome rises to $61 a share. Anyone investing $10,000 in Dome walks away with more than $100,000.

Our Second Stop
The Year: 1936
The Place: Palm Beach

Were at the Kennedy home in Palm Beach, where Dad is meeting with Joe Kennedy, trying to convince him to buy silver.

The metal has been as low as a meager 17 cents per ounce. But, Dad explains, industrial demand is going to take off.

Kennedy is warm to the idea.
But his accountants nix it. They say its too far off the beaten path.

Kennedy had a fortune, Dad writes later. But with that one decision, he missed the opportunity to make still another fortune. I calculate that, at 17 cents an ounce, if you invested $4,000, you could have purchased about twenty two 1,000 ounce silver bars, worth over $1 million at the peak.

Our Third Stop
The Time: January 2001
The Place: Palm Beach Gardens

Were in the former headquarters of the John D. and Catherine T. MacArthur Foundation, the building we bought to house our research company along with our Weiss School for gifted children.

Silver and gold are again out of favor, and the pessimism about the metals is the greatest since the 1930s.

Larry Edelson, a precious metals specialist whose children attend the Weiss School, has joined us at the research company. Since the 1980s, hes been very bearish on both metals. But now he says the extreme pessimism signals that this is the big bottom, time to buy. We decide to recommend some mining shares.

Starting shortly thereafter, they take off.

The price of gold more than doubles.

And the value of good mining shares goes up even more rapidly:

Newmont Mining, up 224% … Kinross Gold, 541% … Coeur DAlene, 553% … GoldCorp, 747% … Bema Gold, 1,372%. For early investors, its a great profit bonanza. But is it the end? Or just the beginning?

Back to the Present

If todays rise in silver and gold were eliciting great enthusiasm and euphoria, I might again be skeptical of a further rise. But theyre not. Quite to the contrary, even in surging markets like this weeks, we still see rampant disregard even disdain for the metals.

The key to your success: Dont be afraid to buck the crowd. If that takes you off the beaten track, so be it.

Right now, for example, Sean and Larry are looking closely at gold and other natural resource companies in Asia and Australia.

I recommend you check it out. The profit potential is greater than virtually anything weve seen in the United States. And the risk is strictly limited.

But the deadline is Sunday, the day after tomorrow. For details, call 800-898-0819 or read Seans latest report, just published yesterday.

Plus, check out Seans story below about one of the most intriguing gold rushes of all time.

Riches Like a
Thunderclap!
by Sean Brodrick

Rarely have I encountered a story with more stunning disconnects or staggering riches than in the saga of the Australian Gold Rush.

When Britains Lieutenant Cook discovered Australia in 1770, he raised his flag on Possession Island off the coast of Queensland.

Ironically, though, it wasnt until the next century that prospectors digging on the same island found a fortune in gold. Just imagine how Australias history might have unfolded differently if Cook had dug a little deeper to plant his flag!

In fact, Australians actually went to some lengths to avoid finding gold. Discoveries of gold were quashed time and again for fear of being overrun by scum and riffraff. But by 1851, that changed drastically.

Delusional and Darned Lucky

One Australian in particular, Edward Hargraves, had sought his fortune in the California gold rush and didnt find it.

To read his diaries is to read delusions of grandeur. But one thing he had right was the similarity between the geology of the California goldfields and his homeland. So, back in Australia, he went prospecting in Lewes Pond Creek near Bathhurst, New South Wales.

He panned vigorously for the yellow metal. And sure enough, he found it. Within a few days, 100 miners were frantically digging for instant wealth in the new gold field, called Ophir. Within a couple months, there were 500. And they kept coming. It seemed as if the entire population of Australia was on the move.

From Sheep Pen to
Gold Miners Bonanza

New South Wales neighboring state, Victoria, was hit particularly hard by gold fever. Melbourne, the capital, emptied out. Schools were deserted; businesses, shuttered. All but two members of the police force quit.

Whole families traipsed off for the mining camps. And as hard as conditions were for women and children, they were the lucky ones. In many other Victoria families, fathers deserted when the gold bug bit.

In 1851, goldfields were discovered in Victoria in Ballarat, Buninyong and Bendigo, some of the richest goldfields in the world.

Bendigo was a sheep pen until gold was discovered. Then it became a tent city. Next it was a row of wooden false-fronted buildings that sprung up overnight. And soon it was a goldfield 11 miles wide with 20,000 miners digging in a wild frenzy.

A 148-POUND
Gold Nugget

Enormous nuggets were discovered more than 1,200 weighing over 20 troy ounces each!

In 1858, a gold nugget weighing 138.6 pounds thats POUNDS, not ounces was discovered in Ballarat.

Then, in 1869, the biggest nugget of them all, tipping the scales at 148.75 pounds, christened The Welcome Stranger Nugget, was discovered near Moliagul. Thats 2,284 ounces of gold in one piece!

Wealth from the gold fields poured into Melbourne. Saloons and less reputable establishments lined the muddy streets, while drunken diggers lurched from one party to the next, scattering gold dust in their wake and fending off Biddies unattached young women looking for miners to marry.

Merchants of all kinds flourished in the boom town, especially the kind that specialized in fleecing the unsuspecting.

Yet despite toil and mayhem, immigrants with gold in their eyes continued to flood into Australia.

At the beginning of 1851, the population of Victoria stood at around 80,000. By Christmas, new arrivals with gold fever had swelled it to over 97,000. By Christmas the next year, over 168,000 people packed the city. A decade later the towns population had risen to over 500,000.

The total population of Australia increased from 430,000 in 1851 to 1.7 million in 1871 a THREEFOLD increase in 20 years.

During its gold rush heyday, Victoria alone produced 25 million ounces of gold, representing 87% of the total Australian production and a whopping 35% of world production.

But Victoria wasnt the end of Australias gold rush. One Australian state after another had its own gold rush. And the gold rush in Western Australia didnt start until June 1893 42 years after Hargraves found the first glimmers in a pan in New South Wales.

The Energizer Bunny
Of Gold Rushes

This, to me, is the big lesson of the Australian gold rush under the right circumstances, a bull run can go on and on and on. Like the Energizer Bunny.

But whats really got me pumped up is not the distant past. Its the immediate future: My strong hunch is that Australias next rush for riches is starting right now, and that you can make a fortune on it.

Land of Gold
by Larry Edelson

Sean has written about a gold rush in 19th century Australia. I love that story.

But Im in Bangkok right now, and I can tell you, first hand, Im witnessing another, equally dramatic gold rush here in Asia.

Its hard to walk down a street without seeing at least one gold shop. Often, there are two or three to a block. Almost all of them are packed with buyers.

On an earlier trip, I toured the temples, where lavish displays of gold continually bombard the consciousness of Thai citizens the Temple of the Golden Buddha, the golden domes, the golden walls.

We were absolutely surrounded in gold.

But its not just Thailand.

Gold demand is rising rapidly in China, India, and Japan.

Its surging all over the Middle East. Everywhere, the rush for gold is gaining momentum, and soon it could become a veritable stampede.

This gold market is more powerful than almost anyone is ready to admit. I fully expect to see gold beyond $618 an ounce soon, and quite likely, as high as $740 my next major target.

How to Buy and
Safeguard Your Gold

I recommend the bulk of your gold investments should be in a combination of a gold ETF, a good gold fund, and shares in the right gold companies.

Are gold bullion coins a good investment? Sure. But if you buy coins, youre going to pay for the fancy design and the rarity of the coin itself. And that can add up to a hefty premium over the actual value of the gold content, as much as 7%.

Instead, if youre interested in physical gold, I recommend you invest in small gold bars. You can buy them in a wide range of weights, from one to a thousand grams.

They contain a minimum of 99.5% fine gold and dont carry the premium that gold coins do. You can buy small gold bars or ingots for as little as 1% over the price of gold.

Right now, there are 50 accredited manufacturers of small gold bars that produce a staggering 338 different gold bars among them.

Which to choose? Any one of the 50 accredited manufacturers is fine. But to help you narrow down your choices, I like Engelhard, Johnson Matthey and Pamp. But when buying gold, keep these rules in mind …

Rule #1
Dont store your gold with the
dealer you bought it from.

Sounds simple enough, doesnt it? But the fact remains that countless investors have been burned when their gold dealer went bankrupt:

Ruffco … National Bullion … North American Coin … and Bullion Reserve are just a few gold dealers that went belly up.

And mark my words, as the price of gold continues to skyrocket, youll likely see more bankruptcies, not less, down the road. In gold bull markets, the buying frenzy seems to attract the least prudent and least ethical players to the bullion industry.

Rule #2
Take possession of your gold using
one of these alternatives.

Look at it this way: When you purchase physical gold, the farther you remove your bullion legally and physically from the dealer, the safer it is from the claims of that dealers creditors.

Alternative A. Cash & Carry. In terms of getting what you paid for, buying your gold and taking it with you is the ultimate solution. You go to your dealer, inspect what youre buying, fork over the money, and walk out the door with your gold. Simple. (But remember: Driving around town with a bag of gold has its own security risks.)
Alternative B. Consignment Method. The dealer sends the bullion to you for your inspection and then you send the money. Its a great choice and gives you plenty of leverage. If you can find a dealer to go for it, youre golden. Just have them send the metal to you and then you respond with a check the minute youre satisfied youve got what you were promised.
Alternative C. Sight Drafts. You make an arrangement with your bank to act as an intermediary between you and the gold dealer. The dealer sends the gold to the bank. The bank then holds it for your inspection. When you give the OK, the bank issues a cashiers check and you take possession of the metal.

Rule #3
Use a major, independent depository
to safeguard your gold.

My Real Wealth subscribers already know that Wilmington Trust and Iron Mountain Depository are two of the best independent depositories around. They charge about 1% of the market value of your metal per year to keep an eye on it.

Rule #4
Use nonfungible storage.

When you put your gold in nonfungible storage, it means its stored in your name and its not pooled with bullion from other customers. This keeps your gold nice and tidy and its really the best way to go.

However, just because your dealer says your bullion is nonfungible and completely segregated doesnt necessarily make it so. And even if your metal is segregated, that doesnt mean the segregation agreement will automatically stand up in court. The best way to make sure is to have your attorney review the firms paperwork.

Either way, always specify that you want nonfungible storage. It may cost a bit more but its worth every single penny.

Real Wealth Portfolios Soaring!

As of last nights close, the Real Wealth gold portfolio is now up 45%, with every position in the win column, including one position up 145%.

For those of you not in some of these gold share funds, my two favorites are the Tocqueville Gold Fund (TGLDX) and the Scudder Gold and Precious Metals Fund, now called the DWS Gold & Precious Metals Fund (SCGDX).

Those are nice core positions. But the bigger leverage is in the individual gold shares. For more details, see my latest edition of the Real Wealth Report. With gold taking off again, the time is now.

And for many times more profit potential, dont miss out on Seans new red-hot recommendations. His first set of four powerful plays with up to 43-to-1 leverage goes out Monday, April 3. So to participate, you have to be on board by this coming Sunday.

Best wishes,

Larry Edelson

For more information and archived issues, visit http://legacy.weissinc.com.

About MONEY AND MARKETS

MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Jennifer Moran, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.

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