The Michael Fuljenz Metals Market Report: November 2012, Week 5 Edition

Last Week In Metals: Gold rose $38 (+2.2%), silver rose $1.82 (+5.6%), platinum rose $61 (+3.9%)

Gold rose after global statistics revealed that both China and Germany are recovering more strongly than expected. This sent the dollar down to the euro, further boosting gold's price in dollar terms. Labor unrest in South Africa's Harmony Gold Mining Company also lifted the price of gold. Silver was up more than gold because of the sudden resurgence of China and Germany, the economic giants of Asia and Europe, respectively. (As an industrial metal, silver benefits from a strong global economy.)

• Gold 52 weeks ago (November 25, 2011): $1688
• Gold's price at the start of 2012: $1574
• Gold's London Low for 2012: $1537 on May 16
• Gold's London High for 2012: $1792 on October 4

New Gold Predictions

A recent survey of 16 top analysts by Bloomberg shows an average predicted high of $1925 per ounce of gold a year from now. That would be about 10% higher than gold's current $1750 price. Although a 10% gain seems modest, any rise at all would also mark gold's 13th straight year of positive gold gains, assuming we hold on to this year's gain for another five weeks. (This year's gain in gold is 11%, so far.)

Global Gold Demand is Picking up as 2013 Approaches

The World Gold Council predicts a rise in gold demand this quarter. Last quarter's drop in global gold demand came largely over fears of a China (hence global) economic slowdown, exacerbated by a drop in Indian jewelry demand due to a temporarily weak Indian rupee. Last quarter, China seemed leaderless and sluggish, but with a newly appointed leader, China seems ready to stage another economic rebound. This positive attitude will lead to more gold buying, particularly as the Chinese New Year approaches.

In other gold news, the Central Bank of the Russian Federation bought 100,000 more ounces of gold last month, raising its total gold reserves to 30.1 million ounces, worth $53 billion at today's prices, and Turkey announced last Friday that it had exported $10.7 billion in gold (about 200 tons) during the first nine months of 2012, most of it ($6.4 billion) in trade for Iran's natural gas. Turkey found a way around the international boycott of Iranian oil by circumventing bank transfers in favor of a physical exchange of commodities, gold for natural gas. In 2011, before Iranian trade sanctions took effect, Turkey exported just $54 million in gold to Iran, so 2012's gold-for-gas trade represents a 118-fold increase over 2011!

Putting Your Children And Grandchildren Through College With Rare Coins - A True Story

College tuition costs at the best schools are astronomical. Even four years at a state university will set you back a pretty penny. If you have young children, by the time they're ready for college, the costs will be beyond astronomical.

People have different strategies for building a college education nest egg for their kids. But a friend of mine - I'll call him "Mr. B" - hit on an inventive and very profitable way to build a college fund for his youngsters. Mr. B is a prominent fellow numismatist and coin dealer who has held numerous influential positions in national coin industry groups. I was impressed with his creative college savings plan, and I think his story is worth sharing with you.

Mr. B's first two children, a girl and a boy, were born in the late 60s and early 70s. Mr. B launched his plan right away to be ready financially for their higher education.

Every year he bought $1,000 of well-known companies' stocks for each kid. He stuck to the axiom of "invest in what you know" and bought companies that affected his children's lives, like Johnson & Johnson (because they make baby powder and no-tears shampoo). As they grew out of the toddler stage, he bought companies like toymaker Mattel and, of course, Disney. When they were teens, he bought consumer product companies like Coca-Cola.

Now, here's the unusual part of Mr. B's strategy. In addition to building a stock portfolio for each child every year, he also invested $1,000 in high-quality U.S. gold and silver coins for each of them.

He chose only gem uncirculated or proof coins that were 50 to 150 years old. He completed a U.S. gold coin type set for each child. He also enhanced their coin portfolios with many gem-quality silver coins.

Mr. B told me that his plan of investing in stocks and coins became much more than just a prudent financial exercise. "It was a bonding experience," he said. "It brought us closer together as a family while instilling in my children valuable life skills." The kids got excited when annual reports came out, which Mr. B read with them, so they could see how the companies they owned were doing. They followed the stock charts of their portfolios and even went to shareholder meetings. The kids became absorbed in the history of the coins in their portfolios and avidly dug into reading and learning about them - which paid extra dividends later on when they got outstanding grades in college history courses.

Mr. B was able to finance the two children's educations by selling the stock and coin portfolios. Adding it all up, he noted that the money he invested in coins paid off far better than the money he put into stocks.

Here's how the actual performance numbers worked out. Investing $1,000 in stocks and $1,000 in high quality gold and silver coins for each child each year for 18 years yielded these results:

First Child:

• 18-year $18,000 investment in stocks: $40,500 profit, 225% growth
• 18-year $18,000 investment in high quality U.S. coins: $68,000 profit, 377% growth

Second Child:

• 18-year $18,000 investment in stocks: $38,000 profit, 211% growth
• 18-year $18,000 investment in high quality U.S. coins: $77,500 profit, 430% growth

Aggregate:

• Stocks: Original investment $36,000 ($18,000 x 2), $78,500 profit, 218% growth
• Coins: Original investment $36,000 ($18,000 x 2), $145,500 profit, 404% growth

Many people put cash away in CDs or money market accounts in anticipation of their children's college days. But the meager interest being paid on these accounts against the rapid debasing of the U.S. dollar - and pretty much all world currencies - sucks purchasing power out of the nest egg rather than growing its value. Mr. B's college coin savings plan, on the other hand, paid off with handsome growth.

Investing for Your Children and Grandchildren

We offer parents and grandparents of future college students the opportunity to invest regularly in high-quality mint-state rare gold coins through a strategy developed by America's Gold Expert and Award-Winning rare coin expert, Mike Fuljenz. Through an accumulation plan that we personally outline according to your circumstances and needs, our strategy could provide you with a systematic, smart long-term way to build the resources you need to send the children you love to college.

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