Monetary Digest, December 1998
In recent months, the world’s economy has deteriorated rapidly. Pessimists say it teeters on collapse. Trying to figure out how to avoid a financial donnybrook, “world leaders” have scurried around the globe conferring, holding meetings, and issuing statements. The Federal Reserve’s recent moves to lower interest rates were directed more at the international crisis than at domestic problems. All these acts, however, fall short of convincing skeptics that a global recession can be averted. A worldwide depression is possible.
Many “free-market” economists see economic and financial conditions as having gone beyond the control of governments and central banks. They maintain that market forces will assert themselves and that renewed growth can be achieved only after the market has cleansed itself of bad investments which have proliferated because of worldwide easy money policies. Ironically, easy money policies are being touted as solutions. Japan is a prime example.
Japan’s economy, which holds the key to renewed growth in Asia, has been stagnant for years and stubbornly refuses to respond to easy money stimulus packages. In fact, after years of near-zero interest rates, Japan recently slipped into recession and projections for 199 have the Japanese economy slipping nearly 3%.
For an example how the Japanese economy is suffering, one need not look any farther than Nissan, the country’s second largest car maker. Nissan was recently forced to ask the government for a loan of $817 million. This year, the company expects to post its sixth consolidated loss in seven years.
World leaders, however, assert that massive government spending will turn around Japan’s economy. If the printing of additional money resulted in prosperity, South America would be the most prosperous place on the planet.
Traditional Keynesian policies — easy money and government spending — mask the underlying problems brought on by previous bouts of easy money. Those problems include, among other things, bad management, inferior products, overproduction, and overcapacity, all of which a free market would wash out before they become monumental. A free market eliminates enterprises that do not operate profitably; a government “controlled” economy allows uneconomic enterprises to remain in business.
Strong economies can carry unprofitable businesses when they comprise a small part of economic activity. However, when government policies — official or otherwise — permit or encourage proliferation of uneconomic entities, in time such entities become a major drag and cause recessions that “cleanse” the economy of the uneconomic entities. That is one reason socialism does not work. (Socialism also stifles individual self-interest, which is the mainspring of prosperity.)
The Soviet Union — the greatest attempt ever at total socialism — survived at first by expropriating the private capital of its enslaved people. Additionally, Soviet leaders were successful in extracting capital from the West. Nevertheless, eventually, the uneconomic enterprises became so widespread that no amount of capital could sustain the USSR, and it collapsed and fell into depression. Conditions there are horrendous.
When uneconomic entities make up a small part of the overall economy, a recession will cleanse them. But, when they become widespread, a depression is needed to wash out the system. Such was the case in Russia. Now, will a depression be required to clean house in Japan? Worse, will a depression in Japan lead to worldwide depression?
Although Japan does not have a socialist economy, i.e., government ownership of the major productive sectors of the economy, government policies and Japanese culture produce much the same results: businesses are not allowed to fail. In Japan, uneconomic activities are sustained by government and bank efforts. Now, the piper must be paid.
Failing Japanese businesses cross every sector: banking, auto production, construction, retail sales, high-tech manufacturing. Hardly a sector has been missed. For years, the world waited for the stagnant Japanese economy to rebound. Instead of turning up, however, it sank. Now, reality has to be faced: the Japanese banking system in is grave danger, and most of Japan’s largest nineteen banks are underwater. These are the biggest banks in the world.
Recently, the Japanese parliament approved a government bail-out of the banking system which calls for the injection of $500 billion of taxpayer money. Investors responded excitedly, causing stock prices to climb. The celebration was short lived. After analysts scrutinized the proposed rescue package, stock prices fell, sending the Nikkei 225 below 14,000, a level at bank capital becomes even more impaired.
The bail-out requires some tough changes: the closings or forced mergers of the weakest banks, management resignations, business restrictions, closer scrutiny of loans, etc. It also calls for pulling the credit lines for unprofitable companies. If applied, the plan might put the ruling Liberal Democratic Party out of office. So, the plan has lots of loopholes.
Most important, the plan abandons all vestiges of realistic accounting by allowing banks to value their massive stock portfolios — whose worth counts toward bank capital — at cost rather than at market value. By comparison, U.S. banks are prohibited from investing in stocks. Furthermore, U.S. bank holdings of government bonds are valued at the lower of market or cost.
At the end of September if the Japanese banks had been required to value their stock portfolios at market prices, fourteen of the nineteen large banks would have failed to meet internationally-agreed minimum standards. But, because the Japanese allow banks to value stocks at cost, all nineteen will report capital levels greater than the 8% minimum.
This accounting fiction will remain policy until “the financial system stabilizes.” In other words, the world’s largest banks are permitted to do business despite being insolvent. If the Japanese get an economic recovery, perhaps they can pull it off. As noted above, however, their economy has turned down. And, it’s not just the Japanese economy that is looking bad. Ominously, the rest of the world’s economies are slowing, if not in decline. The U.S. is no exception.
Manufacturing activity slowed in the U.S. for the fifth straight month in October. Personal income grew at its slowest pace in seventeen months during September, and nonresidential construction fell 1.9% in September, after rising only 0.1% in August. And, GDP slipped to a 1.8% annual rate in the 3rd quarter.
Consumer spending is driving our economy. But, Americans are spending more than they are earning, which means we have a negative saving rate. (By comparison, the Chinese save some 40% of their income.) When the buying stops, our economy could follow Japan’s down.
The sharp fall in saving since 1993, when households squirreled away 5% of their income, has been largely due to big gains in stock prices, which have made consumers feel wealthier and encouraged them to spend more. Corporate America has also been on a borrowing and spending binge, and according to J.P. Morgan the total private sector saving rate has fallen to its lowest level ever.
Meanwhile, the Japanese are playing a dangerous game. If their economy rebounds, they may get away with their gamble. But, that is no guarantee. The Japanese economy could recover but the banks could still suffer. Furthermore, if a worldwide recession hits, the Japanese banks — remember, the world’s largest — could fail, an event that would affect every economy and could collapse the international banking system.
Despite the severity of the Japanese banking crisis, getting the facts is difficult as news coverage of the problem is superficial at best. The Wall Street Journal pays it little attention, and the 24-hour news networks generally provide two minutes of coverage after a significant development. If the Japanese banking system fails, Americans will learn of it only after it happens.
If getting the real story in Japan is difficult, it is nearly impossible in China. So much that few Americans are aware of problems there. Most Americans believe that China’s new prosperity will make it a world power to rival the U.S. However, according to The Economist, “The most important question today is not how strong China might become but rather how weak it is today. The danger of an economic collapse is growing.”
Despite the picture the establishment media paints, China remains a socialist state. It opened its doors to foreigners only because it needed foreign capital and technologies. Although some Chinese people are financially better off because of “the opening of China,” its people are still enslaved.
Since China began its “liberalization” in 1978, its GDP has grown, on average, by 9% a year. Income per head has grown by 6% a year, faster in that period than any other Asian country except South Korea. China now claims 10% of the world’s GDP.
Despite these sparkling statistics, China may be on the verge of a prolonged slump. Growth has fallen from 13.4% in 1992-94 to 7.2% this year. Every percentage point fall in GDP means five million more unemployed. As it is, around 70 million — a number equal to the population of Germany — are less than gainfully employed on state farms or, increasingly, in the cities. A Beijing economist predicts 18 million fully unemployed urban Chinese next year.
Several years of Japan-like growth, not to mention recession, would be disastrous for the welfare of ordinary Chinese and could cause a banking crisis that would make Japan’s look like a picnic. The state still owns and operates China’s banks, which are loaded with bad loans both to state enterprises and to property speculators made during the boom years of the early 1990s. The Economist already labels China’s banks insolvent.
Furthermore, China’s “reforms” are aimed at improving the socialist “efficiency” of the state system, not at embracing capitalism. Privatization of heavy industry, telecoms, energy, and the banks is out of the question, even as smaller enterprises are sold to the Chinese people. China’s new prosperity resulted from the massive injection of foreign capital and technologies, not from changes in China’s economic system.
When the government sold the smaller enterprises, government leaders and economists were astonished at how much money the people had stashed away. They shouldn’t have been. The Chinese have always been industrious and thrifty. In fact, Chinese thriftiness probably has averted a meltdown.
China’s financial system enjoys a rate of savings of almost 40%. Household savings at banks have risen from 18% of all bank deposits in 1980 to around 60% today, giving the banks nearly $600 billion in household deposits. Unfortunately, an equal amount of dud loans matches the deposits.
In effect, the frugal Chinese people have been bilked by banks that lent their money to uneconomic enterprises. Barring serious reform — along with a renewed robust economy — one day there will be a reckoning. Either the government will try to inflate its way out of its obligations, or there will be a run on the banks — or both.
Considering China’s dedication to socialism, reform is unlikely. Consequently, state-run banks will continue to support uneconomic enterprises until collapse, as happened in the former USSR. Such policies deprive real job-generating ventures of operating funds and impede economic rebounds.
No one knows how far China might be from a full-blown banking crisis. A further slowdown in economic growth will surely bring one closer. And, a few jolts to the financial system may cause depositors to line up in front of the banks. Already, there is resentment by depositors of a recently-imposed policy prohibiting bank withdrawals on short notice.
Besides the Japanese crisis and the looming problems in China, a South American meltdown was barely averted when the IMF led a $41.5 billion bail-out of Brazil, the world’s ninth largest economy. The rescue looked a little shaky until Congress appropriated $18 billion to the IMF.
Usually, the IMF doles out its money over years as the troubled nation implements IMF-mandated changes in its economy. However, Brazil faces a monumental crisis, one that threatens to engulf all South America, and the IMF is practically air mailing the $41.5 billion to Brazil.
The money will buy time, but it’s probably down a rathole. Earlier this year, IMF-led rescues sank billions into the Asian and Russian crises, and that money promptly disappeared. Now, Russia is set to default on its $160 billion in foreign debt. Earlier this decade, Mexico required a $60 billion bail-out and remains in recession.
Unfortunately, there’s not enough money to bail out Japan and China. If the Asian crisis worsens, the international financial system will really be put through the wringer. Let’s hope it doesn’t happen but prepare just in case it does.
Precious metals are proven, safe investments during such times. Besides, no matter what happens, precious metals are great values at present levels. Gold is a few dollars above a 19-year low. Silver is faster disappearing, with premiums climbing on all the physical products. And, platinum will jump again early next year if the Russians cannot deliver to the Japanese for the first six months of 1999. That has been the case each of the last two years. The Russians’ antiquated and dilapidated mines cannot produce at levels once achieved.
CMI recommends American Gold Eagles, whichever silver products are available at the lowest premiums, and American Platinum Eagles. Call for prices.
Bad Boys or Canaries?
For years, critics have warned of high-flying, gun-slinging hedge funds, particularly their forays into the bond and the currency markets. Some critics blame hedge funds for the collapse of some smaller countries’ currencies. Other critics have called them threats to our financial institutions. Now, hedge funds are under attack after the Fed felt it necessary to orchestrate a $3.6 billion rescue of Long-Term Capital Management (LTCM), which was founded by, among others, two Nobel laureates in economics, a former vice-chairman of the Federal Reserve, and one of Wall Street’s most successful bond traders.
Despite the brilliant minds behind LTCM, it was saved from bankruptcy only by the Fed action. Fed Chairman Alan Greenspan said that if the fund had failed, it “could potentially have impaired the economies of many nations, including our own.” Whoa! LTCM wasn’t even the largest hedge operating, and its collapse could have threatened “the economies of many nations, including our own”?
Hedge funds are limited partnerships, usually based offshore, making them largely unregulated. And, they are open to only the rich. Hedge funds do everything from arbitrage currencies to invest in companies that are take-over targets. They also bet on bankruptcies and interest rate variances between supposedly comparable debt instruments in different countries. For example, a hedge fund may simultaneously buy U.S. treasuries while selling short German bonds. Or, they may leverage their money by buying futures contracts of U.S. treasuries on a U.S. market and selling short Norwegian bonds in Europe.
It sounds complicated, and it is. However, Wall Street deems it safe enough to lend billions of dollars to encourage these gambles. Consequently, LTCM had roughly $50 in borrowed money to every dollar contributed by its wealthy investors. Few hedge funds are as heavily leveraged as was LTCM. In fact, finding one that leverages more than ten to one is rare, but nearly all employ some leveraging.
The Federal Reserve acted quickly not because LTCM’s borrowings directly threatened lending institutions but because U.S. banks gamble on the same types of investments that hedge funds make — but, in total, on a much bigger scale. According to some reports, whereas LTCM had $80 billion in arbitraged positions between U.S. treasuries, banks have some $3 trillion tied up in similar bets. How dangerous are such gambles?
Tiger Management, which directs several separate hedge funds, lost $3.6 billion or 17% of its capital in October. That was on top of $2.1 billion in losses in September. The October losses wiped out all Tiger’s gains for the year.
Had LTCM gone bust and its positions liquidated in a fire sale, it would have made the banks’ bets even more loss-making than they already were, rendering some major U.S. banks insolvent. Perhaps, the hedge funds are mine canaries and serve as early warnings to deadly gasses permeating the banking system.
At the time of the LTCM crisis, rumors circulated that several investment banks were on the verge of bankruptcy because of the recent collapse of the dollar against the yen. The banks had bet the dollar would continue to climb against the yen, and they leveraged their positions. They lost, and they lost big.
So, U.S. banks have a double exposure to hedge fund speculation. First, they lent to the funds; second, they made the same bets themselves. Additionally, U.S. banks have even greater exposure to the emerging-markets where they have lent tens of billions. Russia is in default, and if Brazil had defaulted, even the Federal Reserve would have been powerless to halt a market meltdown. Yet, other South American countries have their hooks in the U.S. banks.
While Japanese banks stand on the brink of failing, and Chinese banks are headed toward crisis, U.S. banks have exposures to emerging markets’ debt in the tens of billions of dollars. Additionally, whereas LTCM had U.S. treasuries arbitraged positions of some $80 billion, U.S. banks had similar positions totaling some $3 trillion. Now, it’s clear why Congress so promptly appropriated $18 billion for the IMF.
President Clinton has said that the world’s leading nations have “linked arms to contain the world’s financial turmoil.” Basically, that means the industrialized nations have admitted a problem exists and that they are going to use taxpayer dollars to try to solve it.
In today’s financial system, a banking collapse — even in Japan or China — remains remote. That’s because governments can always resort to the printing press money to cover bank runs or capital shortages. No government is going to willingly put its economy through a “cleansing depression.”
When economic slowdowns top the horizon, central banks ease monetary policy. When signs of a genuine depression appear, they speed up the printing presses. That’s exactly what Japan has done where interest rates have been reduced nearly to zero. However, the Japanese economy has not responded. In fact, it recently turned down after years of mediocre growth.
As in Japan, easy money policies do not always guarantee improved economies. Often, they result in years of high rates of inflation; sometimes, they mean hyperinflation. South American countries are famous for destroying their currencies with easy money policies.
When hyperinflation besets a country, a “cleansing depression” is guaranteed. A government’s weapons against hyperinflation include raising interest rates, devaluing the currency, or even changing the currency. Usually, it’s a combination of higher interest rates along with one of the latter options. Regardless, a depression is guaranteed.
In the mist of such conditions, there’s a wild card that can topple banking systems: bank runs. If the people fear a loss of their money, they line up in front of the banks and withdraw it. If they withdraw too much, the bank either closes or the central bank prints more money. Japan has already experienced runs on some of their smaller banks. A run on a large Japanese bank is possible.
Presently, hyperinflation is not on the horizon in any major industrialized country, but bank problems are real. It is generally believed that central banks can move swiftly enough avert collapses. That, however, is not guaranteed. It is more likely that the industrialized world will suffer years, perhaps a decade, of high rates of inflation. Precious metals are safe havens during such times.
An Exciting Investment
For decades, Russia (previously as the USSR) has supplied Japan with platinum. However, during the first six months of 1997 and 1998, the Russians failed to deliver any platinum to Japan, forcing the Japanese to buy platinum in other markets. Both years, this pushed platinum prices much higher, at times reaching premiums of $150 to $200 above the price of gold.
Platinum’s price relative to gold is a standard measure of its investment merit.
Platinum at or near the price of gold has proven to be an excellent investment. In fact, platinum is good investment when it trades within $50 of the price of gold, as it now does. With the first six months of 1999 closing in, platinum is an even better buy.
A high possibility exists that the Russians will again not ship platinum to the Japanese in early 1999. According to Reuters, the Russians expect to export only 643,000 ounces of platinum in 1999. Johnson Matthey estimated Russia exported 900,000 ounces in 1997. A 29% reduction over two years is huge. The Russians’ mining operations are a shambles. The Norilsk mine, the world’s second largest source of platinum, is falling apart. Regular maintenance has been ignored for years, and worn-out equipment is not replaced. The workers have to strike to get paid. Only a massive infusion of capital can turn Norilsk around, and that is not anywhere close to happening.
South Africa is the only other major source of platinum. Although the mining companies there are moving to take advantage of the Russians inability to deliver, it is a long term proposition. They will not be ready this year. Presently, platinum is attractively priced. Precious metals investors wanting a little more excitement in their portfolios should add American Platinum Eagles.
Silver Dollars: Overvalued
U.S. silver dollars, nicknamed cartwheels, are the most widely collected coins in the world. Even people who have little interest in coins or precious metals like them. Consequently, silver dollars are frequently promoted, always at prices much above market prices. Prudent investors should avoid such promotions. In fact, silver dollars at fair-market prices are high compared with historical standards.
Common grade VG silver dollars are selling at $10.00. Since a silver dollar contains .77/oz. of silver, this means silver dollar investors are paying $13.00/oz. for their silver. With silver at $5.00/oz., that’s a premium of $8.00 or 160%, a record premium for common silver dollars.
Not only should precious metals investors avoid silver dollars at current prices, investors holding silver dollars should trade them for other forms of silver that carry small premiums, such as 100-oz bars, 1-oz silver rounds, or 90% circulated coins. In rising markets — and that’s what we’re looking for — premiums on silver dollars shrink. If silver were to climb slowly to $10, silver dollars prices would benefit little, perhaps not at all. If silver were to spike to $10, silver dollar prices would not budge.
Investors holding silver dollars for Y2K purposes should trade them for 1-oz silver rounds or circulated 90% coins. This would increase the amount of silver they own and give them more pieces of silver to use if Y2K is as serious as some people predict.
Investors with silver dollars for investment purposes should trade them for 100-oz bars which will move nearly penny for penny with any price move in silver. So will 1-oz silver rounds.
Example: 1,000 silver dollars represent 770 ounces of silver and are valued today at about $9,000. The same 1,000 silver dollars could be traded for approximately 1600 ounces of silver in 100-oz silver bar form, resulting in an increase of 830 ounces. If silver were to spike to $10, the 1600 ounces would be worth about $16,000. As noted above, there is a very good chance silver dollars would not move at all, or, at best, appreciate slightly.
Silver dollars carry high premiums because of promotions. Those premiums will disappear, either slowly or quickly. Silver dollars should be traded. Call Certified Mint to discuss this opportunity.
Beware Gold Coin Promotions
The May and August issues of Monetary Digest gave detailed explanations why investors should avoid old U.S. gold coins. In fact, both issues presented strong arguments for trading them for bullion coins, preferably the American Gold Eagles. That recommendation remains valid. Investors who own old U.S. gold coins ($20 Libertys, St. Gaudens [Double Eagles], $10 Libs, $5 Libs, etc.) should take advantage of this truly golden opportunity. If you would like copies of the May and August Monetary Digests, call, and we will mail them to you.
Old U.S. gold coins are not only overvalued, many telemarketers sell them at prices significantly higher than their fair market values. Be wary of any dealer who talks about “non- confiscateable gold,” or “non-reportable gold.” These are dead-giveaways that you’re being promoted. Telemarketers also claim “pre-1933” coins have unique qualities. They do not.
Telemarketers are now touting European coins. These coins are not special either, except that they sell at high premiums. (For investors new to precious metals and coins, a coin’s premium is the difference between a coin’s price and the value of its metal content.) Telemarketers have switched to European coins because old U.S. coins have become difficult to get. A quick review is in order.
European banks are the primary sources of old U.S. gold coins. (See the May Monetary Digest as to why.) However, with gold at its lowest levels in nineteen years, the banks are not selling; consequently, the telemarketers have had to switch to other coins. They couldn’t switch to Gold Eagles for Gold Eagles’ prices are easily ascertained. Besides, telemarketers have been claiming for years that Gold Eagles are “confiscateable” and “reportable.” So, they have to come up with unknown coins. And, since promoters mail expensive flyers and pay their sales agents big commissions, they have to promote coins in good supply because they cannot sell coins they cannot get.
Now, promotions of Swiss Helvetias, French 20 franc roosters, British sovereigns, and even Danish Mermaids are common. Most of these coins are sold as “non-confiscatable” because they carry dates before 1933. Again is this a ruse exposed in the May Monetary Digest. Do not fall for it.
At $294 gold, Swiss Helvetias and French roosters (Each contains .1867 ounce of gold.) have less than $55 in gold. Yet, they’re promoted at prices exceeding $70 each. That’s $375 gold. The Sovereign contains .2354 ounce of gold, which means that at $294 gold, each coin has less than $70 in gold. These coins are frequently promoted at $80 to $85 each. At $85, that’s $361 gold. The worst are the Danish Mermaids which are sold at about $472/ounce.
Here is a summary of Certified Mint’s position on gold coins:
- There’s no such thing as “non-confiscatable gold.” If the government were again to call in gold (highly unlikely), you would have to decide whether to turn in your gold. If you’ve bought from a telemarketer, you would comply because your name’s on a computer database. Certified Mint does not computerize its transactions.
- If there were to be another recall (again, highly unlikely), coins dated before 1933 would not be exempt. No law, rule or regulation supports the “non-confiscatable” position. Again, the “non-confiscatable” myth was exposed in the May Monetary Digest.
- European coins are not good investments for many reasons, the most important being they are overpriced. Second, they do not have their gold content stamped on then. Third, they usually are not written in English. (The British sovereign is an exception.) Fourth, they contain weird amounts of gold, such as .1867 ounce or .2354 ounce.
- Americans prefer coins that are stamped in English with their gold contents on them and are minted in ounces or common fractions thereof, such as 1/2-oz, 1/4-oz, or 1/10-oz.
Do not fall for the telemarketers’ stories and pay too much for your gold. American Gold Eagles, the best-selling gold coins in the United States, are the way to go. Certified Mint offers the lowest prices in the country with prompt delivery. Our twenty-five years in the industry also give investors perspectives not found anywhere else. Call with any questions about investing in gold, silver, or platinum.
A Primary Bear Market
The August Monetary Digest provided convincing evidence that stocks had peaked in July, and stock activity since then confirms that stocks have entered a primary bear market phase. However, with stocks having rallied strongly since their August and October lows, optimists have all but proclaimed the bear market over.
When the Dow Industrials and the Dow Transports fell through the “critical levels” shown on the charts in the August Monetary Digest, a bear market began according to the Dow Theory. Furthermore, stocks will remain in a primary downtrend until both the Industrials and the Transports make new highs. For the optimists to be right — for the bear market to be finished and a new bull market to have begun — the Industrials must top their July highs and the Transports must climb above their April highs.
With the Industrials climbing through 8700 and the Transports topping 2900, we have strong rallies in a bear market — but it’s still a bear market. However, if the Industrials turn down and slip through the 7500 level, and the Transports fall below 2300, that would confirm a bear market which the most optimistic stock analysts would have to recognize.
Such a confirmation may be months in coming, maybe well into 1999. Yet, hope springs eternal. The bull market ran for so long and provided such huge profits that its beneficiaries will have to be battered before they concede that the ball game’s over.
There is always the possibility that stocks will climb to new highs, but it’s not likely. A scenario would have the Industrials climb above 8700 and the Transports top 2900, but both fail to reach their July and April highs. Such action would offer great hope to stock investors, causing them again to pour billions into the market. Then, months later, the averages crash again, inflicting losses comparable to those suffered July through October.
The most probable outcome: a bear market that runs for five to seven years, one that wipes outs the bulk of the profits enjoyed this decade. Under present economic conditions and high stock prices, stocks are aggressive speculations, not the “solid investments” Wall Street would have you believe. Major U.S. corporations will survive any depression or cataclysmic decline, but that’s doesn’t mean their stocks will not suffer. The recent stock rally offers an opportunity for investors who haven’t sold to do so at high prices. If you are one of those, don’t miss this opportunity.
- Trade any old U.S. gold coins for gold bullion coins, preferably American Gold Eagles. This recommendation is fully detailed in the May issue of Monetary Digest, with additional substantiation in the August issue. Call for copies.
- Trade any silver dollars for bullion silver, 100-oz silver bars, 1-oz rounds or 90% circulated coins. See the article titled Silver Dollars: Overvalued in this issue.
- Pre-1965 U.S. silver coins are an excellent way to own silver bullion as an investment and for Y2K protection. They are available as full bags ($1,000 face value) and in partial bags.
- Platinum. Because of unstable supplies, platinum holds greater long-term upside potential than gold. Because of instability in Russia, platinum could see big price increases during the first six months of 1999. See Platinum: An Exciting Investment in this issue. The American Platinum Eagles now dominated the platinum coin market. Future investments in platinum should be these coins.
- Gold bullion coins are the best way to own gold. They sell at small premiums over spot and are readily resalable. The American Gold Eagles dominated the gold bullion coin market just as the Platinum Eagles dominate the platinum coin market.