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Y2K Awareness Grows

Monetary Digest, March 1999

If not for the Y2K problem, January 1, 2000 would be only a memorable day with hundreds of millions of people waking to headaches from too much partying the night before. The headaches of 1/1/00, however, will not be remedied by taking two aspirins and going back to bed. Y2K may turn out to be a migraine which lasts for months. The more vocal alarmists maintain that the problems brought on by Y2K will be terminal for our high-technology way of life, sending us back to stage coaches and kerosene lanterns. Ironically, if it were not for the Internet–certainly one crowning glory of high technology–awareness of Y2K would be only a fraction of what it is today.

Increased awareness of Y2K has not produced, however, heightened concerns. Polls show that Americans have become less concerned about Y2K over the last few months. Considering the coverage, it’s no wonder.

Gary North continues to predict the end of the world as we now know it. The collapse of our electrical generating capacity is the cornerstone of his belief. A high probability of the failure of our banking system runs a close second, with the inability of our food distribution system to restock local supermarkets also important.

Frankly, Gary North’s dire predictions are summarily rejected by most people. However, North’s critics have not studied the matter to the same depth as has North. Yet, there are other intelligent people who have investigated the Y2K matter and come away concluding there will be problems but that they will be nowhere as apocalyptic as forecast by North.

The lack of Y2K concern by most people probably centers around the news media. Although several popular television news programs have addressed the issue, they seemed to always close with assurances from government spokesmen or “experts” that the problem is straight forward, can easily be solved with simple programming changes, and that any disruptions will be minimal.

The huge number of programs and their immense sizes make Y2K compliance an enormous undertaking. Some have compared it to the Manhattan Project. The law of averages guarantees that some computers will spew worthless data.

In late January, Arizona’s largest newspaper dedicated a section to the Y2K problem. If you were to read it, you would be assured that all is well. The newspaper interviewed or contacted spokesmen from several high-profile industries who assured the reporters that their industries will be ready. Here’s the problem: Generally, the people the reporters talked with were spokesmen, public relations people. Most of them were not on the front line and had no first-hand knowledge of their companies’ degree of Y2K compliance. They simply parroted their companies’ lines. The Union Pacific spokesman said that the railroad “believes it has all its ducks in a row.” The railroad industry is heavily dependent on computers, and UP daily needs to track some 300,000 cars.

To reassure bank depositors, the newspaper ran a huge headline that read “Billions spent to protect finances.” Below the headline was a photo of a customer using an ATM. The photo clearly showed $20 bills in hand and an armed guard in the background. How could a viewer not get a warm and fuzzy feeling?

Also included was a photo of the president of a bank consulting firm who said “banks are working to ensure that the new year arrives without a glitch for customers.” She didn’t mention that most banks started addressing the issue a little late and are expected to be still working on the problem after January 1 rolls around.

Another headline read: “Utilities aim to keep juice flowing.” Under that headline, however, read a smaller one: “But small glitch could scramble whole grid.” The article applauded Arizona’s utilities for their Y2K preparation. One utility successfully tested one of its major plants in early January, and a spokesman for the Palo Verde nuclear generating plant 50 miles west of Phoenix said “They expect to have everything fixed and ready by May.” But, what about the other 10,000 plants across North America?

The article noted that one small plant could go down and lead to “cascading where the loss of generation at one plant causes others to go down like dominos as they ramp up to compensate for the lost power and overload the system in the process.” As recently as August 1996, cascading caused a loss of power for 30 million Western power grid customers. In 1965, the Northeast suffered a blackout which has become legendary in the electricity-producing industry. It has since been an industry goal never to let that happen again. Y2K may thwart that goal.

The Western Interconnections grid hook ups with Eastern Interconnections and ERCOT to make up the North American Power Grid, which is this continent’s electrical infrastructure. It is a high-level network of thousands of generating, transmitting, and distribution companies. Note that it is the North American Power Grid, and it is linked to and is dependent on power production in Canada and Mexico. (There goes that warm and fuzzy feeling.)

Last year, the North American Electric Reliability Council (NERC) polled utilities about their Y2K readiness for a report to the Department of Energy. “Will the lights go out?” the authors asked in the report. Then they answered that “no one knows for certain yet what the effects of Y2K will be. The risks that Y2K may impact electrical system operations are real much like the risks that earthquakes or severe weather could cause electrical shortages before the new millennium arrives.” The NERC report also warned: “Without a reliable supply of electricity, the Y2K problems in other industries become secondary, especially if all those computers and electronic devices society depends on every day don’t have any electricity to run them.”

The NERC report did not make predictions but outlined hypothetical “Categories of Operating Scenarios.” The “More Probable Scenarios” included loss or unavailability of a portion of generation, loss of a portion of system monitoring and control functions, loss of voice communications and/or loss of a portion of load or uncharacteristic loads. The result: inconsistent delivery of power and intermittent outages.

Because the national power grid is interconnected and many utilities buy power from other companies, if a few key players fall behind on their Y2K compliance, their failures could create a ripple effect throughout the country.

Among NERC’s “Worst Case Scenarios” were losses of some transmission facilities, interconnection islanding, protection failing to operate (leading to equipment damage or cascading outages), under-frequency or under-voltage load shedding, failure of environmental control or monitoring systems, loss of intra or inter-regional communications, voltage control device mis-operation or failure and/or loss of a portion of distribution systems. These malfunctions could lead to blackouts, or brownouts where electricity is available only during specific times. The most dismal scenario fears equipment damage that would further exacerbate the outage problem and increase the duration of any blackouts or brownouts.

Still, no one knows how serious the problems will be because the ramifications of Y2K are so far reaching. We’re dealing with millions of computers being operated by hundreds of thousands of software programs that are being rewritten by hundreds of thousands of programmers with varying degrees of knowledge and training.

The consensus is that the United States leads the world in Y2K awareness and in taking corrective measures. That makes sense for the U.S. gave birth to the computer, and we have become more dependent on computers. Therefore, because of the huge number of computers here, it is more likely we will face more Y2K problems. This is not to say that other countries will not have Y2K problems. They will, for the significance computers play in all economies cannot be overstated. But in the U.S., they assist in running everything from coffee makers to nuclear power plants. Take airports, for example.

Nearly all airports’ navigation systems are operated by the FAA which plans to spend about $187 million in fixing its air traffic control systems. The FAA operates 645 computer systems, 430 of them critical to safety. Last fall, FAA administrator Jane Garvey assured a House of Representatives subcommittee that Y2K preparations were a “top priority,” that aviation safety would not be compromised, and that all FAA’s systems will be fully compliant by June. To demonstrate her confidence in the FAA’s Y2K compliance, Garvey plans to board a plane before midnight December 31, 1999, and fly through all four U.S. time zones. (Wasn’t the man who designed the Titanic on board that fateful night?)

Other reports, however, assert the FAA will not be ready and that the only way to assure safety will be to cut back on the number of flights. Such a move would devastate our economy. Another point as to air safety: The airlines have to ensure they have located all date-sensitive embedded chips in their thousands of planes.

Before you plan to fly on December 31, consider that your airport’s airfield lighting, fire control, security, communications, baggage handling, elevators, electrical power, heating, shuttle buses, parking garages, and flight information systems are dependent on computers. A malfunction of one or more of those computers could paralyze a large airport.

Electricity is essential to our way of life. In fact, a nation’s standard of living correlates to its capacity to produce electricity. Undoubtedly, most utilities are working diligently to become Y2K compliant. But, what about the ones that have delayed their efforts, those which failed to see the enormity of the corrective measures needed? Will they be the weakest links that cause the North American Power Grid to fail?

By midyear, we can expect to see a shifting of personnel from those utilities that are probably ready to those that are questionable. And, contingency plans will be in effect to minimize the effects of potential blackouts or brownouts. While there is potential for disruptions in the nation’s electrical power, it is difficult to believe we will be thrown back into the 1800s. However, if you happened to live in an area that gets hit with blackouts or extended periods of brownouts, your lifestyle will be adversely affected.

Nearly as important as our electrical generating capacity is the banking system, which is completely dependent on computers. No backup systems stand in the wings if banks’ computers go down. Manual systems no longer exist. The banks know this and are spending hundreds of millions of dollars in attempts to make their computers Y2K compliant. Most will succeed, but the law of averages has some failing.

Despite how well the individual banks do, the Federal Reserve System’s electronic funds transfer system stands as the lynchpin to a fully operating banking system. If that system is not compliant, we’re facing a massive disaster. Coupled with that is the government’s ability to electronically deposit the millions of Social Security recipients’ monthly benefits. And, let’s not forget the government’s ability to simply pay its bills. The scorecards will be posted Monday, January 3, 2000, the first business day after 1/1/00.

The Federal Reserve has said it plans to boost its emergency cash an extra $50 billion to $200 billion to meet Y2K-motivated withdrawals. While $200 billion is a huge sum of money, it is only 5% of the $4 trillion in checking and saving accounts across America.

If later this year, some major bank’s computers hiccup and depositors start wholesale withdrawals, long before the additional $50 billion is needed the government will limit cash withdrawals. “Use your check book,” depositors will be told. “The banks will are safe. Don’t listen to the doomsayers.”

Perhaps the most likely candidate for computer failure is the government, which has rarely met a deadline. Some Congressional overseers say the Defense Department is hopelessly behind schedule. Yet, one Y2K “expert” on television recently said the man in charge of making the Pentagon compliant is confident he will get the job done. (Maybe his responsibility is only the Pentagon.)

The Social Security Administration first addressed the matter years ago, and, according to the General Accounting Office, has high marks. However, the SSA receives data daily from the individual fifty states. Will the states be ready, or will their data corrupt SS data?

Computers are so pervasive that it is difficult not to believe there will significant adverse developments from Y2K, certainly, at least, economic. The Gartner Group estimates that Y2K will cost the world $1 trillion to $2 trillion, $300 for every man, woman, and child on the planet. That’s the cost to fix it; that does not consider the productivity lost because of Y2K. Edward Yardeni of Deutsche Bank Securities says there is a 70% likelihood that Y2K will cause a worldwide recession equivalent to the one that followed the 1973 oil shock.

Gary North and other doomsayers have come under great ridicule because of their dire predictions. (Scary Gary and his pals would prefer to be called Modern Day Paul Reveres.) However, without their warnings, it is unlikely Y2K would have been taken seriously. Inquiries by bank depositors, letters to elected officials, and phone calls to utilities resulted in the issue being addressed more than it would have been if left to only Information Systems management teams. (About 500 consumers call US West each month asking if they will have phone service on January 1, 2000.) Unfortunately, the profiteers are there as well.

Many firms offer valid services and products while others sell unneeded goods and services. Extra food is a good idea, but there is no reason to buy it anywhere other than the local supermarket. If a generator to provide enough electricity to keep your freezer, refrigerator, and television going offers peace of mind, buy it, but a massive unit to light the whole house is overkill. Survival equipment that would be used only in case of nuclear war is a waste of money. Don’t be led down that road.

Salesmen have long known that emotion causes buyers to act, not logic or reason. And, no emotion cause buyers to act more quickly than fear. Avoid any salesman who attempts to scare you into buying his product. Y2K has been a gold mine to gold coin telemarketers selling overpriced numismatic coins. If you’re preparing for a calamity, it doesn’t make sense to pay $500 or $600 an ounce for your gold when you can get it for $300.

If the time ever comes when you have to swap your gold for goods and services, the person on the other side of the trade will not say, “Great! You have a 1908 No Motto St. Gaudens. I’ll value it at twice the price of gold.” If there is a collapse of our economic system, the gold content of a coin is what will count, not the date, not the mint mark, not the condition. “What do you have of value?” will be the question. If you’re talking gold coins, the question will be, “How much gold is in the coin?”

Certified Mint does not sell food, generators, or survival equipment. However, we offer gold, silver, and platinum at fair prices. Readers who have spoken with us also know we recommend those forms of gold, silver, and platinum that are best for our clients, not the overpriced numismatic coins which provide the seller the biggest profits. Gold really is a “Buyer Beware” market. Invest cautiously. Buying overpriced numismatic coins can be costly.

Stocks: Still Headed Down

The August 1998 Monetary Digest presented strong evidence that the bull market in stocks was on its last legs; the December 1998 issue reiterated that position. However, in early March, the Dow Industrials sailed through their January high and the S&P 500 climbed back to its January high.

Despite the strength of these two important indexes, we continue to believe that stocks have topped out and are headed down in a primary bear market which will rip hearts out of devoted stock investors. Many will hang on all the way to the bottom, finally selling when they should be buying.

Although bull market foundations are laid during times of extensive pessimism, bull markets can climb to new highs only when optimism abounds. And, bull markets end when optimism is at its highest. Recognizing the signs of a topping market, however, becomes difficult, mostly because stock investors do not want the market to stop rising. They seem to think that if they don’t look for it to end, it won’t.

Note in the graph that the Dow Transportation average hit its high of 3686.02 back in April 1998, nearly one year ago. Shortly thereafter, the Dow Industrials climbed to a new high at 9076.54. This confirmed the continuation of the bull market. However, since April 1998, the Industrials have hit three new highs: July 1998, January 1999, and March 1999, while the Transports failed to make new highs. According to Dow Theory, the first sign of the end of a bull market is for one the averages to register a new high and the other fail to do so.

A definite bear market signal comes when both averages fall through previous lows. This happened in August when the Industrials plowed through their previous lows. Note on the graph that the Transports had already fallen to new lows.

The bulls (those predicting and expecting higher stock prices) point to the Industrials and the S&P 500’s new highs as reaffirmation of a continued bull market. However, the Transports have failed to confirm, standing nearly 400 points below their April 1998 high. Also ominous: The advance-decline ratio, which traces the action of all the stock traded on the New York Stock Exchange, has recaptured only about one-third of its decline since its top in July 1998.

Still, it is easy to understand why many people view the Dow Industrials and the S&P 500’s new highs as evidence of a continued bull market. After all, those indexes, especially the Industrials, are widely publicized. When newscasters report on the stock market, usually they do so by giving the change in Dow Industrials. Rarely, do they even mention the Dow Transportation average. The importance of the Transportation average should not be overlooked.

The transportation industry carries the nation’s goods. Expectations of a slow down in the economy are reflected in declining transportation stocks. When the economy is good–and when stock buyers expect the economy to turn better–transportation stocks rise. Right now, however, the Transports are failing miserably to keep up with the Industrials. This “non- confirmation” is especially worrisome with the price of oil below $12 a barrel. Lower fuel expenses should have the Transports climbing through the roof–unless, of course, a bear market has started. If this were a continued bull market, oil below $12 would have the Transports–and all other stocks flying high.

A summary of major stock market indicators:

On April 3, 1998, the advance-decline ratio topped at 13.00. Two weeks later, on April 16, the Dow Transports peaked at 3686.02. On April 21, the broad Value Line Composite of 1617 stocks topped out at 508.39. On October 9, the Dow Jones Utility average topped out at 320.51. Despite the new highs of the Dow Industrials average and the S&P 500 index, the failure of the Dow Transportation average to register a new high sends a warning to all stock investors.

Bull markets do not turn into bear markets overnight. All averages and indexes do not peak on the same week, month, or even in the same year. All analysts will never agree as to the direction of the stock market. Only after all the averages and indexes have fallen to new lows and have failed to make significant rallies will the investing public recognize it is a bear market. By then, most of their profits will have disappeared.

Over time, however, stock investors will recognize that the market has turned down. Unfortunately, a bear market in stocks will change the nation’s optimism to pessimism. Rising stock prices increase people’s perceptions of their real wealth. (Remember, no investor has made a dime in stocks until he sells and takes his money home.) These perceptions cause people to spend more freely, thereby leading to the consumer-driven economy which we have. This optimism leads consumers to spend with less consideration for the future. Right now, we have a negative rate of saving in the U.S. This optimism also helped the housing industry post a record year in 1998.

On the other hand, as this optimism turns to pessimism, investors will look for other places to invest. Some of their money will flow to the metals. Historically, gold and silver have always done well during periods of pessimism and anxiety.

Y2K Buying Heats Up Metals Market

Concerns about Y2K have brought new investors to the metals. Many of them, unfortunately, are buying without understanding how the metals markets work and are either buying the wrong coins or paying too much. Too many fall prey to telemarketers who promote overpriced numismatic coins; others are buying bullion items whose premiums have risen to levels that simply are not justified. (A premium is the difference between the value of a coin’s metal content and the price at which it sells. Said another way, it’s the difference between spot and the coin’s price on a per-ounce basis.)

For years, CMI recommended circulated 90% coins when they could have been purchased at .20 cents to .40 cents an ounce over spot. We steadfastly maintained that when buyers came to the silver market that the premium would increase and that the premium might reach $2.50-$3.00 by the time silver hit $12 to $15. We did not expect a $2 premium with silver at $5.25. A premium approaching 40% is way too much to pay for bullion products.

When investing in precious metals, you want to pay the smallest premium possible, giving you the most metal for your money. Additionally, you want to consider your reasons for buying.

For example, if you are simply making an investment because you expect silver’s price to rise and you plan to sell for a profit, then 100-oz .999 fine silver bars are the best vehicles. However, investors wanting Y2K protection should go with 1-oz .999 fine silver rounds which are available at significantly smaller premiums than are pre-’65 circulated 90% coins.

In reality, 1-oz silver rounds are privately-minted coins. A coin is simply a piece of metal of a known weight and fineness minted to facilitate commerce. The precious metals industry, though, calls them “rounds,” leaving the term “coins” for government-issued legal tender coins.

A coin, just like any other form of money, should also serve as a store of value. However, base metal coins, such as the ones that circulate as money in the U.S., lose their purchasing power the same as paper money. Privately-minted silver coins offer protection against debasement.

In the gold bullion coin market, the premium on 1/10-oz Gold Eagles has risen to 30%. Just a few weeks ago, they could have been purchased for as little as 12% over spot. Additionally, the premium on 1-oz Gold Eagles has climbed 2%. As this is written, the premiums on the 1/2-oz Eagles remain at 8%, but the 1/4-oz Eagles have inched up to the 11% range. Fortunately, the gold market offers alternatives.

Canada’s Royal Canadian Mint and Australia’s Perth Mint also sell 1-oz, 1/2-oz, 1/4-oz, and 1/10-oz gold coins. Canada offers Maple Leafs, and Australia sells Kangaroo Nuggets. Presently, 1/10-oz Maple Leafs carry a premium of 18%-20% and Australian Gold Nuggets about 15%.

Additionally, 1-oz Krugerrands, which were heavily promoted in the U.S. before the introduction of Maple Leafs and Gold Eagles, are readily available. Fractional-ounce Rands never gained popularity and are difficult to find. Furthermore, Austrian 100 Coronas and Mexican 50 Pesos, which actually preceded the Krugerrands, are usually available. And, the new Austrian Philharmonics are somewhat popular.

CMI recommends that investors go with the coins that sell at the lower premiums. If you want 1/10-oz coins for Y2K protection, buy the Australian coins. If you like 1-oz coins and the premium on Gold Eagles rises higher, consider Maple Leafs, Gold Nuggets, or Krugerrands.

Another Warning

Telemarketers promoting numismatic coins as Y2K protection have pushed up the premiums on these coins. Regarding numismatic coins, CMI has two recommendations:

1. Don’t buy them;
2. If you already own them, swap them for bullion coins.

Contrary to what telemarketers say, Double Eagles (St. Gaudens and $20 Libertys) offer no protection against confiscation. There are no laws, regulations, or standing executive orders that prohibit the confiscation of any gold coins. Furthermore, if there were laws offering such protection, the government could simply ignore or repeal them.

Numismatic coins, because of their high premiums – sometimes exceeding 100% – carry great dangers. Gold could rise to $500, and those coins might not budge a dollar. Our Web site ( discusses this issue at length. If you have access to the Internet, read our pages titled “Myths, Misunderstandings, and Outright Lies” and “Old U.S. Gold Coins.” If you own old U.S. gold coins (numismatic coins) but do not have access to the Internet, call CMI. We have back issues of Monetary Digest that also dispel the myth that old U.S. coins are “non-confiscatable.”

Now, if you already own old U.S. gold coins, here are a few reasons why you should consider trading them for bullion coins. First, most old U.S. gold coins are owned by European banks. The estimates are in the tens of millions. When gold dropped in 1997, the European banks quit selling, depriving the telemarketers of their primary source of coins. As the telemarketers were forced to buy coins in the domestic market, the premiums on old U.S. gold coins climbed to their present levels. With common-date coins carrying premiums approaching 100%, you cannot realistically expect them to climb higher. You can, however, expect them to fall even when the price of gold rises.

The European banks quit selling as gold dropped below $350. When gold climbs back to $350, the banks will again become sellers, perhaps even flooding the market and thereby reducing the premiums to more reasonable levels, $40 to $60 over spot.

Another reason for trading now: Old U.S. gold coins have historically seen their premiums fall during rising gold markets. Obviously, people in the gold market now are looking for higher prices. So, why own coins that may fall in price as gold rises?

Finally, in a rising gold market, you receive a bigger gain with bullion coins simply because you own more gold. Many investors who own old U.S. coins refuse to trade them for bullion coins because their old coins will be valued at prices less than what they paid. Even when this is the case, investors come out ahead by trading.

Let’s say an investor owns 50 VF $20 Libs. With each coin containing .9675 oz of gold, he has 48.38 ozs net. Fifty VF $20 Libs, valued at $440 each for a total of $22,000, could be traded for approximately 72.5 ozs in Gold Eagles; that’s an increase of more than 24 ozs of gold, or 50%. If gold rises to $400, where it traded in 1996, the 72.5 ozs of Gold Eagles would be worth approximately $29,500.

Although we cannot pinpoint what 50 VF $20 Libertys would be worth if gold rose to $400, we do know that low grade St. Gaudens and $20 Libertys have traded at spot many times. Consequently, their premiums easily could drop to $40 where they have traded in the past. This is especially true if European banks sell as gold rises. Therefore, on a rise in the world market price for gold, it is quite possible for low grade old U.S. coins not to rise at all! In other words, gold could rise to $400, and 50 VF $20 Libs may not appreciate at all from current prices.

The same principle applies to higher-graded old U.S. coins, all the way up to slabbed MS63 and MS64 coins. Right now, MS62 $20 Libs and St. Gaudens sell at only $50 to $60 above VF coins. VF coins show wear that anyone can see while MS62 coins are “mint state” and require years of grading experience to properly evaluate. The premium of MS62 coins over low grade coins is small because the number of MS62-graded coins grows daily. Investors holding these coins should move quickly to get out of them before those premiums disappear. Trading them for bullion coins would be a prudent move.

In the silver coin market, old U.S. silver dollars are carrying huge premiums. As in the gold coin market, this is because of Y2K concerns and telemarketers. Old silver dollars are even sold on QVC. But, there are limits at to what the public will pay and when the promotions die or silver rises, the premiums will come down. If you own old silver dollars consider trading them for silver bullion.

A silver dollar contains .77 oz of silver. VG-grade Peace and 1921 Morgans are worth about $10 each, possible a little more. For this example, let’s say an investor has 1,000 coins (770 ozs of silver) worth $10,000. If he still wants Y2K protection, at current prices the 1,000 silver dollars can be traded for approximately 1625 1-oz silver rounds (based on spot silver at $5.55) for an increase of 855 ozs. If the 1,000 coins are traded for 100-oz silver bars, the exchange climbs higher.

Finally, the Y2K buying has been so frantic that even 90% circ bags are carrying high premiums. With silver in the $5.55 range, bags were priced at approximately $5300 each. Divide the $5300 by 715, the number of ounces you get in a bag, and you’re paying $7.42/oz for your silver. One-ounce silver rounds can be bought at approximately $6.15/oz. Therefore, $5300 invested in 1-oz silver rounds would net you 861 oz of silver, an increase of 146 ozs. And, silver rounds also provide Y2K protection.

We cannot stress enough the importance of avoiding premiums in the gold and silver markets. Premiums tend to increase during periods of low prices; they shrink when prices rise. At CMi, we want our clients to get the most for their money and recommend only those products which we believe will provide the biggest profits and greatest protection. And, we recommend you switch metals or forms of metals when favorable to do so. If you’re holding high premium coins, call and let’s discuss some trades that should be beneficial to you.



1. Trade old U.S. gold coins for gold bullion coins. The basis for this recommendation is outlined under Another Warning on page 6.

2. Trade silver dollars for 1-oz .999 fine silver rounds or 100-oz .999 fine silver bars. The basis for this recommendation also is outlined under Another Warning on page 6.

New Investments:

We rank the metals investment potential as follows:

A. Silver
B. Platinum
C. Gold

Although silver holds better upside potential than either gold or platinum, silver’s bulk and weight can present problems. If you can handle silver, it should be your first choice. Industrial demand has exceeded production each of the last ten years and now the production deficit threatens a critical shortage. Only higher prices can bring enough silver to the market to meet future demand. That’s why Warren Buffet bought 130 million ounces.

1. One-ounce .999 fine silver rounds for Y2K purposes. One-hundred ounce .999 fine silver bars for investment purposes. As long as circ 90% coins carry high premiums, 1-oz rounds are the better way to go.

2. Platinum Eagles or Platinum Maple Leafs. Platinum could explode due to the political instability of Russia and South Africa which together produce most of the world’s platinum. Russia is in near chaos. In some parts, criminals have more control than the government. Crime is also rampant in South Africa, and Johannesburg has one of the world’s highest homicide rates. Like silver, platinum is essential to many products we take for granted. By some estimates, platinum is used in the production of 20% of today’s products.

3. Gold Eagles, Maple Leafs, and Australian Nuggets. Although silver has been used more as money than has gold, gold remains the ultimate safety haven in the minds of many people. It is compact, making it easy to store and conceal great wealth. It is universally recognized and can be converted to cash easier than stocks. With gold, you have money under all circumstances. Can you own too much gold? Not at present low prices.

Chose the sizes that fit your needs, then buy the coins with lowest premiums. All have their gold contents stamped on them in English. Avoid the European coins of odd weights which do not even have their gold contents stamped on them. Besides, European coins carry higher premiums than comparable Gold Eagles, Maple Leafs, and Nuggets.

Make Your IRA Golden

There are some good reasons for switching IRA holdings from traditional investments to precious metals. First, the stock market has probably topped. Second, in the wake of the Asian crisis, Europe’s economies have turned sluggish. The U.S. will be next; we will not be an island of prosperity in a worldwide recession. Third, the Federal Reserve has been lowering interest rates and expanding the money supply to head off a worldwide recession. Previously, such “pump priming” has led to rising prices for the metals.

American Church Trust (ACT), Houston, Texas, offers a simple, inexpensive self-directed IRA. ACT is regulated by the Texas Department of Banking and administrates more than 8,000 IRAs. CMi has worked with ACT for nine years and has found its personnel to be informed, professional, and easy to work with. ACT uses Macintosh computers which ACT believes to be fully Y2K compliant.

ACT stores the metals in Republic National Bank of New York’s depository, which is licensed and approved by all the major commodities and futures exchanges. RNB-NY is one of the most profitable and best run banks in the world. CMI is confident that RNB-NY will be Y2K compliant and that metals stored at its depository will be safe into the new millennium.

Establishing an IRA with ACT entails two easy steps: 1. Doing the paperwork. This sets up the account and authorizes the transfer of funds from your present IRA. (You do not have to move all your IRA investments to ACT.) 2. Directing CMI which precious metals to buy. After the metals are delivered to Republic’s depository, ACT pays CMI, completing the investment.

Step #1 requires a check for $125, which pays the first year’s annual fee of $50, the first year’s storage fee of $50, and the initial transaction fee of $25. Thereafter, ACT charges 1/8 of 1% of the IRA’s asset value, with a minimum of $35 and maximum of $150.

Numerous forms of precious metals are approved for IRAs. The most popular are 1-oz Gold Eagles, 1-oz Platinum Eagles, and 100-oz .999 fine silver bars.

Investors wanting to discuss setting up an IRA with ACT should contact CMI at 1-800-528-1380. If after getting your questions answered you want to proceed, we will mail ACT’s forms to you. If you are interested, we urge you to move quickly. Current low precious metals make the metals attractive alternatives to stocks and other paper investments which may be too fragile to withstand the next few years.