A wave of unprecedented government growth and spending has descended on America.

 

The Obama administration is unleashing a wave of new government programs and expenditures which will result in government intrusions into our financial and personal lives and unimaginable debt inflicted on our children.

 

Barack Obama inflicted this socialistic agenda on the American people in the name of “fixing” our economy, while cynically taking advantage of a political crisis which had been spun off by a frightening financial crisis.

 

As Obama’s adviser Rahm Emanuel said clearly: “You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before.”

 

Well, government is indeed doing things it has never done before. And, as a result, our massive federal debt is slated to grow faster—by far—than it ever has before.

 

The stage is now set for an even more dramatic economic and political crisis. We face many problems today and the problems that we face will likely grow more intense due to Obama’s policies. The full effects of Obamanomics are eventually going to hit America like a laser-guided bomb—at a time when our already weakened economy, stagnant job market, crippled banking system and once again rising energy costs will make the dollar even weaker.

 

The result will be declining paper investments and a rush to hard assets.

 

The stock market is a shadow of its former self, the real estate market has undergone generational collapse.

 

To make matters worse, banks are failing in record numbers with many others teetering on the brink, but the FDIC will be hard-pressed to control the continued fallout of the subprime mortgage crisis and real estate collapse as more waves of foreclosures are forecast in the months ahead.

 

In response to the economic and financial crisis, the new Obama administration has basically decided that big spending, easy money policies are the solution to our problems. Unfortunately, we will all pay a dear price, and so will our children.

 

But investors can still move quickly and decisively to safeguard their wealth by diversifying into gold investments, which can actually benefit from high inflation and economic and political crisis.

 

 

At the outset of 2009, on top of the $800 billion TARP bailout of the banks and other financial institutions (including AIG), the federal government set new speed and magnitude records for spending and running up the debt by allocating another $800 billion in what was called a “stimulus” package, but what really amounted to a huge spending bill accompanied by the expansion of the role of government in our daily lives and the inevitable erosion of personal freedom that always accompanies such things.

 

To add insult to injury, the $1.6 trillion in new spending that has been ushered out over a 6 month period are over and above the regular federal government budget, which is obscenely large and growing as well. A case in point would be the pork-laden $400 billion omnibus spending bill which sailed through Congress to President Obama’s desk after only mild and pointless grandstanding by most of our elected representatives entrenched in Washington, D.C.

 

In less than 6 months time, we added over $2 trillion to the already gargantuan federal debt. The national debt now stands at more than $11 trillion—and that does not take into account the shortfall in Social Security, which, through an accounting trick that only the federal government could come up with, is treated as a completely separate item, as if the taxpayers aren’t on the hook for it!

 

Obama’s budget for 2010 came in at a staggering $3.68 trillion, with a $1.6 trillion deficit to pile on top of that $11 trillion debt which, by the way, is growing at over $3 billion per day!

 

The 2010 budget was $700 billion more than the 2009 budget—which is an increase of 24%. Never in the history of the United States has government spending increased from one year to the next by such a large percentage, not even during wartime.

 

In other words, the deficit is now 43% of the federal budget itself and amounts to the equivalent of 11.2% of the entire US economy. Both of these figures are at all-time highs. Not even at the height of World War II did the US government spend us into debt at such a rapid and horrible pace.

 

Most frighteningly, the Congressional Budget Office expects the deficits from 2010 to 2019 to total more than $7 trillion. There is nothing but red ink in sight. Today the national debt is equal to 54% of the US economy, but by the time Obama is through with us, it could go as high as 68%.

 

As if all this was not enough, none of these figures take into account the possible costs of “Obamacare,” President Obama’s huge, socialized medicine program. Should Obamacare pass Congress, the Congressional Budget Office believes that it will result in another $1 trillion in government spending--$1 trillion that we simply do not have, at a time when our economy is severely depressed and Americans cannot afford to pay higher taxes.

 

This is simply unsustainable and investors better move to protect themselves now before it is too late.

 

 

Whether or not all this spending will jumpstart the US economy is debatable, but the inevitable outcome of these fiscal policies will be a sharp devaluation of the dollar as the world becomes awash in greenbacks. (When you greatly increase the supply of something, its value tends to fall.) This will manifest itself in the form of inflation, perhaps even hyperinflation, such as that experienced in Latin America in the 1970s.

 

Keep in mind that this inflation will arrive on the scene at a time when the US unemployment rate is pushing 10% and is still growing.

 

There is a word for a combination of high inflation and high unemployment: stagflation. We last saw it from 1974-75, when the Dow fell 45% and the price of gold set new records.

 

Unfortunately, today’s conditions are on an order of magnitude so much worse that some observers are tossing aside the term stagflation as inadequate and replacing it with depressflation.

 

 

To go with the spendthrift fiscal policies, the Federal Reserve continues to try to print dollars and spark economic activity through easy money—policies which can only serve to further undermine the dollar and sew the seeds of future high inflation.

 

A vicious cycle is now at hand. The Fed is working at inflating the US economy with easy money, which serves to undermine the value of the dollar, which results in less demand for the dollar, which sends the value lower still…

 

The cycle described above is one of the things that has stocks and bonds spooked. Historically, high inflation has been terrible for the bond market and some of the roughest years in the stock market came as a result of high inflation as well.

 

Therefore, in the current and future economic environment, stocks and bonds are not particularly attractive.

 

In the past, investors have been able to turn to real estate as a reliable hedge against high inflation.

 

Not any more; the US real estate market continues to struggle and most experts reckon that the last impact of the subprime mortgage debacle has yet to be felt.

 

But most ominous is the fact that the Fed and Wall Street keep getting blindsided by bad news.

 

So, we have a combination of unprecedented uncertainty and an unprecedented crisis ongoing in the dollar, which will eventually loose the ravages of inflation on the US economy.

 

Inflation has been described as being like toothpaste. It can be difficult to start, but once it gets out, it’s awful hard to put back in the tube! No wonder that the last serious bout of high inflation lasted from 1973 to 1981, a full 8 years.

 

We are in the very beginning stages of a new inflationary spiral, which hasn’t even been felt yet. We could have years left before it comes under control.

 

 

There is really only one way to protect your hard-earned wealth in such a scenario and that is to buy and own gold—and hold on to that gold for dear life.

 

For more than 5,000 years, the value of gold has endured all over the world—through feast and famine, war and peace, boom and bust—in a way paper investments never could. As a medium of exchange gold has provided a standard of value that has lasted through centuries of trade. In tomorrow’s uncertain economic environment, gold will be more important than ever to your investment portfolio because it is an asset which does not depend upon anyone’s promise to repay. Quite simply, gold is money. In fact, it is more trusted around the world than any other currency.

 

Gold should serve as your strong financial foundation because it has historically moved in the opposite direction of stocks and bonds. Therefore it is a vital asset to hold in conjunction with paper investments in order to reduce risk and volatility.

 

 

 

 

The following are some of the investment implications of rising inflation:

 

• Inflation erodes the buying power of money. As a result, it hurts savers and rewards borrowers. People living on pensions and fixed annuities are badly hurt by inflation.

 

• Inflation encourages people to borrow money and buy things, since their dollars will be worth less tomorrow but their things will be worth more. This increase in demand for things tends to perpetuate the inflationary cycle.

 

• Rising inflation pushes up interest rates, simply because investors require higher rates to compensate for the loss of purchasing power. As a result, inflation drives money out of long-term bonds and into shorter-term investments that bear high rates of interest. Bonds fall.

 

• Stocks are also hurt by inflation. Higher interest rates and higher wages hurt corporate profits.

 

• Because inflation is eating away at the value of their savings and because investments in stocks and bonds are declining, people begin to place a larger percentage of their investments in hard assets—rare coins and precious metals. The increase in demand drives prices higher, which serves to then increase investment demand even more.

 

Rare coins may actually be the perfect inflation hedge. Although most investors should own some gold, gold may not be the best inflation hedge in the years to come, as well shall see shortly.

 

Many prudent investors hold gold bullion for insurance or security purposes—a sort of hedge against crisis, inflation or uncertainty. Gold has served in this role for thousands of years, but laws created by governments that have grown too big put this role in doubt today. Therefore investors need a better hedge.

Leading financial institutions collapsing.

 

The value of the dollar in a freefall.

 

Gold prices soaring.

 

These are some of the circumstances that led to the gold confiscation of 1933.

 

If they sound familiar to you today, then you’re not alone.

The U.S. has had bans against or financial disincentives for the private ownership of gold in the past. This is one reason why the U.S. government has reporting requirements for bullion transactions.

 

America has actually seen four different gold confiscations, the last of which occurred during the Great Depression in 1933. From 1933 until 1974, U.S. citizens could not legally own gold. However, what few people realize is that, when the freedom to own gold was restored in 1974, a provision of the Federal Reserve Act was retained which permitted the Secretary of the Treasury to require individuals to surrender their gold. This action would most likely be started by an Executive Order from the president. Nothing in the legislation that ended the forty-year ban changed the fact that Congress continued to treat the private ownership of gold as a privilege to be enjoyed at its discretion, and not a right.

 

 

In 1933, in an attempt to control the monetary and banking crisis associated with the Great Depression, President Franklin D. Roosevelt, with Executive Order No. 6102, confiscated all privately owned gold in the United States.

 

The President’s gold confiscation order specifically exempted “gold coins having a recognized special value to collectors of rare and unusual coins.”

 

Could gold confiscation happen again? It is too soon to tell, but many things that no one in the investment world thought would happen have already happened in the last year. Storied names like Bear Stearns, which survived the Great Depression, have disappeared. The federal government has pumped hundreds of billions of dollars into the banking system which amounts to a de facto nationalization of some banks and other financial institutions.

         

In many ways, today’s economic climate and financial crisis are comparable to those of 1933.

 

Gold confiscation was done in the name of stabilizing America’s monetary system. Today, if it becomes necessary for the U.S. to bolster a collapsing dollar with gold, the Treasury no longer has enough gold to accomplish the task.

 

When Franklin Delano Roosevelt was inaugurated as the 32^nd president of the United States, America was already mired deeply in The Great Depression. Frightened Americans had been hoarding gold and shunning greenbacks, which reduced the Federal Reserve's gold stocks to near the legal minimum, touching off more worries of an even worse financial collapse.

 

America was on the gold standard, which established fixed exchange rates between different currencies and gold and made gold an internationally accepted substitute currency. The gold standard vanished forever in the tumultuous and unprecedented power-plays at the outset of the Roosevelt administration.

 

On March 6 of 1933, Roosevelt started a process that finished the gold standard for all time. First, using emergency powers created by the Trading with the Enemy Act of World War I he ordered all banks closed for a “holiday” and prohibited them from paying out or exporting gold coins and bullion,. When it was pointed out that there was no legal basis for either the executive or the legislative branch of government to close privately owned banks, Roosevelt prepared legislation to rubber stamp what had already been done.

 

Three days later, Roosevelt’s floor leaders in Congress introduced and passed the Emergency Banking Relief Act, which sought to amend the Trading with the Enemy Act and particularly those provisions which authorized the President in times of war to "investigate, regulate, or prohibit... the importing, exporting, hoarding, melting or earmarking of gold... " The change made by the Emergency Banking Act was to provide the President with authority to act "during any other period of national emergency declared by the President," thus expanding his authority beyond the limitation of actual war. The Act also vested the Secretary of the Treasury with the discretion to compel holders of gold to surrender it.

 

The very next day, acting under the authority of the Emergency Banking Relief Act, President Roosevelt issued Executive Order No. 6073. In addition to authorizing the Secretary of the Treasury to decide which of the nations' banks could open, the Order prohibited owners of gold from exporting or otherwise removing it from the United States. Shortly thereafter, also under the authority of the Emergency Banking Act, the President issued Executive Order No. 6102, which provided that all privately owned gold in the United States was to be confiscated by the government. As compensation, the owners would receive paper money.

         

When gold bullion was confiscated, the government compensated individuals with paper currency at the then official gold price. Rare coins (described as "gold coins having a recognized special value to collectors of rare and unusual coins") were exempt from government confiscation provisions, not due to any love of coin collectors, but because determining appropriate compensation, coin-by-coin, collector-by-collector, would have been an administrative nightmare and logistical impossibility.

 

Twelve words provided the defensive blockade for coin owners: "nor shall private property be taken for public use, without just compensation." Since the confiscation of rare gold coins would be taking private property, just compensation would have to be paid.

 

When gold was confiscated, the Treasury had no trouble declaring that payment in paper currency at the official gold price was just compensation. What had happened was debatably a swap of components of the monetary system, i.e. gold for dollars. But just compensation for rare gold coins –clearly not part of any monetary system – would have been a very dissimilar condition.

 

Should the current financial crisis worsen or go on for an extended period of time, more measures taken by the government would probably include exchange controls and some form of regulation of the ownership and sale of gold. People who scoff at that suggestion should remember that, as recently as the 1970s it was illegal to own gold and transactions in foreign currencies and securities were discouraged by the imposition of an 11.5% “interest equalization tax.” And back in 1962, President John F. Kennedy closed a loophole enjoyed by wealthy Americans when he prohibited American citizens from owning gold bullion overseas and required those who already owned gold held overseas to sell it.

 

 

That’s why, in times of crisis, such as hyperinflation or depression, it would be far better to own numismatic gold—that is rare gold coins—than gold bullion. The relevant laws exempt from confiscation provisions any gold owned in the form of “numismatic coins,” defined as “gold coins having a recognized special value to collectors of rare and unusual coins, including all gold coins made prior to April 5, 1933.”

 

With the current administration and Congress and just about every other branch, department and agency of government growing rapidly, there will inevitably be increased government intrusion into your financial affairs. If conditions ever become bad enough for your gold to perform its ultimate security function, would your gold still be yours?

 

Although private ownership of gold in America was legalized in 1974, the authority to confiscate gold remains with the President. The President still retains the power, under the Emergency Banking Relief Act, to "investigate, regulate or prohibit... the importing, exporting, hoarding, melting or earmarking of gold" in times of a declared national emergency. It is extremely doubtful that either the judicial branch or Congress could effectively argue that gold confiscation authority is not inherent in the Emergency Banking Relief Act if a financial crisis or other national emergency pressed the President to nationalize all privately held gold.

 

 

 

 

The eventual result of the series of unprecedented government bailouts, huge spending “stimulus” packages and already runaway government budgets will be inflationary and will further weaken the dollar. The flip side to a weak dollar is a rising gold price. All other things being equal, gold will continue to climb higher as the dollar moves lower. Today, just as in 1973 when gold began its last, big bull market, gold and the dollar are competitors, riding opposite ends of an economic seesaw.

 

The economic and financial crisis that could send inflation out of control and make your gold extremely valuable will also result in the circumstances in which America could return to a gold standard, which would require that central banks enlarge their stocks of gold.

 

Rare coins also offer a number of advantages, in addition to protection from gold confiscation, including aesthetic appeal and a history of handsome investment returns.

 

The time to act is now--before, not after, a crisis is thrust upon us. The political process has been tumultuous lately and governments pushed to the brink often ignore the constitutional niceties. In any event, if you wait until a financial, economic or national security crisis is underway and emergency measures start to be taken, it may be too late.

 

What should you do? Put some of your savings in the ultimate crisis hedge – rare gold coins.

Rare coins have a history of providing handsome returns for collectors and investors alike. This has been proven by an authoritative study conducted by Dr. Raymond Lombra of the economics department at Penn State.

 

In his study, Professor Lombra examined the performance of various investments, including gold bullion and rare coins, over a quarter century, ending in 2007. Here are some of the conclusions in the study:

 

         

         

         

         

 

 

 

 

Do rare coins belong in every tangible asset portfolio? The answer is yes.

 

Rare coins should be a part of your long-term financial plan because they have historically increased in value, providing handsome long-term returns, and because they add a unique dimension of protection to your wealth.

 

Knowing the differences between rare coins and gold can help you protect your wealth and increase your opportunity for profit.

 

Now is the time to begin building and diversifying your tangible asset portfolio. If you already have extensive gold and silver holdings, you can quickly and privately convert a portion of your bullion to rare coins. We urge you to begin today.