How the Paperboy Made 1,000% from Gold
By Tom Dyson
Thursday, March 05, 2009
A 16-year old paperboy named Chris Weber from Phoenix, Arizona, had just been dumped by his girlfriend. It was a hot summer that year, and Chris thought he'd stay at home and read books. The first book he read was Harry Browne's How You Can Profit from the Coming Devaluation.
This book was Browne's first book, and it went on to become a national bestseller. (Browne revised it in 2005. Now it's titled 99% of All You Need to Know About Money and Its Effect Upon the Economy. This is an absolutely fantastic book. It's so enjoyable, I read it in three hours and then immediately re-read it.)
"It was a revelation," says Chris. "It is still the best explanation of what money is, and how it develops, that I have ever read. After that, it was 'off to the races...'"
At the time, the world was living in a fixed currency system. The U.S. government had set the gold price at $35 an ounce, and foreign currencies were fixed against the dollar. The U.S., therefore, had the wonderful power to print paper dollars and tell the rest of the world they were redeemable for gold. The problem was, the government started abusing this privilege in the late 1960s, inflating the dollar to pay for Vietnam.
Chris realized the system couldn't last, and sooner or later the country would have to devalue the dollar against gold. So in July 1971, he bicycled down to the local coin dealer and spent $650 – all the money he had saved from his paper route – on British gold sovereign coins. At the time, it was still illegal for Americans to own gold. Collectors' coins were exempt. The coins cost $12 each.
His timing was perfect. By the end of the summer, foreign governments had stopped supporting the dollar and were asking for gold instead. On August 15, 1971, President Nixon closed the "gold window." He cut the link between the U.S. dollar and gold. That December, Nixon devalued the dollar against gold by about 8.5%.
"As the price started going up, I started trading. I still don't know how I did it, but when I thought the price was going up too far, too fast, and had gotten ahead of itself, I sold my coins. I waited until I thought the rise was going again... By the time I finished high school, I was rich," Chris says.
By the end of the decade, gold hit $850 an ounce and Chris' gold sovereigns were over $300 each. When he saw the crowd piling in, he knew the game was up. He dumped his coins and invested the profits in 20% Treasury bonds... an investment he still holds today.
The paper route was the last job Chris had. Chris has since made millions from his investments and spent his life traveling around the world. He thankfully records his thoughts on stocks, currencies, and commodities in his Weber Global Opportunities Report. It's a fantastic letter... and I can't recall a major market move Chris hasn't nailed.
So what's Chris doing with his money right now?
One of my colleagues – Sean Goldsmith –
interviewed Chris last week. In the interview, Chris says investors should have protection against both deflation and inflation and says he recently dumped all his stock investments except a few gold mining stocks. He now holds all his money in gold coins and cash.
"This continues to be a time to be safe and on the sidelines. I believe that the ultimate lows of the stock market are going to be much lower than even today's prices, but it may take years – and months of fake rallies – to get us there."
Good investing,
Tom Dyson
P.S. Whether you agree with him or not, I encourage you to think about what Chris has to say. His interview includes his favorite currency and his long-term targets for gold and silver... and it could make a huge difference in your family's finances over the coming years. The interview is free to readers of The Daily Crux... a service I consider required reading every day. Click here to access the interview. |
|
WHY CLEAN ENERGY DOESN'T MAKE ANY SENSE
It's politically incorrect day at DailyWealth: Clean energy stinks. Avoid it like you would jury duty.
Several months ago, we ran a chart of the clean energy ETF (PBW). This fund is one of the most popular ways to invest in the production of solar, hydro, wind, and geothermal energy. It's also one of the worst-performing assets in the world right now. Shares are down 75% from their 2007 high. Why the stupendous decline?
Despite what the gullible among us think, there's no global conspiracy against clean energy. GM and Ford aren't holding back the development of 100-mpg cars. They aren't that smart. Big Oil isn't part of a sinister cabal that gouges you on fuel.
Clean energy shares are in the toilet because coal and crude oil are the cheapest thing we've got right now. Hollywood liberals and Washington busybodies want to blow a trillion dollars on clean energy. And why not? They don't have to worry about things like managing budgets, working for shareholders, keeping food on the table, or making good on contracts. They think the government should provide "free energy for everyone."
We stand by our analysis from January: When folks are struggling to make mortgage and car payments, penguins and ice caps take a backseat to coal and crude oil. Clean energy shares don't make any sense in a recession. Just ask the market...
 |
|
 |
 |
Copper prices rose to the highest in three months on signs that China will boost government spending, reviving its economy and lifting metal demand.
Premier Wen Jiabao will announce a new stimulus package tomorrow, adding to a 4 trillion yuan ($585 billion) spending plan, former statistics bureau head Li Deshui said. China is the world's biggest metal consumer. Copper prices jumped 5.8 percent yesterday on speculation China's consumption will climb.
"If they're actually boosting the stimulus there, it can help bring demand back up for copper," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
– Bloomberg
Kyle Bass, the hedge-fund manager who made $500 million in 2007 betting on declines on subprime mortgages, said investors need to protect themselves against central banks printing money to cover up their mistakes.
Confidence in government and central bank leadership is plummeting globally, sending investors to buy "old fashioned stores of value" such as precious metals, Bass, managing partner of Dallas-based Hayman Advisors LP, said in a letter to clients.
The "rampant printing of currencies" won't immediately lead to inflation as banks reduce borrowing and asset values decline, Bass, 39, wrote in the March 2 letter, a copy of which was obtained by Bloomberg News. "The greater concern is the potential inflationary time bomb that grows as governments continue to borrow, print" and stimulate economies.
– Bloomberg
|
 |
|
|
|
