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Your Precious Metals "Checking Account"

It is smart to diversify your precious metals into two categories. The first category is your "checking account," which is bullion that hasn't been certified to have any unique numismatic value. This part of your portfolio can be accessed more quickly than your savings account items by selling it for a value linked to the current spot price. The value of this portion of your portfolio will rise and fall with the current market price of the metal, and offers you diversification from your Dollar-based investments.

Your precious metals "checking account" works like an insurance policy. Should the stock market or the Dollar face a crash, the value of your precious metals will increase to help compensate you for your losses in your Dollar-based investments. Because gold and silver have been accepted as having value for thousands of years, this is an "insurance policy" that you can cash out of at any time.

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Your Precious Metals "Savings Account"

Your precious metals "savings account" consists of investment-grade rare coins that have been certified to have numismatic value above and beyond their metal melt value. Because they have value as rare coins, they are not affected by changes in the spot price of gold and silver to the extent that bullion (your precious metals "checking account") is. This offers you further diversification both from the ups and downs of the traditional markets and from the ups and downs of the precious metals markets.

While investment-grade coins are more stable than bullion, they can take longer to liquidate. As a result, they should be considered part of a long-term buy-and-hold strategy.

Contact us now so that we can advise you on which coins are most likely to increase in numismatic value. Don't be taken advantage of by unscrupulous coin dealers. Go with a dealer you can trust -- one with an A+ BBB rating. Call now 800-257-3253.

GOLD:   1243.96  -9.29 

   SILVER:   18.12  -0.1

   PLATINUM:   955.00  +3.00

   PALLADIUM:   802.00  +12.00

Call Now! 800-257-3253

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The Declining Value of the Dollar

The 5th paragraph of Section 8 of Article 1 of the U.S. Constitution provides that the U.S. Congress shall have the power to "coin money" and to "regulate the value" of domestic and foreign coins. Congress exercised those powers when it enacted the Coinage Act of 1792. That Act provided for the minting of the first U.S. dollar and it declared that the U.S. dollar shall have "the value of a Spanish milled dollar as the same is now current".

The table below shows the equivalent amount of goods that, in a particular year, could be purchased with $1. The table shows that from 1774 through 2009 the U.S. dollar has lost about 96.4% of its buying power.

Buying power of $1 compared to 1774 Dollars
 Year  Equivalent buying power  Year  Equivalent buying power  Year  Equivalent buying power
1774  $1.00 1860  $0.97 1950  $0.33
1780  $0.59 1870  $0.62 1960  $0.26
1790  $0.89 1880  $0.79 1970  $0.20
1800  $0.64 1890  $0.89 1980  $0.10
1810  $0.66 1900  $0.96 1990  $0.06
1820  $0.69 1910  $0.85 2000  $0.05
1830  $0.88 1920  $0.39 2007  $0.04
1840  $0.94 1930  $0.47 2008  $0.04
1850  $1.03 1940  $0.56 2009  $0.04

The decline in the value of the U.S. dollar corresponds to price inflation, which is a rise in the general level of prices of goods and services in an economy over a period of time. A consumer price index (CPI) is a measure estimating the average price of consumer goods and services purchased by households. The United States Consumer Price Index, published by the Bureau of Labor Statistics, is a measure estimating the average price of consumer goods and services in the United States. It reflects inflation as experienced by consumers in their day-to-day living expenses. A graph showing the U.S. CPI relative to 1982-1984 and the annual year-over-year change in CPI is shown below.

The value of the U.S. dollar declined significantly during wartime, especially during the American Civil War, World War I, and World War II. The Federal Reserve, which was established in 1913, was designed to furnish an "elastic" currency subject to "substantial changes of quantity over short periods," which differed significantly from previous forms of high-powered money such as gold, national bank notes, and silver coins. Over the very long run, the prior gold standard kept prices stable - for instance, the price level and the value of the U.S. dollar in 1914 was not very different from the price level in the 1880s. The Federal Reserve initially succeeded in maintaining the value of the U.S. dollar and price stability, reversing the inflation caused by the First World War and stabilizing the value of the dollar during the 1920s, before presiding over a 30% deflation in U.S. prices in the 1930s.

Under the Bretton Woods system established after World War II, the value of the U.S. dollar was fixed to $35 per ounce, and the value of the U.S. dollar was thus anchored to the value of gold. Rising government spending in the 1960s, however, led to doubts about the ability of the United States to maintain this convertibility, gold stocks dwindled as banks and international investors began to convert dollars to gold, and as a result the value of the dollar began to decline. Facing an emerging currency crisis and the imminent danger that the United States would no longer be able to redeem dollars for gold, gold convertibility was finally terminated in 1971 by President Nixon, resulting in the "Nixon shock."

The value of the U.S. dollar was therefore no longer anchored to gold, and it fell upon the Federal Reserve to maintain the value of the U.S. currency. The Federal Reserve, however, continued to increase the money supply, resulting in stagflation and a rapidly declining value of the U.S. dollar in the 1970s. This was largely due to the prevailing economic view at the time that inflation and real economic growth were linked (the Phillips curve), and so inflation was regarded as relatively benign. Between 1965 and 1981, the U.S. dollar lost two thirds of its value.

In 1979, President Carter appointed Paul Volcker Chairman of the Federal Reserve. The Federal Reserve tightened the money supply and inflation was substantially lower in the 1980s, and hence the value of the U.S. dollar stabilized.

Over the thirty-year period from 1981 to 2009, the U.S. dollar lost over half its value. This is because the Federal Reserve has targeted not zero inflation, but a low, stable rate of inflation - between 1987 and 1997, the rate of inflation was approximately 3.5%, and between 1997 and 2007 it was approximately 2%. The so-called "Great Moderation" of economic conditions since the 1970s is credited to monetary policy targeting price stability.

There is ongoing debate about whether central banks should target zero inflation (which would mean a constant value for the U.S. dollar over time) or low, stable inflation (which would mean a continuously but slowly declining value of the dollar over time, as is the case now). At this point nearly all the governments of the world are committed to devaluing their currencies at a consistent rate. This allows governments to consistently confiscate purchasing power from its citizens. The value of currencies is measured by comparing currencies with other currencies that are also being devalued, and as a result this devaluation is often not obvious. Putting your assets into assets that hold real value, like precious metals, will protect your portfolio from this devaluation, which is often called "inflation risk."