Hard Money

An in-depth guide to making gold a serious part of your portfolio

Gold, the long forgotten store of value that was once the center of the global financial system, suddenly matters a great deal again. It has become a leading asset by virtue of its strong performance, and its booming demand has made it the only financial asset that remains in an uninterrupted bull market. And yet gold remains one of the least-owned financial assets in investment portfolios today.

Hard Money helps investors move beyond the simple, yet widely accepted notion that gold makes sense in today's financial environment, and explores ways to magnify potential investment returns driven by precious metals. This reliable resource examines the investment vehicles (bullion, stocks, derivatives, and even rare coins) and strategies (aggressive, conservative, passive, and variations) aimed at beating the price of gold as it rises, and ways to protect a portfolio should the metal decline.

• Identifies five key drivers that should continue to push gold higher in the years ahead
• Explores the ins and outs of investing in gold and making this precious metal a part of your portfolio
• Examines the pros and cons of multiple ways to buy gold via coins, ETFs, mining and royalty stocks, and other investment vehicles
• Author Shayne McGuire is a highly-regarded expert on gold

Written in a straightforward and accessible style, Hard Money offers key strategies to enhancing returns with new methods for investing in gold.

Acknowledgments xi

List of Figures and Tables xiii

Introduction The World Doesn’t Have to End for Gold to Go Hyperbolic 1

Part One The Logic of Hard Money in the New Investment World

Chapter 1 Gold Driver 1: The Increasing Likelihood of Fiscal Crises in Major Economies of the World 23

Chapter 2 Gold Driver 2: The Return of Inflation as a Major Investment Risk 31

Chapter 3 Gold Driver 3: The Return of Gold as a Significant Asset in the World’s Largest Investment Funds 43

Chapter 4 Gold Driver 4: The Rise of China 51

Chapter 5 Driver 5: Gold’s Potential Return to Being the Dominant Financial Asset in the Global Monetary System (A Return to Normal) 59

Chapter 6 Gold: How a $10K Gold Is Possible (Taking a Closer Look at Supply and Demand) 67

Chapter 7 Silver: Poor Man’s Gold May Offer the Richest Returns 89

Chapter 8 Platinum and Palladium: Metals as Old as the World, but as New as the Internet, as Investments 101

Part Two Taking Gold to a Higher Investment Level

Chapter 9 Taking Gold to a Higher Level: Creating Your Gold Portfolio 113

Chapter 10 Keeping It Simple with Precious Metals ETFs 147

Chapter 11 Precious Metals Stocks: The Cornerstone of a Gold Portfolio 165

Chapter 12 Physical Gold: The Importance of Wealth You Can Hold in Your Hands 193

Chapter 13 How to Invest in Coins and Bars (Without Getting Ripped Off) 207

Chapter 14 The Most Widely Respected Investment Coins 211

Chapter 15 Rare Coins: An Attractive Market Unreachable to Fund Managers 227

Conclusion Comparing the 1970s Gold Boom with Today’s 245

About the Author 251

Index 253

SHAYNE MCGUIRE manages the $300 million GBI Gold Fund and is the Head of Global Research at Teacher Retirement System of Texas, one of the world’s largest pension funds. With eighteen years of financial experience, McGuire has managed a $2 billion European equity portfolio and was ranked among the best Latin American analysts by Institutional Investor in the late 1990s. An avid gold investor, he has in recent years worked closely with Austin Rare Coins, one of the country’s leading precious metals companies. McGuire graduated from Fordham University and holds a master’s in history and an MBA from the University of Texas at Austin. He lives in Austin, Texas, with his family.

As the global economy continues struggling with financial challenges (deep unemployment, anemic growth, massive government debt, volatile markets) not faced in generations, the logic of holding part of your wealth outside the financial system is compelling. Gold is the only viable and liquid investment vehicle that allows you to do so.

Bulging deficits and national debts—most notably in the United States, Europe, and Japan—will soon force our leaders to take drastic measures. They will have to slash spending and/or raise taxes which could lead to renewed recession and financial instability. This in turn would likely lead central banks, most notably the Federal Reserve, to increase the pace of money printing even further, with the hope of escaping our present dilemma.

Students of financial history know these complex circumstances are raising the odds that we are about to experience a sudden unexpected rise in inflation. The world is not about to end and yet holding gold as an important part of your portfolio makes sense in the present financial environment. In Hard Money, Shayne McGuire describes ways in which investors can take gold investment to a higher level by considering a variety of investment vehicles or by creating a personal diversified gold portfolio. Manager of a gold fund and author of Buy Gold Now, McGuire:

• Outlines five key gold drivers, including the increasing likelihood of fiscal crises in major economies around the world, the return of inflation as a major investment risk, and gold’s potential return as the dominant financial asset in the global monetary system
• Describes ways of constructing a gold portfolio, considering the use of Exchange-Traded Funds, physical gold and gold equities, and the optimal degree of diversification among the four key precious metals
• Demonstrates the importance of wealth you can hold in your hands and investing the old fashioned way (in coins and bars)

Hard Money also details how to invest in physical gold without getting ripped off, and why rare gold coins are an attractive investment option inaccessible to fund managers. Hard Money is not a book about a financial crash, the end of civilization, or storing up food and a mysterious form of wealth for a long, dark financial winter. Rather, it offers an investment strategy to deal with the reality of present financial conditions, conditions that could lead to a dramatic rise in the price of gold.