GOLD _ SILVER by wuxiangyu


									    11 ive
 20 us
   cl ANNUAL
                                                                                                COIN MARKET ADVISORY | SPRING 2011

              GOLD & SILVER                                                                      REPORT
               BULL MARKET
     A year ago I predicted gold would reach $1,500 an ounce in           A good solid correction will clean out the weak money and
2010. At the time, gold was hovering around the $1,080 mark,         leave a strong base for the next leg up. The correction could
so I expected about a $400 per ounce gain during the year.           last through the first quarter of this year, then we should
     Gold came tantalizingly close to my forecast, setting new       see a more orderly, sensible climb to new highs as the year
price records throughout the year and topping out at an intraday     progresses. The odds – and technical indicators – favor the
all-time high of $1,431.30 in early December before settling         long term trend that has been in place for ten years and shows
to a year-end close of $1,421.60. Even though gold didn’t ring       no signs of weakening in the intermediate to long term. The
the $1,500 bell, it sure made it hum.                                pullbacks should be temporary and short (great opportunities
     Peering deep into 2011, I see further increases for gold        to grow your gold portfolio).
this year, though at a slightly more deliberate pace and not              Of course, the gold-bashers and perma-bears will trumpet
without pitfalls along the way. I expect gold to reach at least      the correction as the end of the gold bull market. You’ll see
$1,600 an ounce in 2011. That’s about a $180 gain per ounce          headlines like these at times in the Wall Street Journal [WSJ]
for the year.                                                        proclaiming “Gold Continues to Lose Luster” or “From China,
     However, numerous indicators strongly hint that gold            Signs That Gold's Rally Isn't Endless.” The gloomy tone of these
prices could soar well beyond $1,600, depending on how a             ominous-sounding commentaries could make the uninformed
number of variables fall into place.                                 investor nervous about holding onto gold. But, you’ll also see
     Without question there will be ups and downs. It’s never a      more balanced headlines there like “The Power of Gold: The
straight line. Along with the exciting bull rallies will come        Risk and Rewards.” This WSJ Smart Money article quotes me
gut-turning corrections at times. The year has begun with sharp      and is very balanced.
pullbacks in gold (silver, too). This should be no surprise nor           And you’ll likely see comments from fair-weather gold
should it be cause for alarm. And it almost certainly won’t be the   buyers like Dennis Gartman, a hedge-fund manager and author
only time this year when heart-in-the-throat dives in the gold       of the Gartman Letter. Gartman says he has sold two-thirds of
market take place. Gold investors need to keep the long view in      his gold holdings over the past few weeks because it wasn’t
mind to keep from getting whipsawed into selling low and buying      making new highs and he thought the gold market was too
high. Hang onto your core holdings and ride the waves.               crowded. “Everywhere you went, everyone you knew was
     In the last half of 2010, gold raced through a relentless       aggressive long,” he said. “That's a bad sign, because that
surge to successive record highs in the last quarter, gaining        means everybody has already bought.”
30% for the year. A healthy pullback was inevitable and should            No, not everybody. Only the market insiders and traders
be welcomed. There was too much speculative froth in the gold        like Gartman. The institutional and public retail investor has, for
market, and if it had continued, the gold market would eventually    the most part, not discovered gold yet.
have collapsed under the weight of its own enthusiasm.
                                                                                                                         By Mike Fuljenz

   Visit our free weekly Metals Market Report online: f irstf
       Despite the occasional corrections, the long term bullish          with – nanny-state cradle-to-grave social welfare spending.
  trend line has not been violated and shows every indication of          The Europeans have long been smug about their vaunted social
  remaining intact through 2011 and well into 2012. It has actually       safety net, but now the real cost of the socialist ideal is coming
  been turning dramatically higher but hasn’t gone hyperbolic yet.        clear. As Margaret Thatcher once observed, “The trouble with
   That will be the time to get out of gold because it will indicate      socialism is that eventually you run out
  that the mania has started and the end of the long gold bull            of other people's money.”
  market is near. That’s still a good ways off.                                “The European crisis
       One thing I can predict with virtual certainty is that after the   is most likely to heat up
  first quarter you can expect the return of recurring headlines          again several times more If some of the world’s
  later in the year proclaiming “a new record high for gold.” That        before it comes to some            major currencies
  sounds great, and it helps stir up interest among mainstream            kind of conclusion,”
  public investors who may not be all that familiar with gold. Just       says Filip Petersson, a
                                                                                                           collapse, the money
  keep in mind that what they’re talking about is a nominal new           commodity analyst at             that most can trust
  record high in dollar terms. In inflation-adjusted terms, though,       Swedish bank SEB.                      will be gold.
  gold won’t reach a real-money record high until it gets to
  $2,250 in today’s dollars. That’s how much it will have to cost         BULLISH REASON #3:
  to equal the value of gold’s high of $850 in 1980 dollars.
       But what about all that talk you hear about a “gold bubble”
                                                                          DOLLAR DEVALUATION
  that’s about to pop? Not going to happen, period. Why?                       It is doubtful if Washington has either the ability or the
  The facts say otherwise. I’ll give you a dozen reasons why              intention of paying back what the U.S. owes our creditors.
  the bull market for gold (and for that matter, silver and most          Democrat or Republican, it doesn’t matter who’s in charge – the
  all commodities) will continue to flourish in 2011…                     debt is nearly impossible to repay. It is simply more massive
                                                                          than we have the means to pay or possibly ever will have. But
  BULLISH REASON #1:                                                      Washington won’t default on the debt as many other countries
                                                                          commonly do when they drown in red ink.
  UNPAYABLE U.S. DEBT                                                          No, Uncle Sam will instead shrink the dollar, which will
       The U.S. national debt has swelled to almost $14 trillion, a       therefore shrivel the debt. Washington nags China to boost the
  figure that numbs the brain for most of us. The debt is growing         value of the yuan, which is just another way of saying “We need
  at the rate of $1.4 trillion a year – 10% annually. At that pace,       to debase the dollar.” It’s all part of the “race to the bottom”
  the national debt will double before this decade ends.                  that infects most major fiat currencies these days…a limbo
       As it stands now, if we incurred not another penny of debt         game of how low can you go to get lower than somebody else’s
  and just paid off what we owe right now, this minute, at the            currency bar.
  rate of $1,000,000 a day – that’s a million dollars a day – it               And because there’s no accountability for monetary policy
  would take 38,356 years to pay off the U.S. debt!                       – like a gold standard – the Capitol men can simply keep printing
       When the world can’t trust the U.S. government to pay              lots more dollars out of thin air and pay back the debt with
  its debts fairly, then what can investors trust in? For 5,000           cheaper dollars. But the Washington insiders Bernanke and
  years, people have been trusting gold over governments at               Geithner get away with it because many in Congress, the
  different times.                                                        President, and the Supreme Court seem to look the other way.
                                                                               Your cash is losing value even while you’re reading this. It
  BULLISH REASON #2:                                                      will lose much more.
  EUROPEAN SOVEREIGN DEBT CRISIS                                               As cash shrinks in purchasing power, gold gains muscle. Gold
       The sovereign debt crisis in Europe refuses to go away. No         most often rises as the dollar falls…and falls…and falls. Gold is
  sooner had the furor over Greece sort of died down than Ireland         the ultimate store of wealth when paper currencies cave in.
  tripped over its Blarney Stone. And before that crisis was calmed
  down, worries about Portugal and Spain percolated to a simmer.          BULLISH REASON #4:
  Italy is in none to sturdy a shape, either, though it hasn’t slipped    INFLATION/HYPERINFLATION
  into crisis mode…yet. France looks shaky, too.                              The increase in the headline CPI remains tame at 1.1%,
       The hard reality is that the European Union has finite             so the Labor Department tells us. And if you believe that,
  resources and simply can’t keep bailing every weak-sister               best avoid realtors offering great deals on beachfront property
  spendthrift country that can’t manage its finances. And throwing        in Kansas. The Consumer Price Index is one of the biggest
  money at the problem doesn’t cure what causes it to begin               inaccuracies perpetrated by the government, manipulated and
                                                                          massaged to minimize reported inflation.
2 | • 1-800-336-1630
                                   Why cook the books? Maybe because of all those Cost            BULLISH REASON #5:
                              of Living Adjustments (COLAs) for social benefit (like Social       BOOMING CHINA-INDIA-ASIA
                              Security) and entitlement programs that are tied to the CPI.
                                                                                                       Keep in mind that most of the financial media reports you
                              If inflation goes up, the government has to pay out more in
                                                                                                  read or see on TV deal almost exclusively about what’s happening
                              cost-of-living raises.
                                                                                                  in the U.S. But the U.S. is no longer the center of the financial
                                   The CPI is also heavily weighted toward real estate, and
                                                                                                  universe. If you really want to know what to expect from gold,
                              home prices continue to plunge, according to the most recent
                                                                                                  forget about what’s going on in the U.S...Asia is what counts
                              Standard & Poor’s Case-Shiller report showing home prices
                                                                                                  where gold is concerned.
                              down 28.6% from the July 2006 peak. That artificially de-
                                                                                                       Asians are buying gold in record numbers, especially
                              presses the CPI even as most commodity-based products
                                                                                                  as the price softens. If it weren’t for eager gold buyers in
                              are seeing increases.
                                                                                                  China, India, and the rest of Asia, the gold market might
                                   According to John Williams’ Shadow Government Statistics,
                                                                                                  well fall on hard times now, but they provide a solid floor
                              actual inflation is running close to 7% annually, more than
                                                                                                  of support that largely offsets the risk-chasing American
                              six times what the government is reporting or using for cost
                                                                                                  gamblers who have been switching from the safety of gold
                              of living adjustments.
                                                                                                                      for the stock market crapshoot.
                                                                                                                         China is the world’s biggest gold producer
                                                                                                                      and still can’t dig up enough of the yellow
                                                                                                                      stuff to satisfy demand. China and India
                                                                                                                      jockey neck and neck for the title of biggest
                                                                                                                      importer and consumer of gold. Other Asian
Source: Shadow Government Statistics

                                                                                                                      countries are just as enthusiastic about
                                                                                                                      gold as are China and India; just not on the
                                                                                                                      humongous scale of their giant neighbors.
                                                                                                                           Soaring commodity prices and rapidly
                                                                                                                      rising labor costs have driven up Chinese
                                                                                                                      production costs dramatically in the last
                                                                                                                      year, generating an unwanted problem they
                                                                                                                      hadn’t had to deal with before – inflation.
                                   The flood of money supply already spewing out of the
                                                                                                  Beijing has raised interest rates twice in just a couple of
                              Fed and the likelihood of chronic quantitative easing for the
                                                                                                  months to try to put the brakes on inflation, but now concede
                              foreseeable future virtually guarantees serious inflation ahead
                                                                                                  they will have to raise their target inflation rate to 4% for 2011,
                              and very possible hyperinflation.
                                                                                                  up from 3% for 2010. The Chinese CPI for November ran more
                                   Then there’s inflation imported from China. Not so long
                                                                                                  than 5% higher than a year earlier.
                              ago, China exported deflation with its cheap goods that became
                              a staple on the shelves of many U.S. retailers.
                              Now China’s success has caught up with it in the                                THE REAL COST OF LIVING
                              form of escalating inflation in commodity prices
                                                                                          Year-Over-Year Change ( October 2010) Year-Over-Year Change ( August 2010)
                              that drives up the price of its goods. U.S. retailers
                              Wal-Mart, Gap, and J.C. Penney have warned that 80%
                              they expect Chinese clothing goods to cost 30% 70%
                              more because of zooming cotton prices.                 60%
                                   Cotton isn’t the only commodity setting 50%
                              record highs. The real cost of living is embed-
                              ded in the soaring prices for raw materials and
                              energy necessary to make goods. Through the 30%
                              ages, gold has been the traditional favorite 20%
                              hedge against inflation.                               10%
  “Inflation is like fuel

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     on gold’s fire.”                                                                                                                          Source: Casey Research

                                                                                                                                   First Fidelity Reserve | 3
       So the Chinese people are buying gold to protect themselves           Economists at the Dubai International Financial Center
  from inflation…and the government is officially encouraging           Authority (DIFCA) have urged Gulf States banks to boost their
  them to do so! Beijing has been vigorously promoting private          gold reserves to protect their huge dollar assets from global
  ownership of gold and introducing programs to make it easy for        currency turbulence. The Persian Gulf Cooperation Council
  citizens to stock up on the yellow metal.                             includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and
       “Gold's perceived property as an inflation hedge is making       the United Arab Emirates. “When you have a great deal of
  the metal an attractive investment in the country, particularly as    economic uncertainty, going into paper assets, whatever they
  the other popular inflation hedge, property investment, has           may be - stocks, bonds, other types of equity - is not attractive,”
  already achieved stellar price increases in the past two years,”      said Dr. Nasser Saidi, the chief economist of DIFCA. “That
  says BNP Paribas precious-metals analyst Anne-Laure Tremblay.         makes gold more attractive.”
       “Everybody in the gold market knew there was a surge in                “What we’re seeing now is emerging-market central
  investment demand, but they didn’t know it was China,” said           banks stepping in as new buyers of gold for the first time, while
  Jeff Christian, managing director at CPM Group.                       developed-market central banks have stopped selling,” said
        “The big picture is that China is continuing to relax the rules Jorge Beristain, Deutsche Bank Securities analyst.. “So we’re
  governing the domestic gold market,” said Martin Murenbeeld,          seeing central banks going from a net supply position to a net
  chief economist of DundeeWealth. “What we are seeing is the           demand position, and that could be termed as additional
  latent demand that has been there all the time and now can be         investment demand as well, and one of a more long-term nature.”
  exercised in the market because now the market is freed.”             Beristain notes that China, Brazil, and Russia each hold less
       China figures prominently in gold demand in another major        than 10% of their assets in gold, compared to two-thirds by
  way: central bank purchases. China is the world’s biggest holder      central banks in developed markets. As these markets develop,
  of U.S. debt. Concerned about the decline of the dollar’s value (and  gold demand is predicted to increase further.
  thus the value of their reserve holdings), the Chinese have quietly        “As emerging market countries become wealthier both from
  been diversifying into other                                              a balance of trade and simply continuing to maintain a
  financial assets, includ-                                                     relative similar percentage of gold, that could be a driver
  ing gold. They’ve been              If you really want to know                for increased gold demand,” Beristain said.“But additionally,
  very discreet in their gold     what to expect from gold, forget              we think that these central banks are re-evaluating how
  purchases, knowing that about what’s going on in the U.S... much gold they want to hold as a percentage of their
  word of huge Chinese                Asia is what counts where                 overall assets, which could be a further driver.”
  buying would send gold                    gold is concerned.
  prices into the strato-                                                       BULLISH REASON #7:
  sphere. They have to do it                                              SWELLING GOLD ETFS
  slowly and silently. Even subtly, though,
                                                                             The introduction of gold exchange-traded funds (ETFs) in
  it takes gold off the market table and reduces supply, which
                                                                        recent years opened up the yellow metal to a whole new audience
  maintains a steady support for gold markets.
                                                                        of investors who either didn’t know how to buy physical gold or
                                                                        weren’t interested. ETFs made it easy for investors to participate
                                                                        in gold with a point-and-click on the computer. The popularity
  CENTRAL BANK BUYING                                                   of ETFs has been a driving force pushing up physical gold prices.
       Central banks, which in recent decades had been selling          Shares in ETFs represent fractional ownership in actual gold
  off gold reserves to buy dollars, now have reversed course,           purchased by the fund and stored in a vault (though questions
  trading dollars in for gold and becoming net buyers of the once       have been raised about whether there’s actually as much gold
  scorned metal. China, India, Saudi Arabia, Russia have been           in the vaults as the shares represent). As more shares are
  the largest central bank gold buyers this year. They haven’t          bought, more gold has to be bought and stored to back it up. As
  stopped buying gold because of the latest correction, nor are         enthusiasm for gold ETFs continues to rise, more gold supply is
  they panicking and selling gold from their vaults.                    taken off the market to be put into the fund vaults.
       While China has been subtle about its gold acquisitions,              Sure there have been some outflows from the ETFs in the
  the Russians have been blatantly demonstrative about converting       early part of this year as the correction unfolds. There may
  its reserve dollars to gold. Prime Minister Vladimir Putin            even be more over the next month or so. Yet the largest gold
  loathes the U.S. dollar and wants the world to know it in no          ETF, SPDR Gold Trust (GLD) is still the sixth largest holder of
  uncertain terms. The Russian central bank has very publicly           gold in the world, bigger than all but five central banks and the
  been buying hundreds of thousands of gold ounces every                IMF. The popularity of gold ETFs should continue to explode as
  month over the past year.                                             gold prices erupt upwards.

4 | • 1-800-336-1630
   BULLISH REASON #8:                                                        BULLISH REASON #10:
   THE END OF PRODUCER HEDGING                                               FLAT PRODUCTION
        During the two decades when gold was in the doghouse,                     At a time when gold demand is soaring, supply isn’t keeping
   producer hedging was the bane of gold bugs worldwide.                     up. South African production has been in decline, and global
   Producers would sell their supply forward to lock in prices they          production remains essentially flat. Quality of ore mined
   hoped would be better than in the future as gold values                   continues to decline.
   dropped week by week. Gold bugs claimed hedging artificially                   Investment manager and natural resources guru Rick Rule
   kept a lid on prices by upsetting the supply/demand balance.              says the easy gold has been found. Any new gold fields will be
        With gold prices relentlessly climbing year after year,              harder to find and more expensive to mine.
   producer hedging in gold is now essentially a thing of the past.               Even if and when a promising big new gold discovery comes
   More than a year ago, Newmont Mining unwound its entire                   along, it would be nearly ten years before it would contribute any
   hedge book and was followed soon after by Barrick Gold, long              new supply to the market, and the way demand has been soaring,
   known as the largest of the producer hedgers. Last year,                  it would more than offset the new source of supply by then.
   AngloGold Ashanti, the last of the big hedgers, closed out its                 But finding a huge new gold field is a mighty big if. Real-
   hedge book, paying a hefty premium to get out from under its              istically, the more likely case is that global gold production will
   futures contracts. Now there are no major gold producers with             stay flat for a while longer and then begin to decline.
   active hedge books.                                                            Growing demand and no growth in supply points to higher
        The only remaining hedgers are smaller producers who                 gold prices.
   mostly retain the practice as required as a condition of loans
   from bankers who want to have some security locked in for                 BULLISH REASON #11:
   their collateral.                                                         COMMODITY SUPER-CYCLE
                                                                                 Mary Anne and Pamela Aden, co-editors of The Aden
                                                                             Forecast, pioneered technical analysis applied to precious metals
   EMERGING MAINSTREAM INTEREST                                              and natural resources. They continue to declare that even as
        Public investors – that is, the mom-and-pop players –                gold sets new record highs, it is historically a bargain within
   haven’t as yet discovered gold in large numbers, though a few             what they call the “commodity super-cycle.”
   are beginning to get the word. Institutional buyers have been                 Looking past the day-to-day seesaw price gyrations, the
   dabbling in gold but not charging into it full bore, except for           Adens look at long term cycles for gold, silver, and other metals.
   some aggressive hedge funds and a few forward-thinking                    According to their interpretation of the charts, the commodity
   institutional buyers like the huge Teacher Retirement System              super-cycle is still in the early stage of a bull market that has
   of Texas. When public buyers and institutions catch on to gold            a number of years left to run.
   in a big way, get ready for a wild ride.                                      The same basic story goes for most all other commodities
        However, it’s not likely to happen this year. There’s plenty         as well – oil, copper, coal, cotton, and all that other stuff that
   of room and time for mainstream investors to come on board.               China, India, and the rest of the emerging nations need to
    The smart money is saying gold will see markedly higher                  modernize their economies and infrastructure.
   prices in 2011. A poll by Wall Street Journal revealed that
   nearly 85% of respondents expect gold to top $1,500 in 2011,              BULLISH REASON #12:
   and a whopping 41% believe gold will soar higher than $2,000              GLOBAL CATASTROPHE AND UNREST
   during the year! Only about 15% of the voters in the poll think               The potential for a global catastrophe and unrest hangs
   gold has topped out.                                                      always near and can happen at any time. There’s no shortage
                                                                    41%      of catastrophes lying around to trip over. They are by nature
                                                                1758 votes   unpredictable and maddeningly difficult or even impossible to
  How high can gold go?                                                      plan for. Egypt and even Wisconsin unrest are current examples.
                                           17.7%                                 There are wars and rumors of wars, naturally. The most
 15.2%         13.7%                                                         dangerous is the Korean standoff between North and South.
                             12.5%        758 votes
651 votes     586 votes     536 votes                                        The brinksmanship has escalated to the point that an “accident”
                                                                             could touch off a shooting war that could quickly escalate into
                                                                             a global nuclear holocaust. Tensions between junior nukers
                                                                             Pakistan and India could easily erupt into nastiness that spills
topped out     $1,500        $1,750         $2,000                 Higher
   now                                                                       globally. The Middle East is always a huge powder keg
                                              Source: Wall Street Journal

                                                                                                              First Fidelity Reserve | 5
  with lit matches on all sides just inches
  from the fuse. Relations between the
                                              Catastrophe creates fear, and                    As gold prices have punched regularly
  U.S. and China have been none too fear sends investors running to                        into record territory, more investors globally
  cordial of late. The Russians are none       safety. Reflexively, almost                 are looking at silver as a cheaper way to
  too fond of American politicians, either. instinctively they flock to gold               play the precious metals boom with “poor
  Conflicts with either China or Russia        as a safe haven in times of                 man’s gold.” Price-conscious buyers in
  probably would be trade warfare                                                          India, in particular, have increasingly been
                                                uncertainty and anxiety.
  rather than military… and they’re both                                                   adding silver to their precious metals stash
  in stronger position.                                                                   along with gold.
  Then there are the natural catastrophes that could                   Lately, the gold-to-silver price ratio has generally been running
  have global consequences.                                        about 44:1 – that is 44 ounces of silver equal to one ounce of
                                                                   gold. In recent trading, though, the ratio has slipped to about
                                                                   43:1, meaning silver has become more expensive in gold terms
  SILVER: AMPED-UP “POOR MAN’S GOLD” because it takes fewer ounces of silver to match one ounce of
       As gold goes, so goes silver more or less…mostly more.      gold. That indicates that silver is climbing in value faster than
  Over time, silver tends to track in the same direction as gold,  gold is, even at gold’s record pace over the past year. The ratio
  and for some of the same reasons – supply/demand squeeze,        was as high as about 70:1 in June of last year.
  Asian demand, ETFs, commodity bull super-cycle, inflation             The correction and rebounds we’re seeing in gold reflects
  worries among them.                                              in the silver market, too. Silver led all metals last year, doubling
       When gold goes up, silver typically rises, too, and when    in price from February to December. Too much, too fast, too
  gold slips, silver stumbles. However, silver movements tend      hot. Silver needs a little cooling off time.
  to be more volatile, rising sharply higher than gold in good          If my forecast target of $1,600 for gold is on the money, silver
  times and plunging deeper than gold on reversals. It’s like gold should reach at least $36 an ounce using the trend ratio of 44:1.
  with the volume amped up to rock concert levels, making both     It could go higher if silver’s volatility accelerates. Silver bullion coin
  the high notes and low notes more dramatic.                      sales are strong in 2011 and mints are having to allocate again.

   Silver Should Reach at least                                                                         $    36                   an

                                                                                                                                           Source: Sharelynx

6 | • 1-800-336-1630
Why Gold and Rare Coin Prices Should Rise in 2011
Demand for gold was at a 10 year high in 2010 according to the World Gold Council. There was a 56% increase in tonnage demand for
physical bars and a 17% increase in tonnage demand for gold jewelry. Increased demand for gold typically results in more customers
from advertising for dealers. At some point enough of those new customers are introduced to rare coins by their dealers and
the coin market has often taken off. Many of those bullion buyers then trade some of their bullion for rare coins, further
fueling the market. The recession has resulted in premature selling by some coin buyers but that is slowing down, which in my opinion,
bodes well for the rare coin market in 2011. Banks that reduced credit lines to dealers in 2008-2010 are now becoming a bit more
receptive. The almost certain repeal of 1099 provisions in the new health
care bill will further boost the market and discredit those dealers who          Performance Results from 1970–2011:
used this as a scare tactic to get collectors and investors to prematurely
sell or trade. Obviously the past doesn’t guarantee future results.              Rare Mint State Gold Coin Index up about 110x
                                                                                        3000 Coin Index                             up about 67x
1970-2011 Rare Coin Index Results
Tracking the last 41 years, a highly respected Mint State Rare Gold Coin Index        Gold Spot Price                          up about 38x
identifies that rare mint state gold coins outperformed a generic gold coin           Generic Gold Coins                       up about 30x
index, a 3000 Coin Index as a whole, gold bullion and a return of 5% a year.
Based on a number of factors, including the results found in the respected            5% a year                                 up about 7x
3000 Coin Index, we recommend rare mint state gold coins. While individual
rare coin performance may vary, in my opinion, the results indicate that better condition grades, rarity and a market maker
strategy are all important factors in rare coin performance over the long-term. Other experts I respect concur. Furthermore,
the coin indices we reviewed do not swap coins in and out like major stock indices do. When one studies the performance of collections
and sets of coins put together over generations by famous collectors like Eliasberg, Pittman and Bareford, the research is further validated.
Set building provided diversification and set premiums for some sets during bull market conditions. Articles on these famous collectors
and their strategies are available free from your account representative. Please call for a free copy.

What Is A Market Maker And Why Is It Important To You?
A “market maker” is anyone who is competitively buying and selling a specific product while providing ongoing research and support to
the markets and customer base for such product. Because we focus on buying, selling and publishing activities in only four major areas of
rare coins, out of the thousands available, we are able to provide meaningful and sustained support for the coins we recommend. Our
specialized commitment is key to building long-term market awareness, collector enjoyment and demand among dealers and collectors.
This commitment betters the odds your collection will be worth more in the long term when you decide to sell. Remember, our policy is
to competitively buy what we sell. For a free copy of our Select Four Coin Recommendations contact your account representative.

 SELL YOUR GOLD WITH CARE                                         DISADVANTAGES To Dealing With HOTEL BUYERS
 BE CAREFUL about dealing with east coast dealers        Gold and rare coin buyers doing business out of a hotel, often do not really know what
 you’ve never heard of, who may “cold call” you          they are looking at and may pay as little as 20¢ on the dollar compared to major coin
 to buy or sell coins. Be especially careful if they     dealers. They often lack expertise, and likely do not have appropriate numismatic
 do not deal in coins graded by PCGS or NGC,             credentials and/or industry membership affiliations. They also may fail to give you an
                                                         itemized receipt, and their “appraisal” process may take longer than normal times, with
 which are the two leading certification services
                                                         even common coins taking 45 minutes or more to get a value. Some of these companies
 preferred by the vast majority of national dealers.     have received numerous customer complaints and may not be Better Business Bureau
 Many of these east coast dealers sell coins             accredited. Additionally, they may not comply with your state’s laws requiring licensing
 graded by services that sound like PCGS or NGC          of scales. In 2010, I received the NLG Radio Report of the Year Award for my programs
 over the telephone, so make sure you confirm            on this topic, which were broadcast on KLVI 560 in Beaumont. Jerry Jordan, managing
 you are getting PCGS or NGC products before             editor of The Examiner, provided expert research and input for those programs.
 you do business with them. Also, it is always a
 good idea to check out their current Better                      DISADVANTAGES To Dealing With MAIL-AWAY GOLD BUYERS
 Business Bureau status. Our company is only             Routinely, their offers may be about 20¢ on the dollar and you may have to negotiate to
 located in Beaumont, Texas and we have no               even get that or higher. Some customers have reported their gold items were either lost
                                                         or melted, could not be returned and were refused reimbursement. Like hotel buyers,
 East Coast Representatives. All our calls to
                                                         some of these companies have been the subject of numerous customer complaints,
 you should come from a 409 area code. All               which has resulted in new laws in many states to address some of their business
 packages shipped to us should be addressed              practices. Additionally, they may not be Better Business Bureau accredited. So, be careful!
 to our Beaumont, Texas address..

                                                                                                               First Fidelity Reserve | 7
                         Are Stock Indexes Really Beating Gold – At Long Last?

        The S&P has only 60% of the same                                                                                 Gold has been gold for thousands of years
        stocks as it did in 2000.                                                                                        of recorded history.
        The S&P 500 changes an average                                                                                   Gold doesn’t get a “mulligan” like major
        of 25 to 30 stocks per year.                                                                                     stock indexes.
        In 2007, they changed 43                                                                                         Due to index changes over time, long-term
        stocks (8.6%) on the list.                                                                                       comparisons of stock indexes to gold are flawed.

 Words to the Wise…                                                                                                                                                                FREE MONEY
 The gold and precious metals universe is probably the biggest and most
 profitable bull market that most of us will see in our lifetime.                                                                                                               Recently I googled “Texas unclaimed
                                           –Richard Russell, editor of The Dow Letters                                                                                          property” to see if the State of Texas was
                                                                                                                                                                                holding any money I was entitled to. I do
 Dealers or financial competitors who bad mouth the coin market                                                                                                                 this yearly. It turned out there was some!
 or other dealers typically have many deficiencies themselves.                                                                                                                  You should google your state and then
 When bad mouthing is present say what they say in Missouri
                                                                                                                                                                                “unclaimed property” for you and any of
 “show me” to both competitors for your business. Give both deal-
                                                                                                                                                                                your relatives that might have left you
 ers a chance to provide a response and proof of memberships,
                                                                                                                                                                                money in the past. It is kind of like free
 awards, accreditations and service. In most cases, the “bad
 mouthing” dealers or financial competitors are seriously deficient                                                                                                             money! Interestingly enough, on the
 in credibility or their accusations are seriously mischaracterized,                                                                                                            Texas unclaimed property site one of
 outdated or blatantly false.                                                                                                                                                   their headers is “Come and Get It.”
                                                                     – Mike Fuljenz

                                                            Thank You for making us your rare coin team .
                                                               1-800-336-1630 " f irstf
                      Est. 1989

                                                                                                                                        100% SERVICE STANDARDHOTLINE: 1-877-877-2256
IMPORTANT NEW CUSTOMER DISCLOSURES AND AGREEMENT TO ARBITRATE: (1) All statements, opinions, pricing, and ideas herein are believed to be reliable, truthful and accurate to the best of First Fidelity Reserve’s knowledge
at this time. They are not guaranteed in any way by anybody and are subject to change over time. First Fidelity Reserve’s disclaims and is not liable for any claims or losses which may be incurred by third parties while relying on information published
herein. Individuals should not look at this publication as giving finance or investment advice or information for their individual suitability. (2) All readers of exclusive numismatic publications are advised to independently verify all representations made
herein or by its representatives for your individual suitability before making your investment or collecting decisions. (3) Coin collecting and investing are only meant for those who are personally and financially suited. First Fidelity Reserve does not
recommend financing any purchase or spending more than you can afford to lose if your investment goes down in value. Numismatic purchases are affected, in part, by economic and market conditions. While First Fidelity Reserve’s competitive pricing,
margins and market strategy approach the market with specific attention to the areas we recommend, we impress upon the customer to perform his or her own due diligence in deciding on the amount and type of their numismatic position and independently
verify all representations. (4) As with all investments, the value of the coins could go up or down. First Fidelity Reserve and its representatives do not offer any implied or assumed promises. (5) First Fidelity Reserve considers coin collecting and
investment to be a mid to long term investment. As with all investments, past performance is not a guarantee of future returns. Further, you understand the coin market is speculative and unregulated and you could lose money if you have to sell these
coins in the short run, say a year or two. First Fidelity Reserve recommends a hold time of five to ten years or more. While offering no guarantee of growth in any time frame, First Fidelity Reserve wants the customer to understand that holding numismatic
coins shorter than the recommended hold time could result in losses, while longer holding periods, such as 5-10 years or more increase the chances a coin’s value can rise. (6) Our 100% Satisfaction Guarantee is: If you are not 100% satisfied with
your purchase, you may return it in its original packaging within ten (10) days of receipt for a full refund except on special orders or bullion orders. (7) Other returns of numismatic items may be subject to restocking fee of up to 20%. (8) Our policy
is that payments for refunds on coins received and confirmed for liquidation will be processed in 10-15 business days unless specified otherwise by management in writing. (9) Although many areas of numismatics lend themselves to third party grading
and authentication, third party certification does not eliminate all risks associated with the grading of coins. (10) Arbitration: First Fidelity Reserve strives to handle customer complaint issues directly with customer in an expeditious
manner. In the event an amicable resolution cannot be reached, you agree to accept binding arbitration. Any dispute, controversy, claim or disagreement arising out of or relating to transactions between you and First Fidelity
Reserve shall be resolved by binding arbitration pursuant to the Federal Arbitration Act and conducted in Beaumont, Jefferson County, Texas. It is understood that the parties waive any right to a jury trial. Judgment upon the
award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. (11) In order to stay abreast of changing market conditions, First Fidelity Reserve may contact you from time to time regarding items of interest.
(12) All phone conversations between you and First Fidelity Reserve are recorded. (13) All transactions and communication between First Fidelity Reserve, its employees, and you are only conducted through First Fidelity Reserve business address
and business telephone numbers. (14) You understand and acknowledge First Fidelity Reserve employees cannot receive gifts from customers. (15) You understand it is your responsibility to contact the First Fidelity Reserve customer
Service Hotline and speak with a manager regarding any issues or complaints that you may have. The toll free First Fidelity Reserve Customer Service Hotline is 877-877-2256. (16) Some experts recommend that in typical times, a
diversified investor’s portfolio contain a rare coin and precious metals component of 5% minimum to 25% maximum. Customers should not look at our written materials or our recommendations as giving personalized legal or investment advice. (17)
Coin values are constantly changing and estimated verbal indications of value may vary due to multiple factors. The company cannot be responsible for any indications used for valuation and purchasing of customer coins unless its offer is in writing
and confirmed according to the company’s policies and procedures. (18) You understand and acknowledge all transactions between you and First Fidelity Reserve are processed in Jefferson County, Texas. (19) Reproduction or quotation of this newsletter
is prohibited without written permission of First Fidelity Reserve. The Coin Market Advisory, Investors Advisory Forecast, and the Prestige Report are published by Reserve First Partners, Ltd. ®, 130 Shakespeare, Beaumont, Texas 77706.

                                                                                                                                                                                                                                                 rev. 03/11

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