20 Secrets to Retiring Rich

If you’re relying on Social Security for a large chunk of your retirement money…

You could be in for an unpleasant surprise.

Consider the case of Chuck and Kim Garwood from Georgia, who were profiled recently in USA Today…

WILL SOCIAL SECURITY REALLY BE THERE FOR YOU?

Chuck Garwood is 57, an Army veteran who works part time as an industrial safety consultant. His wife, Kim, is 48, and works part time at a financial planning office.

The Garwoods are counting down the days and adding up every penny in preparation for retirement. Once their daughter Allison graduates from college, the path will be clear.

The Garwoods are planning an active retirement. Chuck does triathlons. Together, Chuck and Kim want to bike across the country for a month in 2007 and hike the Appalachian Trail in 2008. While some of the Garwood's friends talk about working into their 60s, Chuck says, "I've had enough… I've been working since I was in the seventh grade."

When the Garwoods retire, they plan to rely on Social Security for about 20% of their annual income. Chuck is confident the money will be there.

But as USA Today recently reported, "maybe not."

The paper continues: "Americans who are 50-something – a point in life when many are registering peak earnings, seeing their children move into the workplace and beginning to make detailed plans for their retirement – could be in for some unwelcome surprises down the road."

The problem is, Social Security is on the verge of going bankrupt.

How did this happen?

Well, back in 1983, Congress raised social security and Medicare taxes to create a surplus "trust fund," which would ensure the stability of Social Security for the next 50 years. And every year since then, the Social Security Administration has collected more money than they've had to pay out.

The problem is, our elected officials haven't saved a penny of this surplus.

Instead, the last three presidents (Bush Sr., Clinton, and now George W.) have spent every single extra Social Security dollar on other government programs. Now this money is most likely gone forever.

As Washington Post columnist Charles Krauthammer said recently: "The Social Security system has no trust fund. No lockbox. When you pay your payroll taxes every year, the money is not converted into gold bars and shipped to some desert island, ready for retrieval when you turn 65. A piece of paper gets deposited in West Virginia saying that the left hand of the government owes money to the right hand of the government."

How did Congress get away with a stunt like this?

Simple… demographics. For the past 70 years, we've had more people paying INTO Social Security than the number COLLECTING. But 78 million baby boomers will start retiring next year (about 12,000 per day). And even the Social Security Administration admits the program will soon go broke unless something radical is done.

And even if Social Security is "fixed," allowing you to collect the maximum possible payout (which is $2,053 per month before taxes right now), how far is that money really going to go? Prices for everything from gas to food to clothing have soared in the past decade. Imagine what these things will cost 10 years from now.

The fact is, if you want to make sure you have all the money you need in retirement (and then some), you have to take matters into your own hands… you simply can’t count on Social Security alone.

But the good news is, I believe I have found the perfect solution…

20 SECRETS TO A WEALTHY RETIREMENT

If you are at or near retirement age… or if you simply want more money deposited into your bank account on a regular basis… the investment ideas and retirement secrets in this report can help you achieve your goals, safely.

For example:

• Trees That Pay for Your Retirement. You might be surprised to learn that timber as an investment has beaten the stock market over the last 45 years – sometimes by as much as double-digit gains. The Los Angeles Times said that timber has “long beaten the S&P 500” and to consider it if you are “looking for an investment that keeps growing, regardless of recessions or stock market turmoil.” But you don’t have to buy timber or timberland directly to take advantage of this investment… I’ll show you a safe, simple way to own the best timber investment around, through the stock market.
  
  
• The Three Best Mutual Funds You Can Buy Today. There are over 8,000 mutual funds today… most are a complete waste of your money. These mediocre funds consistently underperform the market… while their fund managers get rich off the fees they charge you. But my colleague Porter Stansberry has found three funds that are the exception… and perfect for your “safe” money. Porter has five specific criteria he applies to find the best-performing mutual funds… based on his research, these are the best three to buy now.
  
  
• The Best Place to Retire: The Hamptons Life… On Less Than $100 a Day. Forget Florida or Arizona. I’ve found the best place in the world to retire, or buy a vacation home, for literally pennies on the dollar. Here, you’ll find miles of beautiful beaches… you can eat a steak dinner at the best restaurants for under $20 per person… and you can hire a housekeeper/cook for just $5 per day.
  
  
• Portfolio Insurance: The Secret Currency. This investment – which most Americans know nothing about – is one of the secrets behind some of the world’s richest families. I call this investment a “secret currency” because it is beyond the reach of any government or corporation. It’s been used for centuries to profit on financial windfalls created by governments around the world. This investment will protect your portfolio in good times or bad. And according to the Chicago Tribune, it beats stocks, bonds, gold, silver, artwork, diamonds, U.S. Treasury bills, real estate, and oil. I’ll show you a safe, simple way to own the “secret currency.”
  
  
• PLUS… I’ll also tell you about a CD that pays 13%… a government bond that pays 11.6%… Eight secrets of America’s millionaires… and more.

I believe most people take way too much risk when they invest their money. My goal is to show you much safer opportunities – where you can make a small fortune at the same time.

Over the next several years, I believe the investment opportunities and secrets in this report can help you secure a very comfortable retirement… safely.

Good investing,

Dr. Steve Sjuggerud

People ask me how I come up with some of the “crazy” investment ideas I find.

It works something like this… I read a ton, even though I feel like I’ve seen 99% of it before. And then I find something that piques my interest…

Whether it’s a billion dollars of Argentine property for $180 million, free market reforms in Iceland or Israel, the elimination of the ability to print money in Ecuador, gold coins down at their lowest premiums to melt in recorded history, Harvard increasing its stake in timberland, or… well, you get the idea. It smells like a big opportunity.

So I get curious. I have to investigate. There’s got to be a catch. And there usually is.

Once it starts looking good, I’m compelled to dig deeper… There has to be a hole in the story somewhere. Next thing you know, I’ve taken five trips to Argentina in a year… or I’m building historical databases of gold coin prices and thinking about them all the time.

In recent years, one of my biggest investment obsessions has been trees and timber. The more research I do, the more attractive I find timber to be.

A simple chart will show you why…

This chart tells you what you need to know… Timber has had three down years in the last 45 years. Total returns on timber have beaten the stock market, with less risk. Is that even possible?

Yes. It’s not only possible… it’s easy to explain. I’ll tell you more in a minute.

Three years ago, I hired a timberland valuation expert, and we started traveling together. We looked at timberlands from the Pacific Northwest to the southeastern U.S. We even took a private plane across Argentina to swoop in and size up the timberland opportunities and sawmill facilities down there.

In the course of my research, I think I’ve come across every major timber deal in the U.S. over the last 10 years (maybe 100 major deals). And I’ve found and recorded most midsized timber deals in the southeastern U.S. as well. In short, I know timberland prices.

According to my homework, midsized tracts of timberland with a variety of tree ages might go for $1,500 an acre or more to individual investors, and very large tracts with mixed ages for $1,200 an acre or more.

So I find it very interesting that the stock market value of one of the investments I’m going to tell you about in this report is LESS THAN $1,000 an acre… a screaming bargain.

We ought to have to pay a premium to buy a quality timber company. If we bought timber on our own, we’d likely pay $1,500 or more per acre. And we wouldn’t be diversified. Plus, we’d have to pay above and beyond the cost of the acreage for many services in order to manage the land. And our return would be hurt by our ignorance of how to efficiently run the thing.

But as I’ll show you in this report, it’s actually cheaper and easier for you to buy trees on the stock market than it would be for you to buy land and trees on your own.

I’m going to show you:

1) Why trees are one of the best retirement investments in the world, particularly right now, and

2) How to get started investing in the best timberland investments right away.

So let’s get right to it…

It’s not hard to explain why trees are such good investments.

Here are the rough numbers on where timberland returns come from:

1% Land value increase
6% Biologic growth of the trees
3% “Stumpage” price increase (in other words, the price of the actual tree)
3% Inflation

In addition, there’s cash flow from regular timber sales, and more income from additional uses of the land (hunting licenses, pine straw, and more). The investment proposition is exceptional, if there’s an easy way to do it. And there is – you just buy a timber stock.

In some ways, it seems easier to make solid, safe profits in timber than in buying a big stock. Think about it…

While it’s extremely difficult for a large company to grow its earnings by 6%-8% a year, trees grow 6%-8% a year without even thinking about it.

And while it’s extremely difficult for a company to increase the prices of its goods by 6% every year, the price of wood, according to investment legend Jeremy Grantham, has increased by that amount for the last hundred years. (Specifically, he says “stumpage” prices – the value of all the wood on the stump – have beaten inflation by 3% a year over the last century.)

So… the trees grow 6% a year, the price of the wood goes up 6% a year (counting inflation)… and we haven’t even talked about the underlying appreciation of the real estate… or the advantages of professional timberland management, which is starting to reap the benefits of genetic engineering now.

When you really understand this, you can understand how timberland has actually beaten the stock market since 1960 (as far back as data goes). Stocks did extremely well in that time… up nearly 12% a year. But the total return on timberland was even better, at nearly 14% (according to James W. Sewall Company).

Another nice thing is timber is completely uncorrelated to the stock market. It makes sense… the trees have never heard of the Nasdaq bubble… and they don’t know what a War on Terror is.

The good news is that timber hasn’t run up too much lately. It’s still attractively priced.

And just look at the returns of timber versus other asset classes since 1973:

As an asset, timber has performed very well over the long run. But it has stalled in recent years, with the exception of 2005.

While every other asset has run up in value, timber is still attractive. I still think we have 40% in upside potential in these stocks over the next few years. And timber REITs are the best way for you and me to get in.

I’d like to explain to you, in some detail, the numbers behind the two biggest timber operations in the United States. Then I’ll tell you about some of the smaller timber businesses, and show you which stocks to buy right now…

The last great bear market in stocks began in the late 1960s and lasted until about 1980. An investor in stocks during that time literally lost money, due to inflation.

However, as the table below shows, an investor in timber never had a losing year… More often than not, the returns were in the double digits… with a 55% return in 1973 and a 47% return in 1977.

The 1970s weren’t a timber fluke. Even in recent decades, timber has been one of the best assets to own. Consider the graph on this page… it shows a comparison of the annualized returns for timber versus several other investments. As you can see, timber has performed better than stocks, bonds, and commodities. The total compounded gain during this period was about 16%.

www.campbellgroup.com/timber_invest

Clearly, timber is an opportunity now. So how do we play it?

THE BEST DEAL ON TREES AND TIMBER IN
NORTH AMERICA RIGHT NOW

The traditional way people buy timber is by buying the trees. But that’s the hard way. The easy way is to get at timber through publicly traded companies. I’d rather buy company stock than trees. I’d even be willing to pay a premium to buy the stock, since I don’t have to go through the hassle of buying the land, insuring it, maintaining it, etc.

What I found when I first started investigating this idea is that right now there are ways to buy timber through a stock that are cheaper than buying the land with the trees. It’s crazy. But it’s true…

Right now, it is fair to say that bare timberland in the southeastern U.S. is in the $600-$700 an acre range. If the site has been prepped and planted, you can add a few hundred bucks. And if you’re a couple of years in, and the weeds have been controlled and the trees are growing as they should, there’s another couple hundred bucks.

Remember, midsized tracts with a variety of tree ages might go for $1,500 an acre or more to individual investors, and very large tracts with mixed ages for $1,200 an acre or more right now.

So its amazing that the enterprise value of the biggest timber company in the United States, Plum Creek (NYSE: PCL), is just $1,100 an acre.

By enterprise value per acre, we mean how much you’re paying for each acre, after you factor in the company’s cash and cash equivalents, minus debts.

We ought to have to pay a premium to buy a quality timber manager like Plum Creek.

After all, the company is the largest and most geographically diverse private land owner in the nation. It owns more than 8 million acres of timberland, in 18 U.S. states.

As I said earlier, if we bought timber on our own, we’d likely pay $1,500 or more per acre, plus whatever it would cost to manage the land – and we wouldn’t be diversified.

But instead of paying a premium for professional management, by buying Plum Creek, we’re buying a diversified timber portfolio at a nice discount.

So Plum Creek is the best timber buy in North America right now. Not only does it give you the largest number of trees (more than 8 million acres), it gives you the best price per acre, and pays just under a 5% dividend.

Action to take: Start your timber portfolio with Plum Creek Timber (NYSE: PCL). You’ll own timberland in 18 states, and collect nearly a 5% dividend as the trees grow exponentially, year after year.

After spending the past 10 years as an independent investment analyst, I’ve learned something very important about the mutual fund industry:

Nearly all mutual fund products – products marketed as the savior to your retirement – are a complete waste of time and money.

There are a lot of reasons why I despise mutual funds. I hate the way lousy mutual fund managers can still earn millions of dollars. I hate the way people who own mutual funds smugly assume they’re being smart about their finances. I hate the way mutual funds spread their commission dollars around Wall Street, corrupting analysts and bankers, creating myriad conflicts of interest.

But at the very core of my violent distaste for 95% of all mutual funds is the fraudulent promise at the heart of the industry: The lie that you can get rich by doing nothing and knowing nothing about investing.

It’s simply not true.

Nor is it reasonable to believe that you can trust someone at an institution to handle your finances alongside thousands of other investors with any genuine fiduciary care. It’s a myth – one of the most valuable myths of the modern financial era. The lie they tell is very compelling: Just send us all your money, and we’ll take care of it. Investors go for it because it relieves them of their second biggest worry – that they’ll lose their wealth. (The first worry is losing their health.)

When you buy a mutual fund, you’re buying the fund as it’s comprised today, at current prices. But no mutual fund only owns securities that it considers to be attractive at today’s prices. No, in fact most of the assets of the fund should be long-held investments that should have increased in price significantly since they were added to the fund. But, as a new investor, you’re buying all the assets at the current prices – including all of those stocks whose prices aren’t currently attractive to the managers. In other words, you're buying all of the fund's faded gems at full retail value.

That’s no good. And from there, it gets worse.

If you’re buying an “index fund,” which typically tracks the performance of the S&P 500 or the Dow Jones Industrial Average, you’re buying a group of the biggest and supposedly best stocks around. This means they’re also the most expensive and the least likely to appreciate much.

Even worse, most indexes (like the S&P 500) are “market cap weighted,” which means the bigger the market cap a stock has, the more weight it carries in the index. Said another way, the more expensive a company is, the more weight it carries in the index. That means when you buy an index fund, most of your money is going into the most expensive stocks. That doesn’t make any sense, does it?

There is indisputable evidence that proves small-cap value stocks will outperform any other type of similar financial asset. However, these stocks are typically too small for any large institutional investor to buy. Thus, small-cap value is out of bounds for index funds and even for most mutual fund families.

When you buy a mutual fund, you’re automatically condemning yourself to subpar investment performance, a truth that’s proven in mutual fund performance studies. Dalbar, a Boston consultancy, did a study which showed the average mutual fund investor made less than 6% a year, on average, during the greatest bull market ever in stocks – from 1981 through 2000.

The incredibly poor showing is due, in part, to the contrary motivations of the fund companies. They get paid based on total assets under management, not investment performance. As a result, the fund companies advertise the hottest sectors heavily as they go higher. They know investors will chase performance.

Fortunately, there are some notable exceptions. There is a relatively small group of top-notch managers who, because of their tremendous skill, are no longer concerned with garnering assets and have the freedom to do the right thing for the current and prospective customer.

That’s exactly what this report is all about, and in just a moment, you’ll learn about three such funds. The long-term performance of these funds is among the best in the world... they’re extremely risk-averse... and they have their shareholders’ best interest at heart.

You should be able to buy each of these funds through your regular broker.

With over 8,000 mutual funds in the U.S. alone, finding a winning fund can be a bit tricky. Based on my experience, I’ve developed the following five guidelines that have helped narrow this field down in order to target the best funds that money can buy.

Here they are...

First, a fund should have an expense ratio no greater than 1%. This way, more of your investment dollars are working for you and not for the fund’s management.

Secondly, you want a value-oriented fund. This means that the fund’s holdings are selling at below market values, are currently out of favor and have a higher probability of appreciating up to what the analysts estimate the fund’s holdings should be selling at.

Third, a fund should have a manager who’s been in place for at least the past 10 years. This shows that the fund’s current holdings, which were purchased by the existing portfolio manager, have produced consistently good returns for several years and have established a credible track record worthy of your retirement dollars.

Fourth, a fund’s performance should show steady growth with a minimum amount of peaks and valleys. Investors often make the mistake of choosing a fund with the highest returns. But when a fund shows steady growth for many years, we know that its growth can be attributed to the fund manager’s experience rather than speculative investing.

And last but most importantly, a fund’s history should be void of big quarterly losses that often result in negative returns during those periods. This creates an unstable environment in which to invest your retirement dollars.

By using the above criteria, I have found the three best funds in the world. Together, these funds are a “buy-it-and-forget-it” mutual fund portfolio. You could put all of your money in these three funds and never make another investment – ever.

Since this fund's inception in 1996, the Oakmark Select Fund has returned an average of around 18% a year – that's almost good enough to double your money every three and a half years.

There are three reasons why I think you should invest in the Oakmark Select Fund today, and keep your money there for at least five years.

1) It’s a focused, non-diversified portfolio, concentrating only on a few high-quality stocks.

The best investors in the world don't over-diversify. Warren Buffett, the second-richest man in the world, provides a good example with his holding company. Berkshire Hathaway holds just 19 common stocks, rather than the 200 or more different stocks you'll find in a typical insurance company stock portfolio.

The Oakmark Select Fund holds 20 stocks. It has 62% of its assets in its top-10 holdings and, according to CNN Money, “slammed its peers on a three-year annualized basis and beat out the S&P 500 during a growth oriented bull market.”

2) It has a strict value discipline, buying only when a stock sells at a big discount to intrinsic value.

For the Oakmark Select Fund, its manager, Bill Nygren, only buys the highest-quality stocks, and only when they're selling for at least a 40% discount to intrinsic value.

Morningstar analyst Scott Cooley calls Nygren one of the smartest managers around, whose willingness to seek opportunities in growth areas has led to consistently good returns.

3) It has heavy insider ownership, with fund employees investing their own money along with public investment dollars.

According to Oakmark's website (www.oakmark.com), “the employees of the Funds' adviser, Harris Associates L.P., the Funds' officers and trustees and their families have over $200 million invested in The Oakmark Funds.”

The greatest investors always “eat their own cooking,” and Oakmark is no different.

Buy the Oakmark Select Fund Now (OAKLX). The minimum initial investment is $1,000, and there are three ways you can buy this fund:

1. Through your regular broker,
2. By visiting www.oakmark.com or,
3. By calling 1-800-OAKMARK (1-800-625-6275).

I recommend that you BUY the Oakmark Select Fund (OAKLX) and hold it for at least five years.

This mutual fund has returned an annual average of 20%. That’s four percentage points per year more than the average returns of similar funds. And the fund achieved its gains with 25% less volatility than its peers.

In other words, if you started with $10,000 in this fund back when it first began in 1998, you’d have about $50,000 today.

The Third Avenue Real Estate Fund (TAREX) is the best no-load real estate fund available.

After having closed itself off to new investors due to unprecedented cash inflows during the first half of 2005, this fund has now re-opened in order to take advantage of the favorable market environment that now exists in real estate-related securities.

Most real estate funds focus on high-yielding REITs, but portfolio manager Michael Winer puts the bulk of his money into real estate operating companies. Unlike REITs, operating companies aren’t required to distribute nearly all of their profits to shareholders; therefore, the companies can retain their profits to finance growth.

“That’s a distinct advantage,” says Winer, who has had a long and diverse background in real estate. Previously, Winer has done accounting for several real estate firms, has run a real estate development business, and has served as a real estate stock analyst.

A few of the fund’s top holdings are some of the most valued real estate companies in the world, including: Forest City Enterprises, ProLogis, Brookfield Asset Management, the St. Joe Company, and Vornado Realty Trust.

With an eye for value, Michael Winer gives us all the confidence we need to recommend you buy the Third Avenue Real Estate Fund (TAVFX).

The minimum initial investment is $10,000 ($2,500 for IRAs).

For more information on this fund, go to www.oakmark.com.

The last fund I’d like to tell you about re-opened to new investors in July 2006, due to turbulence in foreign stock markets.

According to its management, the Longleaf Partners International Fund (LLINX) has now completed its assembly of the highest-quality portfolio of international businesses that it’s ever owned.

“The volatility in markets around the globe has produced additional high-quality companies that are adequately discounted and attractively priced,” says Mason Hawkins, co-manager of this $3 billion fund.

Longleaf’s managers, all of whom have been with the fund since its 1998 inception, look for stocks that trade at 40% or more below their estimate of the underlying company’s value.

“The fund’s portfolio currently holds a combination of the most vested corporate managements and more quality holdings than at any time in its history,” says Hawkins.

Longleaf’s top-five holdings are Japanese companies NipponKoa and Olympus, French carmaker Renault, Canadian insurer Fairfax Financial, and global computer giant Dell.

The fund’s minimum initial investment is $10,000. This may be pricey, but the firm does treat its shareholders like partners, something that can be seen in its willingness to close funds to new investors even when that means less revenue.

According to Kiplinger’s, this fund is “a solid choice for your overseas money.”

The Longleaf Partners International Fund holds 20 investment positions. Its average annual return since inception is roughly 15%.

At the May 2006 shareholders meeting, Mason Hawkins made it clear that he and his managers have virtually their entire net worths in Longleaf Funds. After all, Longleaf’s #1 governing principle is, “we will treat your investment as if it were our own.”

I recommend that you buy Longleaf Partners International Fund (LLINX) now and hold it for at least five years to make about 15%-18% a year. I could hardly provide a better vehicle for a safe, long-term investment.

There are three ways you can buy this fund:

1. Through your regular broker,
2. By visiting www.longleafpartners.com or,
3. Calling Longleaf directly at 1-800-445-9469.

There you have it – the three best regular mutual finds you can own right now. Each of these funds should do very well for you over the next five years.

Last spring, Iceland’s Prime Minister gave a speech…

In it, he made an important prediction.

If his prediction turns out to be correct, we’ll make a fortune, as I’ll show. If he is wrong, we’ll still make a heck of a lot of money – most likely double-digit returns for the next eight years. Let me explain…

Prime Minister Halldór Ásgrímsson’s topic was “What kind of Iceland should we expect in 2015?” In that speech, he boldly predicted that Iceland would become a full member of the European Union by 2015.

Nobody in the world is paying attention to this prediction right now… and nobody is playing the “Convergence Trade” I’m about to show you.

If Iceland joins the European Union, as he predicts, it will become part of the euro currency. You don’t have to be a rocket scientist to get this one… A simple look at a chart that I’ll show you later on tells the story. It, you’ll see this: In the few years before tiny countries give up their tiny currencies to join the euro, you make a fortune in their bonds. It happens every time. But before we get there, let me explain what’s going on in Iceland now…

Ásgrímsson’s prediction might not sound so bold at first… But the previous Prime Minister of Iceland was dead set against joining the European Union. The current Prime Minister is putting the idea on the table… and it really needs to be there.

You see, Iceland is part of the European Economic Area anyway, so it already has to abide by a mountain of laws out of Brussels. Yet Iceland has not made it official yet… Most importantly, Iceland is not part of the euro currency… yet.

While the economy has soared recently, Iceland’s little currency (the krona) has been like a tax on its people. Iceland suffers because it has its own tiny currency, which is subject to much wilder swings than the euro, and, importantly, interest rates in Iceland are significantly higher than in the euro area.

In March 2006, The Economist did a great job of summing up Iceland’s situation:

“It is remote and tiny, with just 300,000 people. Yet Iceland’s recent performance is impressive by any standards. One of Europe’s richest countries boasts one of its fastest-growing economies. Top marginal rates of income and corporate tax have been cut to unNordic levels of around 36% and 18%, respectively. Unemployment is in effect near zero.”

“Yet over the past two weeks severe financial tremors have jolted Iceland….”

The chart below shows those tremors, and just what the currency has been through. Note the sharp drop on the right-hand side.

Iceland’s currency is the thick line, and the euro is the thin line. As you can see, from 2002 to 2005, Iceland’s currency acted exactly like the euro. So nobody worried about it.

In 2005 and early 2006, it started to outperform the euro, as investors were attracted to the high interest rates in Iceland. People worried about the currency even less.

But last spring, the currency fell significantly – “severe financial tremors,” as The Economist called it.

The Prime Minister gave his speech before the currency started to explode. He knew this type of thing was possible. In his speech, looking out to 2015, he said:

The Prime Minister is dead right, on all counts. After the crash in the currency last year, I expect the debate about ditching the krona in favor of the euro will become serious. The current system is simply a tax on the people of Iceland.

And here is where the “convergence” starts… where the profits come in. Let me explain…

The euro officially started on January 1, 1999. Man, let me tell you, countries like Italy and Spain sure got a free ride…

Italy and Spain never had strong currencies. The Italian lira was a chronic loser. Interest rates in Italy and Spain were usually very high. They had to be in order to attract investors and compensate them for taking a risk in owning their currency.

When the euro came along, Italy and Spain got the chance to trash their currencies and replace them with what was basically Germany’s currency, which was much more stable.

In the mid-1990s, it didn’t seem possible that Italian and Spanish interest rates would converge with German interest rates once Italy and Spain joined the euro. But that’s exactly what happened.

As the following chart shows, as the introduction into the euro approached on January 1, 1999, interest rates in Italy and Spain fell from about 11% down to about 4%.

Next up was Greece. Greece was such a disaster, it simply wasn’t allowed to join the club on the first go in 1999. Greece had to wait two years to get in.

What happened to Greek interest rates in the few years leading up to joining the euro was exactly the same as what had happened a few years before in Italy and Spain. Interest rates went from sky high down to 4%, in line with German levels.

The next countries to join the euro will be a handful of Eastern European countries, like Poland. Oh, will you look at that? The same pattern is emerging… interest rates have gone from sky-high down toward euro levels… but Poland is not part of the euro yet.

You see the pattern… As soon as it’s clear that a country is giving up its little currency in favor of the euro, interest rates in that country converge to euro levels.

If Iceland’s leader is right, Iceland will follow the same path. If that happens, owners of Icelandic bonds – particularly long-dated bonds – will make an absolute fortune.

Right now, Iceland has some bonds that mature all the way out to 2044. If we buy now, it looks like these bonds will pay us 11.6% interest in 2007 and 2008. This interest is only the beginning…

Here’s how you can make a fortune owning these:

If long-term interest rates in Iceland fall to euro levels of around 4%, and you have a bond that pays you 11.6% until 2044, then that bond will be worth a lot of money. Because people will pay you a heck of a lot of money to get your 11.6% bond for the next few decades in a 4% world.

We must buy these long-dated bonds now, before interest rates fall in Iceland toward more normal, European levels.

I’ve met with the folks in Reykjavik at the brokerage firm Glitnir (www.glitnir.is/English/) many times over the years.

The folks at Glitnir are bright. They have a good handle on the economy (it’s very small, so predictions are more reliable). They’re predicting short-term interest rates will peak early this year, before they start declining fast.

The Central Bank of Iceland is hell-bent on stopping inflation and slowing down its economy. So it pushed interest rates up to 11.6%. That, they believe, will be the end of Iceland’s rate-raising cycle. Interest-rate cuts are expected to start soon.

The right bonds for us to buy for maximum gains right now are the Icelandic bonds that mature in 2044. In particular, we want inflation-indexed bonds… this way, we get paid an interest rate, PLUS we get paid back the rate of inflation.

Right now, the 2044 inflation-indexed bonds are paying about 4.3% interest PLUS inflation. If you buy today, you’ll earn 11.6% in total interest each year in 2007 and 2008.

Yes, we’ll get 11.6%. Iceland’s inflation-adjusted bonds pay the highest rates of interest in the world, at 4.3% plus inflation. Inflation-indexed bonds in England and in Sweden only pay about 1.5%. So there’s plenty of room for Icelandic interest rates to fall… and for us to make large capital gains along the way.

Again, we’ll make 11.6% in interest in 2007 and 2008. We should make double-digit capital gains… and if we see a further fall in the dollar, we could have significant currency gains as well. It wouldn’t be impossible to see 25% a year… for the next three years!

I think this bond will beat all other government bonds over the next eight years. If you’re looking for a safe place to put money outside the dollar that still has significant upside, this bond is it.

If the Prime Minister of Iceland is right, and Iceland joins the European Union (and then scraps its currency), we’ll make a killing.

If, for some reason, the Prime Minister is wrong, and we only hold this bond a few years instead of eight years, then the chances are great we’ll still make double-digit returns on it.

The bond I’m recommending is called the “HFF” bond, and it matures in 2044. There’s a nice website on Icelandic bonds at www.bonds.is.

It’s time to get in now, to lock in the current high rates. Sure, you can buy a simple CD to capture the high short-term rates in Iceland. EverBank offers an Iceland CD that pays double-digit interest rates right now. And that’s great.

But if you want to make the biggest total return, you need to be invested in the longest-dated bonds you can buy. The old rule is, when interest rates go down, bond prices go up. The longer the bond life, the bigger your capital gains.

If you buy my recommended Icelandic bonds right now, you’re looking at total interest of 11.6%, between the yield and the inflation payback. But that’s not where the big money will be made…

The big money will be made when interest rates start to fall, and we start to make capital gains on these bonds. So far, we haven’t made money this way yet. On the bright side, if you haven’t bought yet, you haven’t missed it.

There is another factor… When you buy bonds in a foreign currency, the currency fluctuations factor into your returns, too. So far, the currency has gone against us. But it has been strengthening recently… no doubt because money is attracted to those incredibly high rates of interest. I’m not making a currency prediction here… the currency could help or hurt our returns. But between the high rates of interest and the capital gains we can make, I’m not too worried about the currency fluctuations over the long run.

I think we have the potential to make more than 30% a year in total returns for a few years if I’m right – in government-backed bonds from a safe, stable country.

See if your regular broker can buy these. If not, here are two brokers who I know can buy bonds like this – and they have a great reputation.

First is my father’s firm… I know these guys well (of course)… Beyond my dad (Dave Sjuggerud), I’ve worked with Howard and Sam for over a dozen years. (I actually lived with Howard and a few other guys just out of college.) You can reach them at 877-539-1004, or dsjuggerud@lasallest.com.

Another good source is Jeff Winn at International Assets. He’s been there for over a dozen years. I also know Jeff well. (In fact, Jeff was one of the groomsmen in my wedding.) You can reach Jeff at 800-432-0000, or jwinn@iaac.com.

(These guys don’t compensate me in any way for mentioning them… I recommend them because they do well what others can’t do well. I prefer it this way… so there are no conflicts of interest.)

These guys are good sources that can talk you through how it works, and that’s often good to have when it comes to international dealings.

Wrapping up, this might be the smartest trade for the next eight years… As Iceland starts moving toward adopting the euro, interest rates in Iceland will converge with euro rates.

We’ll earn huge rates of interest now, we’ll earn huge capital gains as rates come down, and we could have nice currency gains to boot if the U.S. dollar weakens against other currencies. It’s a no-brainer. Get on board, if you haven’t already.

If you’re interested in the Iceland bonds idea, you might also want to learn more about EverBank’s Iceland CDs.

As of this writing (December 2006), this CD is paying 13.1% over three months.

As Iceland’s central bank is fighting inflation, it is likely that interest rates will remain that high. EverBank only offers three-month CDs for Iceland, but you are allowed to roll them over into another three-month CD with no costs, charges, or penalties.

I have put many millions of dollars to work in Iceland in my days managing money. I would rather have my money there than in the States. It’s a safer country, and its government is less indebted than ours. (It is one of the few countries in the world where the government is in the enviable position of being not far from having more assets than debts. The U.S. is a long way from that club!)

Visit EverBank.com for more information (click on Currencies, the Currency CDs), or call 888-882-3837.

Most people don’t believe me when I tell them one of the biggest secrets of Wall Street – that you can actually buy stocks 100% risk-free.

By using these secret stock funds, you get all the profits when the value of the market goes up. And when the market goes down, you’re guaranteed to never get back less than what you started with. Amazing... but true.

If you want to invest in stocks in a volatile market, this is the way to do it. Although there’s never been a “sure thing” in the stock market, this is about as close as it gets.

Here’s how these funds work...

LIMITED DOWNSIDE, UNLIMITED UPSIDE INVESTING

The first rule of making money is simple: Don’t lose money. I’d like to share with you what I believe is one of the best “don’t lose money” stock market investments out there today...

What would you say if I told you I could give you all the upside of the stock market, for the next two years, and guarantee you no downside risk?

The investments I’m talking about are called Market Index Target-Term Securities, or MITTS. They’ve been around for about a decade, although you rarely find anyone talking about them. Pioneered by the folks at Merrill Lynch, MITTS are essentially zero-coupon bonds with five- or seven-year calls on a major market index attached. Sound complicated? It’s not. Let me show you...

MITTS sell for around $10.

About $7 of your investment goes to buy a zero-coupon bond that will yield $10 at maturity in, say, 2009.

A “zero-coupon” bond, by the way, is one in which the interest rate is zero. Instead, you get a fixed return at maturity. It’s like loaning your friend $50... with him agreeing to pay you back $60 next Christmas. There’s no interest rate attached to your loan... you’ve just agreed on a fee and a date. That’s essentially all a zero-coupon bond is.

The other $3 goes to buy “call options.” Call options are basically small bets – on the options market, with potentially high returns – that a particular market index will go higher. At the maturity of the MITTS, you get back your original investment, plus whatever percentage the particular index has risen.

That’s it in a nutshell.

Still confused? The investment is a lot simpler than it sounds. And all you have to know is that you are guaranteed to get back what you started with – and if the index your MITTS is attached to goes up, you’ll make a profit. If it goes down... you won’t. But you’ll never get back less than what you started with.

You can buy a MITTS that is tied to just about any stock market... the Dow Jones... the Nasdaq... the Nikkei in Japan... the Russell 2000 (small stocks)... the list goes on and on. In all there are 27 MITTS you can own.

So if you buy a Dow Jones MITTS, you get back your original investment plus whatever percentage the Dow Jones Industrial Average goes up.

If the Dow goes up 30%, you get a 30% gain. Your $10 becomes $13. If it goes up 100%, you double your money. Your $10 becomes $20. Say the Dow drops 20%. What do you get? Your original investment... $10. In other words, no matter how low the Dow drops, you won’t lose a penny.

And don’t think you’re stuck holding MITTS between now and two years from now. MITTS trade exactly like a stock, on the American Stock Exchange. You can buy and sell them during market hours every day.

Here’s another way to look at how MITTS work…

Let’s say Merrill Lynch is launching a new MITTS, and raises $100 million for it. The maturity date of the MITTS would be set based on the maturity of some U.S. Treasury zero-coupon bond.

Let’s say Merrill’s new MITTS has a seven-year life. Merrill would then invest $80 million into the zero-coupon bond that definitely matures at $100 million. This zero-coupon bond is what allows the MITTS to mature at a guaranteed $10 a share. No matter what, Merrill can return investors their original investment.

$15 million would be spent buying (or creating) a call option on whatever index the MITTS is based on – the S&P 500 Index, the Dow Jones Index, the Nasdaq, or even a foreign stock market index. The other $5 million would go in Merrill’s pockets for profit.

If the $15 million option on the stock market expired worthless, Merrill still would have $100 million at maturity to give to the MITTS shareholders at the end, because of the zero-coupon bond. Confused yet? Again it’s not nearly as complicated as it sounds.

What’s important to remember is that there are only two ways to lose money in MITTS...

1) If you buy the MITTS at a price above $10, and the value of the index falls between now and maturity, causing the MITTS’ ending value to be $10 a share.

2) Or, total catastrophe... either Merrill goes out of business or the U.S. Treasury doesn’t pay on its zero-coupon bonds.

That’s it.

As I mentioned, there are 27 possible MITTS to choose from. Below, I detail my three favorite MITTS to buy right now, which offer you the best chance of upside gains...

A NO-RISK WAY TO OWN THE WHOLE
STOCK MARKET FOR THENEXT TWO YEARS…
You’ll even make money if stocks fall!

Most investors feel they absolutely have to have some exposure to the stock market. If you feel this way, then there is no better investment for you than this one…

It’s an investment in S&P 500 MITTS (MTSP). The story is really simple here… These MITTS closed recently at $10.44, which is pretty close to their fair value ($10.00).

Since these MITTS are close to fair value, almost, by buying now, you will get all of the upside of the S&P 500 Index over the next three years, and none of the downside…

Yes, it’s true… you can have your cake and eat it too… At current prices, it’s about as safe as cash in the bank, yet has all the upside potential of the stock market.

If you own a stock market index fund, you need to sell it. At its current price, the S&P 500 MITTS is a much better deal. The potential downside is almost nonexistent.

Buy the S&P 500 MITTS (MTSP) at current prices, and plan on holding until maturity (August 2008). You will pocket nearly all of the upside of the stock market, and if the market goes down, you will actually make money too. Take the money and run (sell) at $13 – when the $10 floor on our shares is getting too far away.

OUR SECOND CAN’T-LOSE IDEA…
All the upside of the stock market, with 1%
annual gains if everything goes wrong

Here’s another idea… if MTSP is getting bid up too much, there’s a similar alternative… Dow MITTS…

These Dow MITTS closed recently at $10.40. You are, of course, guaranteed $10 at maturity… so by buying at $10.40 today and holding to maturity, your worst-case scenario is a 3.8% loss.

You will get all of the upside of the Dow Jones Industrials between now and maturity, and you will minimize the downside risk of the stock market.

If you are certain that you will own the stock market in some form over the next three years, then why would you invest over that period any other way than with 100% of the upside, and alomost none of the downside?

Buy the Dow MITTS (MTDB) at current prices. Sell at $13, when our floor of $10 a share is getting too far away.

JAPANESE STOCKS HAVE JUMPED,
BUT YOU HAVEN’T MISSED IT…

Here’s how to buy now at pre-jump levels
and have practically no downside risk

For a bit of history here, Japan’s main stock market index, the Nikkei 225, peaked at 38,957 on the last day of 1989. Today – over 16 years later – the Nikkei is only around 16,000. So Japanese stocks are still down over 50% from their highs.

For years, it looked like Japan would never recover. Starting in 2005, it appears that a new bull market is finally in place in Japan.

It’s my belief that Japanese stocks could continue to do well, as I’ll explain. But if I’m wrong, you’ll hardly lose a thing.

Let’s go over the details:

My favorite Japan MITTS has the symbol NKS. As I write, NKS is currently priced at $10.33.

Your worst-case outcome in NKS is that you’ll get 10 bucks back (as usual). Your best case is triple-digit gains (in the case of this particular MITTS, you’ll get 109.5% of the increase in Japan’s Nikkei 225 stock index).

So you have 33 cents of downside risk, and you have unlimited leveraged upside potential.

Even better, you’re buying into Japan at a nice discount…

The fair value for this MITT right now is $11.56. What I mean by fair value is, if Japanese stocks do nothing between now and maturity but stay flat, you’ll get $11.56 deposited into your brokerage account at maturity.

So yes, you’re buying $11.56 of assets for $10.33. And your worst case is 33 cents of downside. The only negative about NKS is it doesn’t mature until June 5, 2009. However, at that kind of discount, and at that kind of limited downside, it’s definitely worth doing.

In Japan, everything changed in 2006…

The stock market peaked on the last day of 1989. Everything in Japan has tanked since then. In 1991, Japan’s central bank started cutting interest rates, trying to stimulate the economy… to ease the burden on people and business… and to get things going again.

It didn’t work. By 2001, the Japanese central bank had cut interest rates to zero percent. Still, nothing. After a decade of falling stock prices and falling real estate prices, nobody wanted to borrow.

On March 8, 2006, the Japanese central bank officially announced the end of “quantitative easing,” as they call it. It is a big deal.

The Japanese central bank saw the end of falling asset prices, and the beginning of people willing to borrow again. Asset values had deflated for 16 years, but recently, inflation has been positive.

The Japanese have a mountain of savings in bonds that pay them next to zero in interest. Even worse, as interest rates start to rise, the value of their bonds will fall. I expect a good deal of that money will flow into the stock market.

The MITTS are the right way to play it. If we’re right, we could make triple-digit gains in three years in NKS. If we’re wrong, well, we risked 33 cents. Sounds like a great deal to me…

We’ll close out this position when NKS matures in 2009. There’s no commission when they mature… you get the full value in your brokerage account.

So there we have it… three ways to make big profits with little or no risk. In fact, in two out of the three cases, it’s possible to actually make money if the stock market falls.

Buy them now, but don’t chase them… We have a while until they mature… and nobody else is doing a thing about these deals – the big guys who want to make $10 million a trade can’t buy ’em, because these MITTS are too small.

In short, these small MITTS are perfect for us. Get in now.

By Dr. Steve Sjuggerud

Let's face it – most people don't know when to sell a falling stock.

So they're frozen into inactivity, saying, "Should I just keep holding and hoping, or should I cut my losses now?" This state of indecision is usually permanent, and often continues until you hear the all-too-familiar phrase "well, it's too late to sell now."

One of my good friends lost it all following the "it's too late to sell now" principle. Based on a friend's recommendation, he bought a ton of shares of a cable stock that was supposed to take over the world. The shares soon tumbled in half, and his friend, who knows about the cable business, told him to buy more, so he did. The shares tumbled in half again, and he bought even more. He finally stopped buying when the shares hit a dollar a share. Now the shares trade for pennies – he would have to pay more in commissions than those shares are worth. He was uncertain about everything, and pretty soon it was all over.

After you've read this section, if you follow the advice, your constant state of indecision will be gone. You'll never lose another night's sleep worrying about which way your investments will go tomorrow. Because, unlike most investors, you'll have a plan – knowing when to get out, and when to stay in for the biggest possible profits.

Buying stocks is easy. There are thousands of theories out there for why and when to buy. But buying is only the first half of the equation when it comes to making money.

Nobody ever talks about the hard part – knowing when to sell.

We've all made expensive mistakes – either missing the full upside by selling too soon or taking a huge loss by holding a falling stock too long. But it's time to make big losses a thing of the past.

In order to invest successfully, you need to put as much thought into planning your exit strategy as you put into the research that motivates you to buy the investment in the first place. So please read closely here, and think about each point…

In business and in stocks, you've got to have a plan and an exit strategy.

When you have one, you know in advance exactly when you're going to buy and sell. The strategy I'll show you will allow you to ride your winners all the way up, while minimizing the damage your losers can do. Before I get into the specific strategy, consider this business example…

Let's say you're in the T-shirt business. You've made a ton of money on your T-shirt business in the States, and you're now in the Bahamas looking for new opportunities. You size up the market, and you figure you can make money in two places: in golf shirts, geared at businessmen, and in muscle-Ts, geared toward the vacationing beachgoers. These are two products clearly aimed at two different markets.

You invest $100,000 in each of these businesses. At the end of the first year, your golf shirts are already showing a profit of $20,000. But the muscle-Ts haven't caught on yet, and you've got a loss of $20,000. There are numerous reasons why this is possible, so you make some changes in your designs and marketing and continue for another year.

In the second year the same thing happens – you make another $20,000 on your golf shirts, and you lose another $20,000 on your muscle-Ts. After two years, the golf shirts business is clearly a succeeding business, and the muscle shirts are clearly failing.

Now… let's say you're ready to invest another $100,000 in one of these businesses. Which one business do you put your money into? The answer should be obvious. You, as a business owner, put more money toward your successful businesses. But as you'll see, this is the opposite of what 99% of individual investors in America do…

Let me start by asking you a question – what does "owning shares of stock" actually mean?

This isn't a trick question. As you know, it means you're a partial owner of the company, just like you're the owner of the T-shirt company in this example.

Owning your own business isn't fundamentally any different than owning a share of a business through stock. However, 99% of investors treat them exactly the opposite…

Let's say the shares of your two T-shirt companies trade on the stock exchange.

They both start trading at $10 a share. At the end of the first year, the profitable golf-shirt company is trading for $12 a share, and the unprofitable muscle-shirt company is trading for $8 a share. At the end of the second year, the golf shirt company is trading at $14, while the muscle shirt company is trading at $6 a share.

Which shares would you rather own?

Even though you know you should buy the winning concept based on the business example, most investors don't do so in their stock investments. They keep throwing good money after bad hoping for a turnaround. They buy the "cheap" stock – the loser.

In stocks (and in business, I believe), you must have and use an exit strategy – one that makes you methodically cut your losses and let your winners ride.

If you follow this rule, you have the best chance of outperforming the markets. If you don't, your retirement is in trouble.

The exit strategy I advocate is simple. I ride my stocks as high as I can, but if they head for a crash, I have my exit strategy in place to protect me from damage. Though I have many levels of defense and many reasons I could sell a stock, if my reasons don't appear before the crash, the Trailing Stop Strategy is my last-ditch measure to save my hard-earned dollars. And it works.

The main element to the Trailing Stop Strategy is a 25% rule. This is where I will sell any and all positions at 25% off their highs. For example, if I buy a stock at $50, and it rises to $100, when do I sell it? If it closes below $75 – no matter what.

DON’T LET YOUR LOSERS BECOME BIG LOSERS

So with my Trailing Stop Strategy, when would I have gotten out of the failing muscle-shirt business?

You already know the answer. Remember the shares started at $10 and fell immediately. Instead of waiting around until they fell to $6 as the business faltered, using my 25% trailing stop, I would have sold out at $7.50. And think of it this way – if the shares fall to $8, you're only asking for a 25% gain to get back to where they started. But if the shares fell to $5, you're asking for a dog of a stock to rise 100%. This only happens once in a blue moon – not good odds!

So what's so magical about the 25% number? Nothing in particular – it's the discipline that matters. Many professional traders actually use much tighter stops – the Investor's Business Daily newspaper for example, recommends an 8% stop. Ultimately, the point is that you never want to be in the position where a stock has fallen by 50% or more. This means that stock has to rise by 100% or more just to get you back to where it was when you bought it. By using this Trailing Stop Strategy, chances are you'll never be in this position again.

I use end-of-day prices for all my calculations, not intra-day prices. You should too. This makes things easier. If a stock has gone to $100, put at least a mental stop at $75. If, subsequently, the stock closes at or below that $75 level, sell your shares the next day.

I have to admit, it took me three years to truly follow my own advice on this one. I would always come up with some excuse for why I should keep holding some dud stocks. Nearly every time with those losers, if I'd practiced what I preached, I'd have been better off.

Now I always cut my losses. And once you get into the habit, and commit to doing it, it is not hard.

One thing in life is certain: That the future is uncertain. Nobody – not even the most astute analyst or investment advisor – can know enough about a particular company, industry, or the nuances of the market to anticipate with 100% certainty the future price of a stock.

But common sense dictates two fundamentals: 1) taking small losses is much better than taking big losses and 2) letting your profits run is much better than cutting them off prematurely.

By following this simple plan accordingly, I strongly believe your investment results will start to improve immediately and dramatically.

One investment – which most Americans know nothing about – is one of the secrets behind some of the world’s richest families.

I’m going to show you how to take advantage of it personally... with amazing results.

We call this investment a “secret currency” because it is beyond the reach of any government or corporation. And because many of the world’s wealthiest families have used it for generations to grow dynasties.

The secret currency is a form of gold.

But it’s not your typical gold investment.

It has nothing to do with mining stocks, mutual funds, options, futures, or bullion. Instead, this is a kind of currency used for centuries by the richest families to profit on financial windfalls created by governments around the world. This secret currency is not old-fashioned or obsolete. In fact, look through the rolls of the richest people in the world and you find dozens of families using this investment to both grow and safeguard their wealth. For example...

• The Rothschilds (at one time, the wealthiest family in the world)
• The Onassis family (Greek shipping magnate Aristotle married Jackie Kennedy after JFK died)
• The Hunt family of Texas (H.L. Hunt made his billions as an oil wildcatter)
• The DuPonts (whose descendants today run the second-biggest chemical company in the United States)
• The Morgans (JP was one of the richest railroad men of the last 100 years)
  

This investment is like gold, only better – with the potential for much higher returns.

• From 1972 to 1974, this investment rose 348%, according to an index that keeps track of its market as a whole. At the same time, stocks dropped 34% according to the S&P 500 stock market index.
  
  
• From 1976 to 1980, while the stock market plummeted 35%, according to the S&P 500 index, this investment realized 1,195% profits.
  
  
• More recently, between 1987 and 1989, investors who took advantage of the secret currency saw profits of 665%. Stocks, meanwhile, went on a roller coaster ride – up and down dozens of times (sound familiar?) during this period.

The last time the Salomon Brothers brokerage firm included this vehicle in its annual investment survey, the secret currency ranked #1 over the prior 20-year span, with an annual return of 17.3%. In other words, it was the single most profitable thing you could do with your money over the previous 20 years.

It beat stocks, bonds, gold, silver, artwork, diamonds, U.S. Treasury bills, real estate, and oil, according to an article in the Chicago Tribune.

I can understand why you may believe I’m exaggerating the power of this secret currency to safeguard and grow your wealth.

After all, you may have never heard of it before. Most investors haven’t. But the truth is, you can use the secret currency to make as much money as you want. The problem is, no one else is likely to tell you about it. Why should they?

But if this investment is good enough for the world’s wealthiest families – the Rothschilds, DuPonts, Morgans, Adamses, Hunts, etc. – I think it’s good enough for you and me.

I want to show you how to make as much money as these folks have made – at least on a percentage basis.

The good news is that you don’t have to be wealthy or famous.

In fact, I’ll show you how to capitalize on the secret currency very soon with as little as a few hundred dollars.

I believe you could double your money with this investment. A 5-times or 10-times return wouldn’t be surprising. The last time the conditions were even close to this good (in 1987), investors made 665% profits.

Here are the details...

When I look out now over the three “major” investment classes – stocks, bonds, and real estate – what I see for the very near future is limited upside potential and large downside risks, particularly in stocks and bonds.

For me, the starting point is always the same... What is certain? What is known? What can we bank on? And is there an outstanding way to profit that nobody has already gobbled up?

One thing we’re certain of right now is that the Fed is going to do its best to prevent deflation (falling prices). We have seen what deflation looks like in Japan, and it is not pretty. The Fed has repeatedly stated it will print money – as much as necessary – to head this thing off. In an effort to calm any fears, the government has been as explicit as possible that it would rather overshoot in this process.

The obvious result is more paper dollars out there. And the next result is that a paper dollar is worthless. Consider this scenario... Say the supply of gold stays roughly the same. But say the supply of dollars out there increases dramatically. What should happen? It should cost more paper dollars to buy an ounce of gold. And that is exactly what’s been happening. Gold has risen from a low around $256 an ounce to over $648 an ounce in the last five years.

Chances are this trend will continue, as falling prices are a natural consequence of a competitive economy in peacetime (computer prices fall, car prices fall, etc.). So chances are, the Fed will be “fighting” this battle for a while. Therefore, chances are gold will be an excellent place to profit from this sure fight in the years to come.

So I went looking for the best way to get into gold right now... the way that will give us significant upside potential, but will keep our downside risk limited. It’s actually hard to find...

We could own gold outright. But if we’re right in this Fed scenario, we’d like a little more bang for our buck. You could buy gold futures, but they’re risky – why risk losing more than your initial investment if you don’t have to? The next logical choice might be shares of mining companies like Newmont Mining, but mining shares are getting pricey. I had to dig deeper.

The secret currency is the supercheap, supersafe way to get into gold and still have big upside potential...

To understand this investment and how it works, we have to back up a little bit...

Before 1933, gold literally was money... gold coins could jingle in your pocket. After 1933, President Franklin D. Roosevelt actually made it illegal for U.S. citizens to own gold or gold coins, upsetting two centuries of stable money...

For most of the 200 years before 1933 (going back to England), an ounce of gold was worth $20.67. Major governments had actually committed to giving you gold for paper money if you demanded it.

FDR changed all that. A month into his new presidency, he ordered all U.S. citizens to immediately exchange all their gold for paper money. His next move was to issue an executive order raising the price of gold from $20.67 to $35, which devalued the U.S. dollar by 69%. In essence, any savings U.S. citizens had were now worth nearly 69% less, by government decree.

The history of the U.S. dollar over the last 70 years since then has been fairly ugly...

Now, 70 short years after FDR trashed the gold standard, we need more than 600 paper dollars to buy an ounce of gold.

Today, our government wants to pull off what FDR did. It wants to squeeze out of a rough period of debt and deflation by creating a massive inflation. The massive devaluation of the dollar worked for FDR – Industrial production rose by 60% and unemployment fell from 25% to 14% from 1933 to 1937. Our current government plans to do the same, devaluing our money to stimulate the economy. We can sit back and watch, or we can take the government to the cleaners, and pocket gains of 100% or more...

The investment I want to tell you about is a way to invest in rare gold coins.

Before you dismiss this idea, remember that this is an investment the most powerful and wealthy families in the world have used for generations.

But it’s not just any coins I want to show you how to invest in... it’s a very specific group of gold coins.

Let me explain...

Before FDR, there was Teddy. Teddy had a thing for coins. He passionately hated America’s coins, calling them “artistically of atrocious hideousness.” America had become the most powerful nation on Earth. And the President felt that our most valuable coins should be a reflection of our status. So he sought out the foremost sculptor of the day, Augustus Saint-Gaudens...

“Dear Mr. President...” Saint-Gaudens replied to Teddy. “Well! Whatever I produce cannot be worse than the inanities now displayed on our coins, and we will at least have made an attempt in the right direction...”

Though in poor health, Saint-Gaudens delivered. He designed the gallant $20 “Double Eagle” gold piece, a design that today is nearly unanimously considered to be the most beautiful coin of all time. It was Saint-Gaudens’ last work. He died and never saw the fruits of his labor.

The coins were minted from 1907 until 1933, when Teddy Roosevelt’s cousin FDR made it illegal for individuals to own gold and melted down many of these gorgeous coins. After gold ownership was banned in 1933, private ownership of gold was not allowed in the U.S. until 1974.

While the entire 1933 series of Saint-Gaudens Double Eagles was supposedly destroyed by FDR, 10 of the coins somehow sneaked out of the mint. Over the years, nine have been recovered and destroyed by the Secret Service. The government seized the 10th coin in New York and made arrests, but the government case fell apart and a compromise was met. The coin would be auctioned, with the proceeds split half and half between the government and the other party. This 1933 Saint-Gaudens $20 Double Eagle sold for $7,590,000, the highest price ever paid for a coin.

Before 1933, we had Double Eagles ($20 gold pieces that contained nearly an ounce of gold), Eagles ($10 gold pieces with nearly half an ounce of gold), Half-Eagles ($5), and so on. A Saint-Gaudens $20 gold piece would have an intrinsic value of about $575 dollars today, since it contains nearly an ounce of gold, and an ounce of gold is worth about $625 (as of December 2006).

Of course, coin enthusiasts will always pay more than meltdown value for Saint-Gaudens $20 gold pieces – as they are considered to be the most beautiful coins in the world. But right now, these Saint-Gaudens gold coins are selling for the smallest premium over the price of gold in their recorded history. We can own a piece of history, and we can own real money with real gold, for a small premium over the meltdown value.

“With modest investment in the right coins in the early 1970s you could cash out and buy a house by 1980, and many did.” – David Hall, Collectors Universe

Rare coins have experienced a few roaring bull markets since gold ownership became legal again. Coin prices (as measured by the CU 3000 Index) were up 1,195% in the 1976-1980 bull market in coins. In other words, a $10,000 investment would have risen to $129,500 in value.

In the 1987-1989 bull market, coin prices rose by 665%. Coins like the Saint-Gaudens in pristine “Mint State” condition (coins graded “MS65” by the coin grading service PCGS) were big winners.

Then in 1989, the bottom fell out. Coins were in a horrendous bear market for the next 14 years, which brought the Saint-Gaudens to ridiculous bargain levels. As you can imagine, after 14 years of misery, there were a lot of bitter people in the coin business. After 14 years of people getting burned, it reached the point where the word “investor” was a dirty word...

I flew out to visit the headquarters of the largest coin dealer in America, and stated my intentions... to learn about its business as a potential coin investor and to possibly tell thousands of potential investors about it. The dealer wouldn’t see me. The next week I went to one of the country’s major coin shows, and again I approached the same coin dealer, again genuinely stating my intentions to invest in coins. Yet again, he wouldn’t see me, as an “investor.” How ridiculous is that?

After the market skyrocketed to its peak in 1989, a bunch of unscrupulous operators entered the coin business, talking about coins as a can’t-lose “investment,” promising high returns, even guaranteeing profits, and fleecing lots of people in the process. The Federal Trade Commission (FTC) stepped in, putting a halt to the scamsters, and the bottom fell out of the market. The FTC was extremely active in shutting dirty operators down in 1992 and 1993.

By 1994, just five years after their peak, coin prices were down about 80%. The bad taste in people’s mouths lingers. We’re not much higher than those 1994 lows now. (See the chart below.) The FTC has put out a guide to investing in coins to help protect you: www.ftc.gov/bcp/conline/pubs/alerts/coinalrt.htm.

Today, the politically correct lingo is “collector/investor.” But I’m not interested in collecting, at least not yet...

When it comes to gold coins, there are basically two types... rare ones and common ones.

The common gold coins are called “bullion coins,” because a one-ounce gold bullion coin generally sells at about the same price of (or at a small premium to) an ounce of gold. Famous bullion coins include South African Krugerrands and Canadian Maple Leafs. If gold is $625, you might buy these for $670.

The rare gold coins are called “numismatic coins.” These coins, trade based on their rarity, scarcity, and collector demand. Though gold may be at $625, a rare and highly prized one-ounce gold coin can easily fetch tens of thousands of dollars.

Then there is a bit of a third type of gold coin... The “hybrid coin,” I call it. And this is what I like. These coins have characteristics of both of the types above, but they’re not really either. The typical Saint-Gaudens is a prime example of the hybrid...

Saint-Gaudens dating from 1924-1928, for example, have a high collectible value, yet they are easy to buy and sell. Like bullion coins, there are enough of them to go around, plus they contain just under an ounce of gold. I expect these will likely be the first coins snapped up when people discover how cheap the coin market is right now.

Mint State Saint-Gaudens coins (graded MS63 by PCGS – if you’re new to coin-lingo visit www.pcgs.com) from these dates are currently selling for around $935 each. The MS65 coins are currently selling for about $1,800, or about a 213% premium to the current price of gold.

There are many ways to buy these coins. Since these coins have been graded and sealed by the grading service PCGS, it is okay to buy them sight unseen. So you can buy them through your local dealer, or try your luck on eBay (I typed “Gaudens” into eBay today and 422 items came up).

The question is: what is the right price? There are many coin price guides out there. And in each guide, you’ll find a wildly different price. Price guides fall into two categories... “retail” price guides, and “dealer” price guides.

“Retail” is the asking price, like what a car dealer would ask for a used car. “Retail” is generally a pipe dream for a dealer... particularly when it comes to easy-to-find coins like the 1924-1928 Saint-Gaudens.

I’m willing to pay a 50% premium above the price of gold for the MS63s, 80% above the price of gold for MS64s, and a 200% premium above the price of gold for the MS65s.

Again, we’ll pay:

• 50% premium above the price of gold for MS63 St. Gaudens
• 80% premium above the price of gold for MS64 St. Gaudens
• 200% premium above the price of gold for MS65 St. Gaudens and
• 25% premium above the price of gold for AU50 Liberties (see below)

The fun thing about pre-1933 gold coins is that they’re like stocks – they come in many different flavors, values, prices, and qualities. While one may soar, another may do nothing. Here’s a great example...

I’ve been recommending 1924-1928 one-ounce gold coins – the Saint-Gaudens coins, as they’re known. I recommended buying them in MS63 and MS65 grade. The prices of those two coins have risen. But the MS64-grade coins, right in between, haven’t risen quite as much.

Here’s our simplified table to keep everything easy to follow:

Also, there’s another MS63-grade gold coin that’s actually down in price since I started talking about gold coins: it’s the $5 Liberty. Now that one is a sleeper bargain! But these are a bit harder to come by, and trade at a significant premium to their melt value.

Remember: Don’t pay more than the “buy-up-to” price.

There’s also opportunity in “raw” coins – gold coins not in Mint State condition. Raw $20 Liberties minted in 1904 can be had for a little more than 10% over the price of gold (in extra-fine grade). This grade is not one of my recommended coins... but here you have a piece of American history for not much more than their melt value – they’re not making any more of these. The “raw” coins I like are a little nicer, the AU50-grade Liberties, and they can often be had for 20% or less above the price of gold.

At the end of this report, I’ve provided a list of dealers you can buy these coins from. Just call or e-mail one of these dealers and tell them you’d like to buy two MS63 graded Saint-Gaudens and one MS65 graded Saint-Gaudens from the 1924-1928 mintage. Make sure they’re graded by either PCGS or NGC.

In addition, or as a substitute for the MS63 Saint-Gaudens, buy the Type III Liberty $20 gold piece. At the time of your order, ask the dealer which of those he thinks is a better deal. And also ask if he believes it’s a better deal to replace the MS65 Saint-Gaudens with a high-grade Type III Liberty, like an MS64.

These are the coin dealers I recommend you start with. You can simply call these guys on the phone, tell them you are one of my readers, and explain what you want to do. I recommend you start with Burt Blumert, because Burt has said he will sell for 5% over the price of gold... and he’ll even give you a 98% buy-back guarantee.

But if Burt can’t help you, try one of the other folks. I’ve been working with these guys for at least a few years now, and they are all good to work with.

Keep in mind that you can also go to any coin dealer near you and ask about 100-year-old coins in Brilliant Uncirculated (BU) condition. Just be sure you know how much gold is in each coin... and that you are not paying much above the melt value of the gold.

Also: I do not receive any compensation for recommending these guys. These dealers all have good reputations and decades of experience.

Burt Blumert
Camino Coin
P.O. Box 4292
Burlingame, CA 94011
Phone: 800-348-8001 or 650-348-3000
Fax: 650-401-5530
E-mail: burtblumert@comcast.net

Van Simmons
David Hall Rare Coins
P.O. Box 6220 Newport Beach, CA 92658
Phone: 800-759-7575 or 949-567-1325
E-mail: info@davidhall.com

Dana Samuelson and his team
American Gold Exchange
P.O. Box 9426
Austin, TX 78766-9426
Phone: 800-613-9323
E-mail: dana@amergold.com

Rich Checkan or Glen Kirsch
Asset Strategies International, Inc.
1700 Rockville Pike, Suite 400
Rockville, MD 20852
Phone: 800-831-0007 or 301-881-8600
Fax: 301-881-1936
E-mail: rcheckan@assetstrategies.com

By Dr. Steve Sjuggerud

In August, Wall Street empties out and heads for the Hamptons...

Investment hotshots get out of the New York grind and head to the coast to enjoy time with friends and family.

This summer, I went to my version of the Hamptons. I was out of the office for five days with my longtime friends, eating fantastic meals and surfing every day… in Nicaragua.

We lived like kings… for less than $100 a day.

Man, I would so much rather be in Nicaragua than the Hamptons…

I stayed in Rancho Santana for a few days on this trip. There were eight of us. We really did live like kings for a few days… with a housekeeper/cook that made extraordinary meals and kept everything super-clean.

You might find this amazing, but we left the housekeeper only $40. Divided by the eight of us, the housekeeper/cook for a few days cost each person $5. It’s so little money, you feel bad about it... But you have to realize that most folks in Nicaragua make less than $100 in a month.

It’s not right to upset the local balance of things. We paid her more than she could imagine. It really is a poor country… They say it’s the second-poorest in the Americas, behind Haiti. So don’t expect five-star living everywhere. You’ve got to have your trip set up before you go.

Our crew then moved up to the Gran Pacifica area. House & Garden TV was there last Monday filming the model home. The waves at Gran Pacifica were just great for surfing, again (but there are great waves all along the coast). Home prices start at $99,000 in Gran Pacifica, according to their website.

Heading back to Managua to fly home, I stopped off at the attorney’s office to sign the legal paperwork on purchasing my lot in Gran Pacifica (just one signature!). Then that night, we ate dinner at El Tiscapa, a fantastic steak restaurant. I didn’t see the bill, but the best restaurants in the country generally end up costing less than $20 a person – and that includes drinks and tip!

I consider myself somewhat of Nicaragua pioneer… I first went there in 1993 and built a house there in the late 1990s. I’ve always said, “as long as Americans think of Nicaragua as Russia With Palm Trees, it’ll be a good buy.”

But I never committed to it like Mike Cobb has… nobody has.

I call Mike Cobb the “Indiana Jones of Investing.” He’s not afraid to go anywhere he sees opportunity. He saw opportunity, and went after it.

About four years ago, Mike did the unthinkable… he moved his wife and child from their suburban, white-picket-fence lifestyle outside of D.C. to – get this – Nicaragua.

Mike and some investors bought 3.5 miles of beachfront land in Nicaragua, less than an hour from the international airport.

Mike needed to be on the ground to make it happen, hounding contractors and the government, and meeting with potential real estate buyers as they came to town. He took it upon himself to make this project work.

I was skeptical at first… it was an awfully large project. His was the second major coastal project in the country, after Rancho Santana. From what I’ve seen, projects fail in “fringe” destinations because they run out of money, not because they’re bad ideas. Mike was going to need a heck of a lot of money, and a little luck…

I never said it to him, but I thought Mike needed a bull market in real estate to get his massive project to critical mass. To give you an idea of how this project can just swallow up cash, Mike had already spent millions, and the first time he drove me to the beach at “Gran Pacifica,” there was no path yet… We were knocking over small trees in his four-wheel drive to get to the beach.

Times have changed…

Mike Cobb got the luck he needed… After a somewhat slow start, coastal real estate prices are soaring in Nicaragua. Many homes are now being built at Gran Pacifica. Golf is coming in. One condo building is sold out and is now under construction. Over 100 lots have been sold that require owners to build within two years of buying, which will help create a real community, instead of a “ghost town” of lots.

Is there risk? Absolutely. A U.S. recession would undoubtedly knock prices down. And of course there’s political risk. One question you might be asking: What does Daniel Ortega's re-election mean for Nicaraguan real estate?

I recently heard from a few friends about the prospects of the country with Ortega back in power – notably Mike Cobb from Gran Pacifica and Tommy Gordon from Rancho Santana. I have had consistently good experiences with both outfits.

Tommy Gordon said:

“Things will be fine here in Nicaragua with Ortega as its president...

“Now, there is a different Nicaragua in a different world than the last time he was president. There is no Soviet Union providing money and arms. Even if he wanted to, Ortega doesn’t have the power to resurrect controversial policies like military conscription, private property confiscation, and censorship of the press. He doesn’t control the National Assembly or the army.

“Mr. Ortega’s ability to enact radical challenges is severely hampered by the National Assembly, which remains divided between four parties. To rule, he must reach agreements with the two conservative parties. Since he was in power last, the president’s power has been curbed by constitutional changes pushed through in recent years, giving the assembly more say over cabinet positions.

“Unlike during the last presidency of Ortega, the Sandinistas are very involved in the tourist industry and land development. They are aware that it is to the benefit of everyone in the country that the economic policy will remain pro-foreign investment and non-interventionist. No one wants to put at risk the economic gains of recent years.

“Of course, there is no guarantee anywhere in Central America, but the picture of Nicaragua is a lot brighter than people might think.”

Thanks, Tom. Well said.

Mike Cobb of Gran Pacifica told me nearly the same thing...

“Mr. Ortega is serious about his commitment to promote foreign investment and tourism. We anticipate public relations issues in the immediate future, but they’ll largely be perception based... Remember too that the presidency is weaker due to laws passed by Oretga himself, and that the assembly has four major parties and should become a moderating force.”

Now that we have a bit more to go on from Americans “on the streets” in Nicaragua, it appears that Ortega could turn out to be “kindler and gentler” after all. If Tommy and Mike are right, folks bold enough to invest there now should do extremely well.

However, because of the risk, Nicaraguan prices will never come close to California prices, or even Costa Rica prices. But right now there’s a limited supply of quality accessible beachfront properties in Nicaragua. Meanwhile, the demand keeps on coming.

I know two real estate developments in Nicaragua particularly well… as I mentioned, years ago, I built a home in Rancho Santana (www.ranchosantana.com), and now as an owner at Mike’s project, Gran Pacifica, I’ll soon be building a home there too (www.granpacifica.com).

I’ve met a lot of realtors in Nicaragua over the years. Honestly, I didn’t trust most of them. The most solid realtor I know there is Barry Oliver. Barry is an American who worked for a tech company, and got out around 2000 and moved to Central America.

Barry’s ideal… He’s responsible. He knows the entire coastline better than anyone (as he’s a great surfer always looking for an undiscovered wave). He married a Central American woman, so he knows the local scoop and speaks perfect Spanish.

He opened the first Century 21 office on the coast in Nicaragua. And he’s set up a U.S. phone number that actually reaches his office in Nicaragua: (904) 430-2022 His e-mail is: barry@c21sanjuandelsur.com. You can reach Mike Cobb by e-mail at mmmcobb@aol.com.

Nicaragua is right next door to Costa Rica, and offers the same climate, coastline, fishing, etc. Only the prices are much lower. While prices have soared, real estate here is still very cheap. I think there’s still 100% of upside on the table here.

If you want the Hamptons experience for a very small fraction of the cost, I'd recommend looking into Nicaragua.

Make sure you read the book The Millionaire Mind, by Thomas J. Stanley… and you can see how your financial habits stack up to America’s most financially successful people.

After interviewing more than 1,300 millionaires for this book, Stanley found eight common elements of long-term economic success:

#1. Honesty, hard work, integrity, and focus. These millionaires understood the key success factors our economy rewards: Being honest with everyone you deal with, hard work, integrity, and focus. Top of the list was “being honest with all people” – even above hard work.

#2. Academic performance doesn’t determine financial success. The average millionaire graduated college with a 2.9 GPA – and that’s if they even graduated.

#3. Have the courage to take some financial risk. This doesn’t mean taking all of your “safe” money and putting it into an options trade. It simply means that, with a small portion of your overall portfolio (less than 5%), you should have exposure to investments pose a higher risk, but offer higher reward. If a higher-risk investment does go against you, there’s an easy way to keep your losses small – see Don’t Lose Money in this report for more on how to do that.

#4. Pick a job that is not only unique and profitable; pick one you love.

#5. Be careful in selecting a spouse. People who are economically productive married men or women who shared the same characteristics of success.

#6. Operate an economically productive household. Most millionaires live below their means. For example, they prefer to repair or refinish things, rather than buy new. They believe that financial independence is far more important than displaying high social status.

#7. Follow the lead of millionaires when buying a home: Study, search, and negotiate aggressively.

#8. Adopt a balanced lifestyle. Many millionaires are “cheap dates.” In other words, it does not take a lot of money to enjoy the company of your family and friends. They allocate their time, money, and energy efficiently, in ways conducive to building wealth.

For example, most millionaires operate their households on an annual budget. They know exactly how much they spend each year on food, clothing, and shelter. Also, millionaires in general have a clearly defined set of daily, weekly, monthly, annual and lifetime financial goals. They spend more time than non-millionaires planning their financial futures.

So… contrary to the popular wisdom about the rich, millionaires in America generally are honest people. They set firm financial goals for the long and short-term. They value their marriages. And they value life’s experiences and the company of their family and friends over expensive “stuff.”

What a refreshing revelation – that these are the core values of achieving true wealth.