The Tin Heist - The Weekend DR

The Tin Heist
The Daily Reckoning
Weekend Edition
January 29-30, 2005
Baltimore, Maryland
By Addison Wiggin and Tom Dyson

Marlene Dubinsky's Coin and Jewelry Exchange became so
choked with customers one afternoon, she was forced to
close her shop.

"The volume of customers has grown so much we can't even
calculate the increase," snapped Marlene. "People are
jumping on the bandwagon because they figure they can make
more money by buying and selling gold and silver than
leaving their money in the bank or playing the stock
market."

Marlene Dubinsky was being quoted in the New York Times.
The date: January 20, 1980.

Your eager Baltimore-based editor is hot on the trail of a
bull market in commodities. Two weeks ago, we went to a
major international seaport, and a major international coin
show. Last week, the trail led us to the local library…and
their archive of New York Times microfilm.

The last commodity bull market took place in the 1970s. The
climax came in January 1980, with the great metals crash.
Gold fell $160 in one day; silver crashed too. Commodities
have been ignored as an investment ever since.

That much we already knew. Now we wanted to see what it
felt like to be there - as if we had traveled back in time
to January 1980 and placed an ear on the sidewalk. History
repeats itself; by examining the final episode of the 70s
metal mania, we hoped to identify patterns we could use in
the future. Once again, we're in the midst of a commodity
bull market, and these clues could prove very useful.

"For the past 23 years, this was just a quiet coin and
stamp store, but within the past few weeks this place has
turned into a junk shop," said Istvan Varga, owner of the
White Plains Coin and Stamp Exchange, speaking in 1980.
"It's a madhouse, what's happened here."

Obervation #1: The public was gripped by mania. In 1980,
the bubble in gold and silver was ripe; thousands of
regular people had become frenzied antique dealers. At a
jewelry refiner in New York, the line snaked around the
outside of the building, says the NY Times. An elderly man,
hoping to sell his flatware, was quoted: "First I waited in
a gas line earlier this year," he said, "and now I'm
waiting in a silver line."

Next, we noticed the adverts. The newspaper was seething
with "reputable" gold coin dealers and "#1-ranked"
commodity traders.

"Are you trading in America's industrial wealth and
forgetting America's natural wealth?" asks a half-page
advert in the business section. "Simple statistics prove
that the profit potential is greater in commodities than in
stocks. It follows - as "B" follows "A" - that where the
leverage is greater, the opportunity for profit is greater.
And the greatest leverage in the world is found in the
commodity futures market."

"You say you don't know anything about commodities market?"
the ad goes on, "You don't have to. We do. When all you
trade is commodities, as we do, you know commodities. For a
better return on your trading dollar…get into commodities
with Nelson, Ghun and Associates."

Finally, we often found commodities featured on the front
page. Usually the stories were of a market bent. "Gold
makes record high, trading is wild," was the headline one
day. At other times, the stories had nothing to do with
markets…

On January 19, 1980 a gang of thieves made off with a
truckload of tin ingots worth more than $500,000, reports
the Times. Handcuffed, blindfolded and held at gunpoint, a
30-year-old guard, Rene Tadros, was held hostage before the
thieves vanished with 60,000 pounds of tin. "The price of
tin, like that of gold silver and other metals, has risen
sharply in recent months, from just of $7 a pound last
October to $8.44 at the close of trading Friday in New
York."

Observation #3: The bubble pushed commodity-based stories
to the front page. It was time to sell.

Here at the Daily Reckoning, we'd assert that a NEW bull
market in commodities was underway. Don't take our word for
it though; just look at any commodity price chart over the
last few years. Or listen to the experts, like Jim Rogers.
"A new commodity bull market is underway and will continue
for years," he says, speaking in 2005. "I have been
convinced of this since 1998, and have been making my case
for commodities ever since."

But you won't much evidence of this juvenile resource bull
run in your weekend edition of the New York Times…even
though the last five years have been one-way traffic. In
fact, the CRB - the benchmark commodity index - is up
nearly 50% since the beginning of 2003. Last week, the CRB
was unchanged at 284. Year to date, it's up only 0.1%.

Gold, silver and oil all declined last week. Oil was off
$1.62 a barrel to $47.18, while gold fell$1.30 an ounce to
$425.70. Silver declined 2 cents to $6.79 an ounce.

In most newspapers, stocks and bonds are still all the
rage. If you don't believe us, just look which companies
are making the headlines. Last week, both markets - bonds
and equities - went up…the DJIA was up 34 points to
10,427, while the Nasdaq was 2 points higher, closing at
2,036. The bond market also found support. The 30-year T-
bond yield closed at 4.61%, down 3 basis points on the
week.

In 2005, a pound of tin trades for $3.64…and most thieves
wouldn't even give it a second glance. Soon they might
reconsider.

P.S. We were proud to learn that the New York Times relied
heavily on Paul Sarnoff's analysis of the metal situation
in early 1980. He was quoted nearly everyday.

We only mention this because, 25 years later, Steve
Sarnoff, Paul's son, finds himself in an equally
distinguished position. Since taking over from his father
as the editor of Options Hotline, Steve has gone from
strength to strength. In fact, you could say his readers
rely on him. Maybe it's because, since January 1, 2004, he
has made 34 option recommendations…and 30 were winners?

Don't miss The Great Profit Debate at the World Money Show
in Orlando, Fl, next Thursday. Investment heavy-hitters Dan
Denning and James Boric are going to duke it out live.
Denning is a big-picture macro-guy who plays options on
ETFs. James, an inveterate small cap sleuth, could care
less…he's buying great companies cheap on their
fundamentals - and watching them skyrocket in value.

"The Great Profit Debate" will be moderated by New York
Times Best-selling author (and publisher of the Rude
Awakening) Addison Wiggin. Stuck in the middle will be
value seeker Chris Mayer, editor of the Fleet Street
Letter. Chris has his own approach he calls: "Tangible
Assets That Sweat." Chris does just fine in any market.

You don't want to miss it…when these guys get together
for a tussle…follow this link for details:

We have invited the world's most experienced traders in
gold to Long Beach, Calif. - including the top names in
bullion (Burt Blumert), rare coins (Van Simmons), portfolio
diversification (Michael Checkan) and gold stocks (Frank
Holmes) to tell you their very best ideas in each category.

It is everything you need to know about investing in gold,
directly from the people who've made an entire career out
of trading in gold. Burt, for example, opened his shop in
1959. Van invented the PCGS grading system. Frank runs the
best gold mutual funds in the world. And Mike can tell you
about helping our Vietnamese allies, who were fleeing the
communists, exchange gold for U.S. dollars at Eglin Air
Force Base more than 25 years ago.

We have even arranged for you to get your own "dealer's
pass." This allows you to go on to the floor of the show
the night before it opens - where you can buy almost any
gold coin that's ever been traded.

It is your chance to buy my recommended coins, or the
recommendations of our experts, and take immediate
delivery.

"In a low inflation world, housing bubbles are a much more
dangerous phenomenon." - John P. Calverley.

We ran an extract from this book as a Daily Reckoning Guest
Essay, and the above quote was taken from the piece.

Bubbles have played a major role in the world economy over
the past 20 years, first in stocks and now in home prices.

If you are worried your home might be part of a bubble, we
recommend you read this book.

If you are interested in markets, economics, trading or
speculation, we recommend you read this book.

Exposed! America's Own Axis of Ruin

Their sneaky plots and dangerous schemes are THREATENING your income, your
investments, your wealth, and your financial security. It could cost you everything.

Finally -- these plots and schemes have been revealed in this shocking report.
Protect yourself and find out how you could profit.Click here:

"When the crowd takes up a corrupt wish - to get something
for nothing…or to make the world a better place by
killing people - the last thing it wants is another point
of view. It is already too late for that."
http://www.dailyreckoning.com/Issues/current/012805.html

"But many speculators fail…even when armed with good
picks. I think it was Woody Allen who said, 'In life, there
are pitfalls and there are opportunities. The idea is to
avoid the pitfalls, seize the opportunities, and get back
home by six o'clock.'"
http://www.dailyreckoning.com/Issues/current/012705.html

Before I tell you what the greatest single secret of
investing is, though, I want to tell you why I'm going to
give it to you. I'm going to tell you this secret because
it's hiding in plain sight.
http://www.dailyreckoning.com/Issues/current/012605.html

"If the American fridges are cheaper in Europe, so are the
Chinese fridges. No net competitive gain in the fridge
market…or perhaps in ANY market for manufactured goods."
http://www.dailyreckoning.com/Issues/current/012505.html

"On page one of the International Herald Tribune we see
George W. Bush, at his second Inauguration, whose mouth
seems to have come such lofty guff he might have been
mistaken for a hospital chimney."
http://www.dailyreckoning.com/Issues/current/012105.html

A Look at What the Future Holds
by Kevin Kerr

Over the past two years, commodities have more than eight
times better than traditional stocks…and there is no sign
of this boom ending any time soon. The future looks bright
for the resource and commodities markets.
http://www.dailyreckoning.com/Featured/ALookatWhat.html

Chipping Away at American Optimism
by Rick Barnard

"In fact, I think that was what was so amazing about Dr.
Richebächer. He's 86 years old, and he still has a fire in
his eyes. As I've said, he constantly watches financial
news channels.
http://www.dailyreckoning.com/Featured/ChippingAway.html

Stomp the S&P 500 By 1,142%

The key to financial freedom certainly isn't found in blue chips or mutual funds - but one market guru's favorite investment vehicle gained 44.6% for his readers…and it barely involved any "trading."

Keep reading to find out about this investment tool that has allowed savvy investors a single source of steady, low-stress buy-and-hold stock market gains that has blown away all other types of securities investment for the last 75 years and counting…