World Reports, Spring 2001


* LEARN FIVE TOP INVESTMENTS. This is the beginning of a seven to fourteen year Wall Street consolidation. Bargains abound. See below.

* DISTORTIONS CREATE EXPLOSIVE OPPORTUNITY. A new coastal highway will turn useless land into ocean resorts. Yet the owners don't know. Buy 38 acres of Pacific Ocean paradise for just $25 a month!

* JOIN GARY SCOTT'S "FESTIVAL OF KNOWLEDGE" AT LITTLE HORSE CREEK.

Mountain winds whisper through giant hemlock and pine. A fresh tang of cut grass drifts buoyant with the promise of spring. Frog songs serenade their limpid pond, golden in the setting sun.

Spring at Merrily Farms, North Carolina. What a day! Up at dawn, writing, then planting crops. Wearing shorts. Enjoying the afternoon sun. Hot, jumping into Little Horse Creek. Sitting in cooling pools. Relaxing under the old Black Walnut tree. Drying in the grass. Thinking about opportunities to share here with you. In most places money cannot buy these simple but incredible pleasures. So I'll invite you to share them here with me. That's later. First let's look at five hot investments and why they make sense now.

Since 1900 U.S. shares have been through four periods of boom and bust. From 1900 to 1911 markets rose. They fell from 1911 to 1920, then rose again until 1929 when the great depression clobbered them for 12 years until 1941. There was a bull for 25 years until 1966. U.S. equities then turned bearish and consolidated for 15 years until 1981, when the last great bull ran for 18 years until 1999. You may read in the news that the bear is over and markets are ready to turn around. You'll see short rebounds. Don't be fooled by this noise. History is clear. We are in for a long equity dry spell.

Cycles are natural. What goes up, comes down. Review economic charts. Study underlying economics. Read history. You will find cycles are inevitable. The bear today is just as history suggests. We may not like it but odds are we are in for long term weakness in the Dow.

Historical perspectives support weak stock action as well. Previous bulls and bears were related to times of peace and war. The great bull markets were post war booms, after WWI, WWII. The last bull of 1982-1999 was fueled by the Evil Empire's collapse and brisk China trade.

Bear markets are associated with tension and wars (fought or cold). The bear of 1911 led to WWI, the bear of 1929 led to WWII and the bear of 1966 led to the cold war. Now we again have rising U.S. – Chinese tension! Yet great opportunities exist. See them next page.

Great Opportunity #1: Wood. Inflation is a possibility now. Prices of oil, commodities, energy etc. are rising. Increased tension with China will push up prices on billions of consumer goods! This makes investing in wood good economic sense now. An article by James Clash in the April 16, 2001 issue of Forbes (page 346) entitled "Timber" shows during these worst three bear markets of the 20th century (1911-20, 1929-41 and 1966-81) that directly owned timber acreage easily outdid the S&P, (timber up 233%- Vs. 71% up S&P). The article points out that buying shares in timber companies gives an equity play plus a back up of vast holdings of company timber. Here are some timber shares.

 


Company Price Market Value P/E Return
Recent 52 week Hi ($ mil) last 12 mos. 10 yr ann.

Boise Cascade $31.22 $37.56 $1,790 11 3.7%
Georgia-Pacific $30.30 $32.40 $2,429 16 -
(Timber)
Hancock Holding $38.88 $41.88 $ 430 11 -
Intl. Paper $35.45 $45.94 $17,066 - 3.7%
Mead $25.59 $38.13 $2,530 15 8.4%
Plum Creek Timber $24.63 $29.81 $1,705 13 20.3%
Potlach $31.30 $44.50 $ 889 - 3.8%
Temple-Inland $45.17 $57.50 $2,221 11 4.2%
Weyerhaeuser $50.94 $64.75 $10,481 12 11.2%
Willamette $46.45 $50.50 $5,082 15 16.6%

Two shares to especially watch are Plum Creek and Georgia Pacific Timber. Plum Creek has managed a 21% annual return since going public and there is a proposed merger with G-P Timber. If this goes through, the combined entity will have 7.9 million acres of U.S. forest land. For more details on timber shares: Larry Grossman, 2706 Alt 19, Suite 114, Palm Harbor, FL 34683. Tel: 1-888-609-7425. Fax: 1-727-784-6181. email:siamsite@gate.net

Sustainable forestry may be even a better way to invest in wood. Demand for wood is offset by the urgent need for forest mitigation and sustainable forestry. A balance between our need to use wood and our need to have forests makes sense. Fortunately there are ways we can work toward better wood equilibrium in profitable ways.

There are six billon people in the world, give or take a few. Most consume wood, yet only 800 million (the populations of the western world), spend the bulk of money on wood. Changing attitudes of these buyers is what counts. They want clean ecology as well as wood! Conservation movements, green political parties and changing global psyches of these wealthy 800 million supports this trend.

One way to invest in sustainable wood is through the shares of Precious Woods, Ltd. This BVI company (shares trade in Zurich) believes sustainable use of forests combined with processing of timber is more profitable than forest destruction. The company creates incentives to conserve rather than burn forests. The firm's belief is sustainability adds economic, social and environmental value. PW struggled its first years but in 1997 attained its first positive cash flow. They have millions of trees in Cost Rica ready for first thinning (income producing) and had their best income last year. You can buy shares of Precious Woods through Swiss bank accounts (See next page). Precious woods is traded OTC (Identification #995,589). There is daily trading and Cantonalbank in Zurich is the market maker.

For more information about Swiss shares, Precious Woods Limited or opening Swiss bank accounts contact Andy Kaegi, Bulach Private Clients Service, Grenztrasse 10, 8180 Bulach, Switzerland. Tel: 011-41-1-863-7101. Fax: 011-41-1-863-7100. email:akaegi@bpcs.ch

Another sustainable investment is to buy Canadian shares of Timberwest Forest Corp. Timberwest, the largest owner of private forest lands in western Canada, owns over 800,000 acres mainly located on Vancouver Island. The company is certified by the American Forest and Paper Association as committed to managing their lands according to sustainable forestry standards. Timberwest was the best performing Canadian forest products equity in 2000, up 14.2%. For details on Timberwest contact Barrie Martin, NCL Investments (Stockbrokers) 9-12 Basinghall Street, London EC2V 5NS, England. Tel: 011-44-171-600-2801. Fax: 011-44-171-726-201. email: b.martin@nclinvestments.co.uk

Great Opportunity #2: Invest in not cutting wood. I have purchased heavily forested land in North Carolina and Ecuador believing the value of uncut forests for recreation, oxygen production and wildlife habitat will soar. I am betting a lot on this yet the wonderful thing is, even if I am wrong the process is such a joy. This is an Inspired Investing tactic. (Learn more about Inspired Investing at www.garyascott.com). Inspired Investing is living your passion in a profitable way. Rule one of Inspired Investing is do what you love. Rule two? Invest in what you know. I love living and working in mountains and woods and know the seminar business well so I purchased forests in Ecuador and North Carolina to use as seminar mountain retreats. I hope to earn profits conducting courses and from rising values of the land. I gain a healthy lifestyle doing what I love! Even if I don't make great profits, who cares? I am doing what I love in a sustainable way. This to me is real wealth. If I am wrong about growing demand for this use of land, I still own and am protecting the trees. But I don't think I am wrong!

Rising land values suggest I am right. In the January-March 2001, WR, I pointed out why land prices in Ashe County, North Carolina would explode. In just three months prices have really risen. $2,000 an acre used to be considered a good price. Yet last month a farm in the county sold at nearly $3,800 an acre and a 100 acre farm near us was just listed for $632,000! If these prices maintain I have quadrupled my investment here in less than three years. There is a 20 acre farm (adjoining my land) I think is of extra value now. For details on this contact Tim Parsons, Century 21 Real Estate. Tel: 1-336-246-2664. Email: c2heritagerlty@fastransit.net Or read more about these property values at my website, http://www.garyascott.com/lostprovince/

Great Opportunity #3: Ecuador Real Estate. I have been recommending Ecuador real estate for years while this country was in a severe depression. Economics have vastly improved but distortions still create unbelievable deals. For example you can buy 38 acres on the beach for as little as $25 per month. Here is what has happened. Manta is the fastest growing part of Ecuador, because a U.S. military base is being installed there. Sheraton is adding a 400 room luxury hotel and Marriott and Howard Johnson are coming in as well. Continental Airlines expects to add a direct Newark-Manta flight in about six months. The government just built a highway along the coast south from Manta to the village of Puerto Lopez. This road hugs the coastline creating stunning Pacific views similar to Highway 101 on the U.S. west coast. Puerto Lopez is a perfect ecological tourist spot with hundreds of thousands of acres of national park, many protected species of wildlife, whale watching, incredible deep sea fishing, diving, surfing, horseback riding, hiking and rustic seaside charm. Traffic to this village has doubled year after year even during the depression. Traffic between Manta and Puerto Lopez is bound to grow by leaps and bounds!

Owners of land on this new highway do not understand how the road adds value to their land. One 38 acre tract I walked has nearly a half mile of broad Pacific beach but is offered for just $15,000! Because of economic problems in Japan (see great Opportunity #4 below), yen loans are as low as 1.75%. The cost of a Japanese yen loan with fees is as low as 2% or $25 per month interest on a $15,000 equivalent yen loan. No cash is needed if you have any acceptable liquid asset (you'll need assets valued a little over $15,000 of stocks, mutual funds, CDS or bonds) to deposit as collateral. Jyske Bank (and many other European banks) will make the yen loan at these low rates right now. There are too many opportunities to write about here so I invite you to one of our Ecuador real estate tours. For details about Ecuador Real Estate tours contact International Living Discovery Tours, 1-800-926-6575 or 1-561-243-6276. Fax: 1-561-278-8765. email agora@gate.net

Great Opportunity #4: Cash in on Currency Distortions. Cheap yen loans result from global currency distortions. The dollar has remained strong despite weak fundamentals. U.S. trade deficits are a record $455 billion, U.S. current account, $434 billion. Interest rate ratios between the dollar and Euro are gone (the 3 month dollar bond rate was 6.04% last year, the Euro 3.77% – Now the dollar is 4.64% and the Euro 4.77%). The dollar is caught between a rock and a hard spot. With a crashing economy, the Fed must lower interest rates. Lowered rates add downward pressure which adds to the trade deficit and current account which adds even more downwards pressure. What can one do? One answer is to use Multicurrency Sandwiches. In last issue of WR, I recommended the yen-peso sandwich. This spread has performed remarkably well!

Here is information about a new Sandwich based on investing $100,000 (the minimum is $15,000) in a A1 rated bond issued by Ford Motor Company that yields 6.510%. The bond is used as collateral to borrow $100,000 of Swiss francs at 5.00% to invest in a Polish Zloty call account paying 17.125% and to borrow $100,000 of Japanese yen at 1.75% to invest in an Icelandic kroner call account paying 9.875%.

Multicurrency Sandwich

$100K invested in a USD Bond, 6.510% Ford, A1 rated
$100K loan in CHF at 5.000% invested, at 17.125% in Polish Zloty
$100,000 loan in JPY at 1.750% invested, at 9.875% in Iceland Kroner
$297,000 invested at average yield at 11.170% = $34.175
$200,000 50% CHF/50% JPY loan at 3.375% = USD 6.750
Net annual yield USD 27.425% on the $100,000 initially invested. In other words this portfolio adds diversification plus increases the potential profit of the initial investment four times!
For more details on Multicurrency Sandwich: Teddy Christiansen, Jyske Bank, PO Box 133, DK-1780, Copenhagen V. Denmark, Europe. Telephone: 011-45-33-78-7800. Fax: 011-45-33-78-7633. EMail: teddy@jyskebank.dk

Great Opportunity #5: Commodities and Gold. Currency and inflation conditions are similar in many ways to the 70s when the dollar crashed and precious metals rose. In addition a study of gold movements from the 1600s shows it has always moved well behind other commodity prices. The study shows that when it rises it jumps sharply in spurts (as it rose from $35 an ounce to $860 in the 70s).

The fundamental reasons for owning gold always remain constant, regardless of what happens in a paper economy. Gold is the only measure of wealth that has value both as money and for its intrinsic worth. Over the past 5,000 years, gold is the only symbol of wealth that has endured non-stop even as civilizations have come and gone. Since fiat money came into vogue a few centuries ago, paper promises have become the norm for commerce. Yet the fragility of the fiat money system has been demonstrated time and again, to the great pain of those who put their faith in promises too easily defaulted.

It may be early for gold. UBS Warburg just published a report lowering their expectation of gold from $350 to $300. Their reasoning included: #1: The strong U.S. dollar has hurt gold's price. Investors (me included) have expected the dollar to fall but it has not. #3: Gold producers have returned to hedging. #4: Speculators have aggressively been selling gold short. #5: Gold demand may soften with a weakening dollar economy. My Swiss banking advisor Andy Kaegi agrees. He wrote:

"Gary, we follow gold closely but there is no green light yet (technically) to enter. We wait for the trend to confirm a buy signal even if we may miss the lowest price. At present our accounts instead still hold as alternative investments a percentage in a Commodity Fund which is based on a much broader product range (precious metals participate with less than 15%) but you have all the other raw materials including energy in it to a much broader extent."

Yet there are huge distortions in the currency market and the dollar is too strong based on fundamentals. Something must give and the price of gold versus the US dollar is the traditional way. The key to getting the lowest price before a strong rise in gold's price is to get in before the market confirms. Conservative investors may wish to be more conservative with a broader commodity investment. Speculators and contrarians who want every ounce of the gold rally will invest sooner.

Those interested in the broader commodity play should take a look at the Canadian share Franco-Nevada Mining Corp. This company has a precious metals, base metals and oil and gas income plus has the best balance sheet in the industry with C$829 in working capital. For details contact Barrie Martin (address above).

For details about gold bullion contact: Jefferson Coin & Bullion, Inc. 2400 Jefferson Hwy., Jefferson, LA 70121. 1-800-593-2585.

Gary Scott Courses Spring-Summer 2001

See also http://www.garyascott.com/courses/

Here's the invitation to share things money cannot buy. I'll conduct a "Festival of Knowledge" this spring and summer. Join us. Learn, relax, unwind. Enjoy nature, the Blue Ridge Mountains and the farm. Drink our fresh spring fed water, breathe the pure air. Dip in the creek. Catch a trout. Soak in the healing waters of the Indian Trough. Be blinded by the brilliant stars. Sing with the crickets. I'll conduct two courses (Inspired Investing & International Business Made EZ), twice plus have invited numerous eClub advisors, friends and contacts to share unusual, but vital knowledge. Here's more on the courses.

Course #1: International Business Made EZ. A practical, hands-on course developed from 33 years experience of international business from home…with no employees (that made millions)! This makes international business so easy even my Mom, a retired 76 year old grandmother, could participate. (I showed her how to turn her doll collecting hobby into a business.) Yet this course is accepted by many US State Boards of Continuing Education for attorneys and CPAs!

Here's some things you'll learn: #1: How to start your own international business. #2: Real-life case studies – practical examples – different types of international business you can start now. #3: How to increase your security, independence, freedom, wealth and well-being through your own business. #4:The professional contacts you need to help make your business profitable and tax-efficient. #5: Why global businesses are immune to recessions. How to turn your passion to profit.

Everything about running your own successful international business is in the course. How to get started, develop a product or service, where to find clients and customers, how to choose hot markets, the risks versus the rewards, where to advertise, asset protection and tax advantages, how to cope with language barriers, using the mail and shipping abroad, when, why and where to have offices, why and how to live abroad or not, the best places to live.

Lessons cover how to use new global technology, find free sources of marketing, set up distributors, how to build and use networks and most importantly how to start small and grow profitably. This course is for all who want their own full or part time business or want to expand or internationalize their current business and increase profits.

Course #2: Inspired Investing. Learn new ways to make wealth. Create a "Personal Income Earning Corridor" (PIEC). Use Three Phase Investing. Phase One: Reverse priorities. Invest in something you love instead of working just to save and invest. Create "Avenues of Abundance" that combine lifestyle with the necessary task of accumulating wealth. For example, if you love golf; instead of working six days a week, 50 weeks a year just to golf on Sundays and during short vacations, create a business (or invest in one) that involves golf. Phase Two : Build a backup of secure conservative emergency money and income. Phase Three: Use barbell portfolios to enhance your capital and earning power.

Some of the things you learn in this course include: Borrow Low-Deposit High. How to develop a barbell portfolio for growth and stability. How to spot global economic distortions and how to cash in on them. How to use the Tipping Point-how to stay ahead of new trends. The Dream Society…find winners in the decade ahead. Gain Tax deferral and asset protection with the Ultimate Tax Loophole. How to Avoid Scams. This course is for those who want to make, keep and enjoy wealth!

Relax on the farm. After thirty years of city and beach living, Merri and I live a simpler life at Merrily Farm. We invite you. Join us in our sanctuary of quiet and green. Simplicity is the motto here. Immerse yourself in nature. Recharge your batteries. Watch the Milky Way. Drink pure, spring fed water. Get away from the rat race. Cell phones don't work here! Awake to the rooster's crow, soothing sighs of the creek. Go to sleep with the sounds of crickets and frogs. Take gentle hikes. Spot the Great Blue Heron at the end of the creek. Stroll the gardens. Pick vegetables from the garden. Collect fresh eggs. Stay as our guest. We have farm houses, cabins, a wonderfully converted guest barn and Homer Buffalo Tipis (first reserved-first choice of accommodations). You can see pictures and get more details at our site http://www.littlehorsecreek.com/

Add a vacation. Stay an extra night or two. Merrily Farms sits near many recreational facilities include the Virginia Creeper (a forty mile wilderness bicycle path), the Appalachian Trail, New River Kayaking and Canoeing, the old scenic town of Blowing Rock and of course hiking on the farm, through deep forest, open meadows and up to mountain views. Here is the schedule of our Summer 2001 "Festival of Knowledge".

Fri.-Sun., June 8-10. Profits in the Stars. Learn how to use Eastern astrology in business-Conducted by Dr. D.S. Dixit, Delhi, India.

July 27-28-29: Inspired Investing
T Christiansen, Steve Rosberg & Gary: Price $799 for couple ($749 for Eclub members).

August 3-4-5: Partners in Wealth
Joe & Jystyna Cox & Gary: Price $799 for couple ($749 for Eclub members)

August 24-25-26: International Business Made EZ
Gary Scott: Price $799 for couple ($749 for Eclub members)

For an updated course schedule or more information about any of these courses go to http://www.garyascott.com/courses/ or call Discovery Tours, 1-800-926-6575 or 1-561-243-6276. Fax: 1-561-278-8765. email agora@gate.net

Other Gary Scott Courses

August 2001. Quito-Cuenca Ecuador Real Estate Tour. Over 1,000 investors have joined us in Ecuador as this country suffered its worst depression that pushed real estate prices unbelievably low. Join us in Ecuador's two colonial cities, enjoy incredible shopping and property bargains we may never be seen again. For details, contact Discovery Tours (see above).

Fri.- Sun., June 22-24. Orlando, Fl. Self Fulfilled-How to Have Your Own Publishing Business. Publishing is business that makes money in print, on tape and over the net. It has brought me many millions and in this course Merri and I and our webmaster share everything we know on having international businesses for individuals or couples. This course is a must for all who want to have their own full or part time publishing business or any existing business that would like to expand using the printed, taped or the net media. For details http://www.garyascott.com/courses/ or call Discovery Tours, 1-800-926-6575 or 1-561-243-6276. Fax: 1-561-278-8765. or agora@gate.net

Join me at a Free Workshop Near You. Lessons on the deepest aspects of wealth are in my novel, "The 65th Octave," available at Amazon.com or in bookstores. I wrote this story to share abundance and affluence in an entertaining way! Years of experience are threaded in this action packed adventure, economic-thriller with a spiritual twist. Learn ways to have more success, deeper social meaning & fulfillment. Robin MacAllen, a global consultant, protects banks and investors from scams. While helping a friend, he uncovers a global economic plot. I will conduct a workshop entitled "Robin MacAllen's Guide to Real Wealth" at as many of my book signings across the USA as I can. While writing this novel, I included 18 golden words I thought I dreamed up during meditations. While in Ecuador, an Andean Shaman told me I was part of a 500 year Incan prophesy! Soon after, fictional events in my novel came true including this shaman giving me a real golden word for prosperity. I have received permission to reveal this word at the workshops. You and friends are invited to attend, gratis.

#1: Weds. June 20, 7-9 PM, Borders Books and Music, 1051 West Sand Lake Road, Orlando, FL 32809. Tel: 407/826-8912.

#2: Thurs. June 21, 200, Borders Books and Music, 8285 Red Bug Lake Road. Oviedo, Fl 32765. Tel: 407/997-3385.

See you at the bookstores! If you cannot attend a book signing, get the workshop on tape. Send $19.95 to Merrily Farms, 157 little Horse Path, Lansing N.C. 28643. We'll send the recorded workshop to you by mail. Get updates on my book signing schedule at http://www.garyascott.com/courses/

Until next message, good global business and investing!

Gary Scott


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