Gold of Yellow and Green


This week’s messages look at international bonds, international investing and international business and focus on how to survive and profit from a US dollar crash. This October 26, 2004 Gary Scott message looks at three specifics ways to gain from the fall. One investment you know, the other two you have never heard before…I promise. They are options combining real estate, overseas property, international property, international real estate, overseas real estate and ginseng. See how interesting this gets below.

First, there’s the obvious mandatory mention of the yellow metal gold.

Gold is real money because it has all five of the values that money should have. It is durable, divisible, portable, desirable and rare.

Anything that fits these five tests can be used as money. Gold as a commodity fits these standards best of all and for thousands of years has been money. You can read all about this at http://www.garyascott.com/archives/2003/11/26/948/index.html

In simple terms when the U.S. dollar falls, the price of gold in dollars goes up. So if the dollar looks weak, buy gold. Many advisors will tell you about this.

But let’s look at a second specific way to protect against the falling dollar with investments you have most likely never thought of before.

Begin with real estate. This is a great dollar hedge. If the dollar falls, inflation rises. Property values go up…..if you bought right.

For years I have suggested buying land away from the maddening crowd for instance in Ashe County. See http://www.garyascott.com/lostprovince/203/index.html for a complete description of the reasons I feel this is a better place than most.

I believe that thousands of acres of what appears to be useless land can be purchased in Ashe County a very low prices.

Here is the third way to protect against a falling US dollar that is the most unusual twist. This land may be or can be full of gold…green gold that is. Ginseng.

Long before the European invasion of North America, American Ginseng was used by the American Indians as a demulcent, a general tonic, as a natural restorative for the weak and wounded and to help the mind.

Edgar Cayce preferred American Ginseng. He called American Ginseng "the essence of the flow of the vitality within the system itself. It is electrifying of the vital forces themselves.”

Wild American Ginseng is rich in the Rb1 group of ginsenosides, which have a more sedative and metabolic effect on the central nervous system. This also increases stamina, learning ability, and has been used for stress, fatigue characterized by insomnia, poor appetite, nervousness and restlessness, and to regulate immune systems.

Ginseng has been found to protect the body & nervous system from stress, stimulate & increase metabolic function, increase physical & mental efficiency, lower blood pressure & glucose levels when they are high, and raise them (blood pressure & glucose levels) when they are low, increase gastrointestinal movement & tone, increase iron metabolism, and cause changes in nucleic acid (RNA) biosynthesis.

In geriatric use, Ginseng has been proven beneficial in restoring mental abilities. Ginseng also helps by directly affecting the adrenal-pituitary axis, the result of which is manifested by an increased resistance to the effects of stress. This herb also aids mental function by improving circulation. Animal studies have clearly demonstrated Ginseng's ability to help the learning process.

Plus the wild Ginseng right now sells for about $250 for 4 ounces!

There is incredible profit potential in American Ginseng. Though most investors have never heard of it, French fur traders realized the enormous profits clear back in the mid 1700s.

They reportedly paid 25 cents per pound to the diggers and then sold the Ginseng for $5 per pound in China. By 1752 the French Canadian traders were selling $100,000 worth of Ginseng. That was a lot of money in those days.

One of the early Ginseng traders in the U.S. became one of the world’s richest men, John Jacob Astor. It has been said that he started his fortune in the late 1700's when he made a profit of $55,000, all in silver, from Ginseng collected on one of his first expeditions.

Daniel Boone was famous as an outdoorsman but he made his fortune trading Ginseng.

Wild American (Glandular) grows in the U.S. and Canada.

A heavy concentration is found in the Appalachian Mountains, although wild American ginseng is considered endangered. It grows wild in the eastern half of North America on hardwood forests on well-drained, north facing slopes in predominantly porous, humus-rich soils.

Wild and cultivated ginseng produce an annual crop in the United States and Canada valued in excess of $25 million. The price of wild root is about three times that of cultivated root and almost all exports are sold to China.

The numbers for ginseng farming can be stunning. It may take several thousand dollars to plant a half acre of ginseng, but the crop can return $30,000 a year!

So why isn’t everyone a ginseng farmer?

Ginseng is still difficult to cultivate, requiring almost constant attention during the growing season and considerable effort in the spring and fall to attend to Ginseng's need for shade.

Intensive field-cultivated ginseng is an expensive venture, requiring valuable land, high-cost artificial shade and costly maintenance for four or five years before a harvest. These costs are beyond the capacity of most potential growers.

But there is a little known catch.… called woods assisted farming. This is a technique that uses a natural forest canopy for shade.

Typical ginseng farming requires shade fertilizer and pesticides because the plants are normally crowded together in unfavorable conditions.

But if you have an expanse of land in the right area and widely scatter the seed, the farming effort almost disappears. Disease only comes from closely packed crops and when north facing.

What is more, ginseng grown this way brings the highest price.

The greatest demand, from the Orient, is for root that is old, variously shaped and forked, moderate in size, stubby but tapering, off-white, firm when dry, and with many closely formed rings. Aged and slowly grown roots are preferred and bring the highest prices.

Field-grown, sometimes heavily fertilized, cultivated roots often are harvested when relatively young. These generally lack many of the characteristics typical of wild roots, are less in demand and lower in value.

In addition, selling seeds to other growers may provide a small income several years after planting, and 1-or-2-year-old seedlings may also be sold. The seed crop may also be of value in expanding one's own plantings.

Where does the ginseng grow? In hardwood forests on well-drained, north facing slopes in predominantly porous, humus-rich soils especially in the Ozark Plateau, Appalachian-Allegheny Mountains, and river bluffs and hilly outcrops elsewhere in eastern North America.

Ashe County has lots of land that I believe is very undervalued and is loaded with hardwood forests on well-drained, north facing slopes in predominantly porous, humus-rich soils.

See the point? Tomorrow’s message looks at how you can even bolster your IRA in this way. Until then, good investing!

Gary


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