Think Like a Rich Guy and Buy “Intrinsic Art”

By Travis Johnson, Stock Gumshoe, April 25, 2011

The latest newsletter to head our way via a big and mysterious marketing pitch is called The Palm Beach Letter, signed by a guy named Mark Ford — who is apparently the same dude as Michael Masterson, who has for a long time been a big name in copywriting and self-help “work from home” marketing … I see his stuff most often because of his EarlyToRise website and email letter, but his name is well dispersed.

I don’t know which is his real name, actually, assuming it’s either one, but there’s a reason that the letter and the marketing pitch might sound familiar to many of you, he started out in the newsletter business a long time ago, helped start the Oxford Club and to build Agora into the gigantic publishing and marketing firm we now enjoy, and has been some sort of copywriting guru consultant to them for a long time. I’m told that he was the guy who taught Porter Stansberry how to write a marketing letter, and Stansberry’s ads certainly lead the pack in terms of getting attention from my readers.

Ford is pitching this Palm Beach Letter for a new publisher called Common Sense Investing that seems to be run by Tom Dyson, who himself edited the 12% Letter for Stansberry for many years. I assume that this Common Sense Investing group is also affiliated with Stansberry and/or Agora, but I don’t know if that’s true. The letter is being pitched at $99 a year (though right now it’s “half price” as they launch it) … which must mean that they have an idea for a $1,000 newsletter that they can sell you once they’ve started to build their mailing list.

But anyway, yes, the letter looks and sounds a lot like the pitches you hear from most of the offspring of the Agoraplex, though the spiel is a little bit different than the “here’s one hot stock” tease. Still a tease, but a bit less specific of one — I’ll share with you what I can figure out in a moment.

The hook of this letter is that Ford is placing a $10,000 bet with a friend named Robert that he (Ford, that is), can teach you how to become rich:

“You see, my rich friend Robert has had a lot of advantages in his life.

“And because of that, he believes there are basically two distinct classes in America… one group who is meant to be rich… and the other group who is not.

“But as you’ll see, I have very different beliefs about who gets rich in America, and why.

“I grew up in a hardworking family. We were very poor, so I know that acquiring wealth is a lot more complicated than that.

“That is why, a few weeks ago, my friend Robert and I made a $10,000 bet.

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“And it involves you if you’d like to participate….

“In short, I believe that in one year, I can teach you to be rich. ”

So that’s the basic idea of this Palm Beach Letter, we’re told — that we’ll learn how the rich use different techniques, think differently, and become and stay wealthy while you’re, well, a sucker. And I don’t say “you” pejoratively, I’m sure I’m probably a sucker, too — after all, I’ve had lots of jobs and have some of my money invested in 401ks and mutual funds like regular folks. Shocking, I know.

Here’s some more of what we’re told to expect from this newsletter:

“…nearly all of the things most middle class Americans think are helping them build wealth, are actually conspiring against them.

“These things are designed and run by big institutions, and many are 100% supported by the government….

“If you are willing to look at the world from a slightly different perspective… and to cast aside your existing beliefs and biases, there’s actually a whole new world of investing, business, and finance, which quickly becomes available to you.

“What I want to show you in this presentation is how the truly rich in America play by a completely different set of rules.”

He then goes on to talk about some of his rules for investing — secrets along the lines of “Never, never lose money.” And he talks about having “Zero” risk tolerance when he describes a type of real estate investment that has never had a down year since 1987, when it was down by just 1.2%, and which has apparently clobbered the stock market, home prices, and gold over the last 40 years.

No, I have no idea what it is — he says it’s low risk and that it’s part of the fortunes of lots of famous people who he name-drops (Gates, Bezos, Turner, etc.), but he doesn’t provide much more in the way of clues … so I don’t know if it’s some special kind of limited partnership for apartment buildings, or timber land, or what have you. I’m not much of a real estate expert, so we’ll have to leave it at that — but if you’re talking about an asset that has never lost value in 23 years it seems awfully likely that it’s either going to be something with a big “if” involved, or a train of luck that shan’t roll again.

And then he does actually tease something specific that I can tell you a bit more about. He says that he doesn’t believe in diversification, that having assets spread across five “buckets” is his strategy … and that his buckets are cash, gold, private businesses, real estate, and art.

Here’s how he introduces his “art” investing idea:

“I know what you are probably thinking… it’s unlikely you’ve ever invested in art before, and it probably scares the daylights out of you.

“Of course, that’s exactly how my rich friend Robert expects you to react. He says you probably won’t be interested in this investment, because it’s unfamiliar. In the world of behavioral finance, they call this phenomenon, aversion to ambiguity.

“In other words, most ordinary people prefer investment strategies they are familiar with… even if these familiar strategies are clearly inferior to something new.

“Well… I hope that together you and I can prove Robert wrong.

“You see, most Americans don’t know that art has outperformed the stock market by 332% over the past decade, according to Jianping Mei and Michael Moses, two New York University professors who have created the most closely followed art price indexes.

“I have personally bought nearly a million dollars worth of art over the past 30 years… and all told today it’s worth about twice what I paid for it.”

“And recently, I have come across an incredible opportunity in the art world… something I call ‘Intrinsic Art.'”

Of course, investing in art is a hobby of the rich for a good reason — you have to either be an expert or hire experts to dabble in the real masterpieces, or you have to get lucky and prescient and be a tastemaker who discovers the next great Master early on. I like art and buy plenty of it, but not the fancy stuff from high-end galleries — and I don’t expect to ever sell it, I buy it because I like to look at it. I expect that’s how a lot of people feel, but in this case Ford is pitching a kind of art that’s not the stuff you see on gallery walls:

“Now… I’ll be the first to admit that making money with art is very different from every other type of investment. It’s highly unlikely that you are going to stroll into a gallery and pick a painting off the wall that will hit it big.

“But that’s why I’m particularly excited about my recent discovery… a unique type of antique collectible ‘art,’ which has a legitimate shot at going up by more than 1,000% over the next five years.”

So what do you reckon this is? Well, we get a few more clues:

“It actually involves series of antique pieces that were designed roughly 150 years ago by a famous Pennsylvania-born American artist. And here’s what makes this unique investment so low risk…

“These pieces are made of nearly pure gold, and can be found in every state around the nation.

“The great opportunity in this investment is simple to understand:

“Despite the fact that gold has gone up in value by more than 400% over the past decade… many of these pieces now sell at lower premiums than they have in more than 50 years!

“I call these pieces ‘Intrinsic Art’ because they are made of gold, and have an intrinsic value that is easy to measure.”

So what is this “intrinsic art?” Well, it’s impossible to be 100% certain given those clues, but I’m pretty sure he’s talking about gold coins — and specifically, about the liberty head gold coins that came primarily out of the Philadelphia Mint and had a very long run, from before the Civil War until early in the 1900s. The original design is called the Liberty Head, with the most well-known being the Double Eagle, and it’s popularity among coin collectors is probably right up there with the later St. Gaudens Double Eagle. Unlike the Gaudens-designed coin, the liberty heads came out in multiple denominations (“Double Eagle” is for the $20 coin, which was minted with roughly an ounce of gold, there were also $10, $5 and $2.50 denominations with commensurate amounts of gold in them).

You’ve probably seen the St. Gaudens Double Eagle gold coin teased before — I’m certainly no numismatist, but they’ve been pitched by newsletter writers before, most prominently by Steve Sjuggerud for years now as the investment that goes up after gold rises, or as the “secret currency”. Those are often talked about as the “most beautiful” coins ever minted, and a remake of the coin came out a couple years ago (I do have one of those remakes, it’s quite purty). But that coin didn’t come out 150 years ago, it’s more like 100 years — and St. Gaudens wasn’t born in the U.S.

But the engravers responsible for the liberty head gold coin were native born — it depends on whether you’re talking about the original Liberty Head gold coin, which was apparently designed by Christian Gobrecht, or about the Double Eagle, which was reportedly engraved by his successor at the Philadelphia Mint, James Barton Longacre, but both were prominent engravers and I suppose can be called “artists” … and neither is known for much other than being a coin designer. And yes, both were born in Pennsylvania.

Collectible gold coins like these are certainly not an area in which I’m an expert, but in general you can think of them as being valued partially for their gold content and partially for their collectible nature — the latter of which brings the “premium” price over the value of the gold. The premium value of these coins can fluctuate wildly, and you’ll see folks telling you now that both the St. Gaudens and the Liberty Head coins are trading at “historically low” premiums to the gold value — and that in general, the coins tend to shoot up along with gold when gold prices are going up, with the gold content driving the price higher, but that they keep going up after gold peaks and reach higher premiums. Since the premium “collectible” value of the coins is based on the number of people who are interested in them and on their scarcity and perceived value, I suppose it makes sense — rising gold prices bring new people into coin ownership, and some of them will catch the bug and look into buying actual collectibles instead of just bullion coins.

I don’t know of any intrinsic reason why the premium should return to some average percentage of the price of gold, so do be careful in your assumptions — from what I’ve seen the premiums are generally low compared to where they were last year or several years ago, when you consider them in percentage terms, but they’ve certainly been lower in absolute terms.

It looks like most of these Liberty Head Double Eagle coins in an ungraded state (ie, just the coin — not slabbed and labeled/authenticated as a MS-62 or MS-63 or whatever) generally cost between $1,600-1,700 right now, and you can add considerably to that for a certified and slabbed coin (an MS-63 would probably be about $2,000, for example), and they have just under an ounce of gold (they’re 90% gold and 10% copper, and the stats I’ve seen say they have a net gold weight of .9675 troy ounces) … so you can think of that as a base premium of about $150, for example. You can also think of them as having a premium of about 10% — and that, apparently, is a historically low premium to pay for a historical coin. These were minted starting in 1849, so yes, “roughly 150 years ago” to match our tease.

So the question is, will premiums climb up faster than the gold price this time? Would you be better off selling your plain vanilla bullion coins and buying collectibles, keeping in mind the fact that you arguably have to know a bit more and try harder to find a trustworthy dealer and learn about the grading system, or is it better to stick with simply modern bullion coins like the Maple Leaf or American Eagle? That’s your call to make — I own some gold coins but know very little about them, and I don’t really want to put in the time to become a numismatic expert or actively monitor the fluctuating premium for these coins, but the historically low premium is certainly compelling if you think past patterns will repeat.

And what else does Ford tease us with as ideas that he’ll be selling in this newsletter?

Well, they’re also generally things that most Gumshoe readers will have heard of before — one of them is that investors need to adopt the mindset of the rich, who he says “hate capital gains” because they’re uncertain and taxable … what the wealthy want is compounding income.

He explains it like this:

“SECRET #3: The Rich Hate Capital Gains

“One of the most important financial secrets I learned years ago from my first mentor is that…
You can’t control the prices of your investments… but you can control what you are set to be paid.
In other words, whenever you make an investment, whether it’s in the stock market, a private business, or real estate, you simply cannot control what is going to happen to the price of your investment.

“But here’s the thing…

“You can, to a large extent, control how much and when you are set to be paid. So that is what you should focus on.

“Rich people always want to know two things when they make an investment:
1. How much will I be repaid for my investment?
2. And when will I get my money?

“Middle class investors, on the other hand, try to make wild guesses about how much their investment will ‘go up in value.'”

He gives the example of buying an apartment building for income, as opposed to buying property because you hope you can sell it at a higher price in a few years — so sure, sounds reasonable.

And then he also says there’s a “much, much better way to invest.” Here’s how he teases that “secret:”

“While most middle class Americans have gotten massacred in their investments over the past decade by trying to find the next “hot” stock, some wealthy Americans I know have been quietly taking advantage of a little-known investment strategy – outside of the stock market.

“In short, you can get a stake in some of the best companies in America, without having to deal with Wall Street. You never have to talk to a broker, and you don’t even need a brokerage account. As a result, your investments will never be recorded on some broker’s books or records.

“But of course the real beauty of this investment, is that you know, with as much certainty as is possible in the investment world, how much you are set to get paid, and when.Even better – you can use this strategy on a handful of investments that have a 10-year history of increasing their payouts… every single year!”

And to further elucidate, we get an example of this:

“For example, although most Americans have never heard of it, there’s a company in South Dakota called Raven Industries, which makes all kinds of critical equipment and supplies for farmers, technology companies, and the government. For example, they make parachutes and uniforms for the military, and high tech chemical injection systems for farmers.

“This is a super-safe and growing business that has been around since 1956. They are careful about what they pay their top executives (the CEO makes about $230,000 a year), and best of all, they offer this unique investment opportunity that has enabled investors to collect more money every year, while avoiding Wall Street altogether.

“Using the secret strategy I’m going to share with you, you could have avoided Wall Street and used this strategy to invest in Raven Industries…

“If you did this 10 years ago, and reinvested those payouts, you would now be sitting on gains of more than 2,216%.”

This brings to mind Ford’s new publisher, Tom Dyson, because he used exactly this same strategy to pitch his 12% Letter back when he worked for Stansberry — this is the same thing Dyson was pitching as the “424 Dividend Boost” and, earlier, as the “801k Plan” … and it’s simply “dividend reinvestment plans” (and yes, the new editor of the 12% Letter, Dan Ferris, is still pitching the same basic idea now).

There are technical differences among these plans, but Dividend Reinvestment Plans and Direct Stock Purchase Plans (sometimes called DRIPs and DSPPs) are ways that a company can sell its stock directly to the public, though they’re not allowed to solicit for the plans or actively market them, and you basically buy stock direct from the company, often setting up a periodic investment plan where you might invest $100 a month or something like that, and you let the dividends reinvest in more stock. Do this with a company that is consistently growing its dividend and you’ll do great over time, though Raven Industries is, as you’d expect, a pretty extreme example (partly because it has also gone from a couple bucks a share to over $60 a share in that decade — so yes, a lot of those gains are the dreaded capital gains that we’re supposed to hate if we want to become rich). And I suppose you don’t technically have a broker keeping records of these holdings, though the transfer agent will certainly be keeping track of you (and most of these “direct” plans are actually run by the transfer agents anyway — the implication that this kind of stock holding is somehow “secret” seems a bit off to me).

What else will the Palm Beach Letter be pitching? Well, again the fingerprints of the Stansberry gang are all over this — like the “secret the insurance industry doesn’t want you to know” (that’s basically the idea, often pitched by the Retirement Millionaire newsletter, that you can sell your unneeded life insurance policy on the secondary market — Retirement Millionaire‘s ad called these “unclaimed inheritances”).

Or the “legally get your assets beyond the government’s reach” that sounds very similar to Stansberry’s own pitch as part of his “End of America” ad for Stansberry’s Investment Advisory. This is how Ford teases this info:

“Did you know that there are 4 places where you can put your money… which is beyond the reach of the U.S. government? When and if you ever sell these things, years down the road, you are still required to pay taxes on your gains. But the great thing is, while you are holding these investments, so long as you play by the rules, neither you nor anyone else is required to report them to the government. The benefits of this, I hope, are obvious. “

So yes, that sounds just like Stansberry’s “Four assets you do not have to report to the US government” (unless you sell ’em) — which, though I’ve never actually written about that particularly over-the-top ad, are probably the same stable of such things that you’re likely to hear of from lots of other “hide from the government” advisories, things like opening small foreign bank accounts (I think the limit for “not reporting” is something very small, like $10,000, though don’t hold me to that number), holding gold bullion overseas (though you also don’t have to report gold coins you own to the government if you hold them here, so the overseas bit is mostly the “fear of confsication” bogeyman), buying overseas real estate (like Stansberry’s oft-cited land in Nicaragua, or Doug Casey’s incessantly referenced Argentinian development), and probably some other things. Really, it could be an awful lot of stuff … and having something that you “don’t have to report” isn’t that extraordinary — most transactions have nothing to do with the government other than paying sales tax, though it’s true that most financial accounts are reported to some degree.

So that’s what we’ve got today — a new newsletter that I expect we’ll see very heavily promoted in the year to come, from one of the original brains behind the world of teaser letters that we see every day. What it amounts to so far is a few investment ideas that Mark Ford things will make you think like a rich person, including some real and ordinary strategies cloaked in fancy clothes, and I suppose for some folks there is certainly room for a newsletter that exposes you to somewhat alternative investing strategies or does something more than just pick a stock a month.

And, frankly, I don’t have any idea what Masterson/Ford’s investment performance will be like, I would expect he’s a far better marketer than he is an investor (that’s true of many successful newsletter folks, I imagine), but I wouldn’t necessarily argue with any of strategies teased in this ad. Maybe investing some of the gold portion of your portfolio into historic coins now is indeed the best way to go with premiums relatively low, and I certainly agree wholeheartedly with the idea of Dividend Reinvestment and focusing on dividends in general (though I see no reason to go through the process of setting up separate direct ownership accounts with companies and their transfer agents — not when almost all brokers do dividend reinvestment for free) … as for whether this Palm Beach Letter will make you think like a wealthy person, well, we’ll see. I look forward to seeing what ideas, picks and strategies they tease in the months ahead. Should be fun!



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June 30, 2011 9:53 pm

He is promoting Saint Gaudens $20 Double Eagle in “brilliant uncirculated” condition. Claims they are "insurance" against inflation or continued dollar devaluation. He does not position them as a way to increase wealth but as a way to protect your already accumulated wealth. States they are portable and easily traded.

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August 26, 2011 10:25 am

Gumshoe, This is a great write up and your smelling is spot on!

roger arsene
roger arsene
September 30, 2011 6:52 am

Thank you.A challenging write up.

September 30, 2011 4:56 pm

During the past five to six years I have been learning about investments, financial strategies and financial newsletters because of the inept and lazy behaviors of “professionals” who were supposed to be managing my 403b investments. I have subscribed to the 12% Newsletter and the Retirement Millionaire; they do support a frame of mind that you are taking control, all be it using their ideas…
The burning match metaphor is an attention getter! I’m not investing my $49.50 in the Palm Beach Letter, but listening to aka Ford’s presentation and reading your outstanding critique reinforces my emerging belief that we as individual investors are ultimately responsible for the outcomes of our investment decisions. Most of the investment letters report burned out ideas and are nothing more than used matches in our quest to ignite financial well being.

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October 12, 2011 3:31 pm

This guy can talk the talk. He is nothing more than a misogynist in expensive shoes.

November 1, 2011 8:13 am

An eye opener from a novice investors viewpoint. “I think I better review the situation again.” Many thanks.

November 24, 2011 1:35 am

The real estate with low risk that he talks about is probably farm land. Either buying farm land directly and acting as a landlord or buying stock in companies that own farm land. This is the only thing I can think of that would qualify as a no to low risk REAL ESTATE investment – especially looking at his graph where there’s a high rise around 2008/9 when food prices spiked – and that is a continuing trend, and hence why it is still a good investment to make now. However, if that is what he’s talking about – it is very doubtful the average American will actually buy land (sometimes in other states) to look after. So if you’re looking to buy stock in one of the very few actual reputable companies that own farm land you will have to wait until the price is reasonably low. And gold coins as intrinsic gold – ridiculous! Gold coins should be considered as a type of gold investment, not art – and this is just another way some rich fat cat is trying to sell you an old idea repackaged as something bright, shiny and new. If you are looking to buy gold, gold coins are best – especially cdn maple leaf gold coins – gold dealers like these. Silver is something else to buy now – while it’s reasonably low (in comparison to gold) – both gold and silver will both rise (as well as platinum.

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November 24, 2011 1:37 am

“intrinsic art” is what I meant to say obviously.

December 24, 2011 12:20 am

I think you just saved my financial life again, Gumshoe. Every time my instincts are screaming “NO” but I can’t quite put it into words, you do, and eloquently. Thanks.

December 30, 2011 4:33 pm