The Black Book Of
Forbidden Investments:
Secret Securities that
Crush Stocks in
Bull and Bear Markets


Forbidden Investment #5: Profit from
Market Turmoil with Select Gold
Stocks p. 12

The #1 Investment of the World’s
Wealthiest 1%. p. 14
Published By:

The
Sovereign
Society


permission is prohibited by law. Violators risk criminal penalties and $50,000 damages.

This publication is sold with the understanding that it does not render legal or other professional services or advice. If legal
advice or other expert assistance is required, the services of a competent professional should be sought. Readers who have general
questions about this publication or its contents, or suggestions for future editions, may contact the author at the above address or via e-
mail.
The Black Book of Forbidden Investments Page 2
There is a Wall of Silence separating you from some of the best performing investments in the world today.

Some of these investments are hidden from you because of obsolete regulations and others purely out of
ignorance (since most brokers are primarily salesmen, not true investment analysts). Even more are kept from
you for the purpose of protecting the self interests of Wall Street.

This virtual information blackout on these top-performing alternative investments could be costing you a
fortune.

As you’ll learn in this report…

Three excellent investments, the Merrill Lynch International World Gold Fund, up 307% since September 2000,
the Ashmore Emerging Market Liquid Investment Fund, recording 75% during a period in which the S&P 500
dropped 44% from 2000 to 2002, and the Man-AHL Diversified PLC fund, up 367% since inception in March
1996, all far outperformed the market. Yet the chances of your hearing about them on CNN are slim to none.

Two other investments recommended by The Sovereign Society during the bear market gained 897% and

converted back into their home currency. This exchange-rate risk, combined with other bearish forces, is

The Black Book of Forbidden Investments Page 3
triggering “dollar dumping.” During the bear market of 2002-03, this caused dollar-denominated investments to
fall farther and faster than would otherwise be the case. Today, it’s hurting the prospects of US bonds and could
soon hit US stocks again if the US stock market rally loses steam.
So how do you turn this crisis into opportunity? One straightforward way to cash in on a falling dollar is to
invest directly in a foreign currency that is appreciating against the dollar.
In June of 2003, The New York Times reported that US investors in a New Zealand CD would have earned 24%
in the prior 12 months. That’s because the CD paid just over 4% and the New Zealand “kiwi” appreciated
almost 20% against the dollar at the same time.

But this was not news to members of The Sovereign Society. As a matter of fact, the President of Everbank, the
bank that offered this CD, had spoken at Sovereign Society conferences the year before that article appeared. So
Society members were able to take advantage of this opportunity as well as similar opportunities in commodity-
based currencies strengthening against the US dollar—from the Australian dollar to the Canadian dollar.

Everbank does not only offer currency investment in New Zealand, but a total of 17 different foreign currencies
and even 6 accounts that collect currencies with a common economic or geographic theme (an example would
be countries who’s economies are very focused on energy).

For more information on foreign currency accounts, visit www.everbank.com
or call 888-882-3837, option 7.
You may also e-mail them at
.

From here, we will reveal four more profitable classes investments that are either overlooked or actually
censored on Wall Street.

These can provide you with a far better balance of investments that don’t correlate with the US stock market,

The Black Book of Forbidden Investments Page 4
Why? Because they’re “offshore funds.” They are managed from countries outside the US, like Switzerland,
Hong Kong and England.

And, while most of these financial centers have far stricter corporate regulations than the scandal-haunted Wall
Street – U.S. “regulators” are convincing Americans that they are actually “protecting” them by enforcing
regulations that hide these investments from American investors.

The truth? These funds are a threat to the U.S. mutual fund’s enormous amounts of “money under
management.” The industry has persuaded U.S. lawmakers to bar offshore funds from advertising in the U.S.
In turn, they have found a way to trap you into U.S. funds and sharply reduce your choices - all so they can save
their own money…

In the three months leading up to this report, CA Funds Thailand Classic posted a 141% return. But did you
hear about this fund on CNN or read about it in your latest edition of Money Magazine? What about RP
Selection Europe, which reported a whopping 85% gain in only a six month period?

Continuing on, in just the last five years, as of August 23, 2003…

Scottish Oriental Smaller Cos. Warrants, a UK fund is up 382%

Korea Europe Fund, another UK fund gained 338%

Korea Open Fund (Off) reported a 331% return

Just imagine if these kinds of returns had been in your portfolio over the last three years – instead of being
trapped in scandal-plagued U.S. stocks and funds, you could have grown wealthier during the bear market.

Offshore hedge funds carry some very unique attributes that make them attractive for U.S. investors. Some of
the advantages of these funds make them absolutely critical to your portfolio in the interest of having it well

In just the last five years ending August 23, 2003…

Parvest China C, a fund you will likely never hear CNBC talk about, posted 440%

Turner Micro Cap Growth compounded a 324% gain…

Russian Prosperity Fund reported a 313% gain…

Orbis Africa Equity Fund recorded a 312% increase, all in just a 5 year span…

Offshore funds deserve to be in every investor’s long-term global asset allocation plan because the best of them
have proven their ability to protect capital in all markets with less risk than your average common stock.

The Sovereign Society offshore fund experts have offered a list of the three most promising offshore funds you
may want to consider for your portfolio.

Please note that these investments should only be in your tax-sheltered retirement accounts, such as IRAs—or in
an offshore variable annuity. (Go to the Members-Only section of the Society website to learn more about
offshore variable annuities. – Washington has made
these offshore funds very tax-inefficient to own, demanding that US investors pay taxes on gains from the fund
each year, whether the gains are realized or not. Yet by owning these funds in a retirement account or variable
annuity, you eliminate that tax disadvantage.
1. MERRILL LYNCH INTERNATIONAL WORLD GOLD FUND

Based in Luxembourg, the Merrill Lynch World Gold Fund is ranked #1 in the offshore gold fund sector
since 1994. In 1998, Merrill Lynch acquired the assets of Mercury Asset Management, a British fund
manager based in Luxembourg. The Merrill Lynch World Gold Fund began managing assets back in late
1994 under the Mercury banner and today manages $1.7 billion in assets.

MLIM World Gold Fund is a truly diversified global gold stock mutual fund. MLIM World Gold holds a

highly skilled group of analysts specializing in emerging market credit and risk analysis. The group
currently manages $6.8 billion dollars and has nine offshore funds available to retail investors in
Luxembourg and Guernsey, Channel Islands.

The flagship product of the group, Ashmore Emerging Markets Liquid Investment Fund (EMLIP), has
enjoyed incredible long-term consistency since launch in October 1992. Over the last 11 years, EMLIP
has gained 20.47% per annum versus 13.87% for the benchmark J.P. Morgan Emerging Markets Bond
Index. EMLIP is ranked #1 in its sector over the last three, five and ten years for all offshore emerging
market debt funds.

EMLIP has suffered only one losing calendar year since 1992 (1998) and has outpaced all major fixed-
income aggregates since 1992, and even the S&P 500 Index. Since 1992, the S&P 500 Index has gained
12.91% per annum with three consecutive calendar year losses from 2000 to 2002.

Ashmore EMLIP has investments diversified across most major emerging market countries, including
Brazil, Turkey, Mexico, Russia and smaller countries in the benchmark index such as Indonesia, the
Philippines, Colombia, Uruguay and Venezuela. The portfolio incurs very low monthly volatility and has
a high monthly profitability ratio in excess of 90% since 1992.

From 2000 to 2002, Ashmore EMLIP gained a cumulative 75.7% versus a loss of 44.4% for the S&P 500
Index. Despite the deep bear market for common stocks over this brutal 36-month period, the Fund
provided traditional portfolios with key diversification from an asset class with negative correlation to
equities.

Ashmore EMLIP has gained 29.4% in 2003 (through 10/22) versus 18.1% for the J.P. Morgan Emerging
Markets Bond Index and 19% for the S&P 500 Index.

Minimum investments start at $25,000 in Guernsey or EURO 25,000 in Luxembourg. Visit

or call London at 44-207-557-4131. ISIN dealing number:

The Fund, however, is extremely volatile. It is not uncommon to record a monthly gain or loss of 10%, or
more. Since volatility is a prevalent theme, investors are advised to limit their exposure to managed
futures to a maximum 10% of their portfolio.

Minimum investments start at $30,000. Visit
or call Switzerland
at 41-44-415-3636. ISIN dealing number: IE0000360275.

Those are strong and proven funds that we highly recommend. They have a solid track record, excellent
management and a very promising future.

Now let’s move onto another investment area that is resulting in very large profits for Sovereign Society
members lately—yet where your broker may be leaving you completely in the dark.

I’m talking about commodities…

Forbidden Investment #3:
Stocks Step Aside to Make Way for the Next Great Bull Market: Commodities

No one can argue that the 1990s belonged to common stocks. However, that era has come to a bitter and ugly
end. This decade is showing much more promise and reward for commodities. The three major commodity
indexes have all posted significant gains over the last 24 months.
From its low in October 2001, the benchmark Commodity Research Bureau (CRB) Index has gained
65.59% through the end of October 2003 versus the –1.14% that the S&P 500 Index shows.
Another natural resources index, the Rogers Commodity Index, soared 80% over a period of five years in
which the S&P 500 reported a loss of 9%.
And the Goldman Sachs Commodity Index (GSCI), heavily weighted in energy futures, has gained 43%
since January 2002 versus the –7% for the S&P 500.
A new bull market is now under way for commodities and you are at the perfect time to dive right in. As the
Fed fights hard to boost the economy, hard assets are going to continue to power ahead for the upcoming years.


2. Chicago Mercantile Exchange Holdings (CME-NYSE). The CME is the world’s second largest
exchange. The CME has four major product areas: interest rates, stock indexes, foreign exchange and
commodities. The Merc is home to three popular exchanges, with record trading volume in 2002 at
558.4 million
contracts valued at $328.6 trillion dollars. This represents the largest notional value traded on any
futures exchange in the world.

The CME trades futures and options in four key areas: interest rates, stock indexes, foreign exchange
and commodities. Since stocks peaked in 2000, the CME trading volume has rocketed 185%. At the
Merc, trading volume in February 2003 was a robust 34% higher than just 12 months before then. But
perhaps one of the more interesting differences between the NYSE and the CME is the current price of a
seat on both exchanges.

In March of 2003, a seat at the NYSE sold for $1.5 million compared to $400,000 at the CME. The
value of CME's seat price has remained virtually unchanged over the year prior to March 2003,
compared to a $250,000 decline for a NYSE seat. The bear market has ripped into prices on the Big
Board, but the ongoing bull market in commodities and derivatives trading should drive Merc seat
values through the roof in the 2000s.

What is driving volume growth at the CME? A combination of factors, including a new uptrend for
commodities since October 2001, the lowest interest rates in over forty years and more investors seeking
hedging strategies to offset losses in any particular trade, especially in currencies and stock indexes.

Through the 3
rd
quarter of 2003, the CME has surged 63 % from its IPO price 10 months earlier.
Earnings in 2002 rose 38% over the previous year and earnings for 2003 should show earnings growth
again in the 30% range. But the profits thus far are nowhere near what we anticipate for the Merc by
2010. By then, we expect Merc profits could rise four-fold.

Forbidden Investment #4:
Forbidden Profits from the Fall of The Dollar

As mentioned earlier in this report, many Sovereign Society members were able to make 24% returns by
investing in a simple investment such as a New Zealand CD. In addition to those more conservative strategies
for profiting from a falling dollar, The Sovereign Society has used foreign currency speculative trades to bring
in far greater returns. In fact, two of our trades during the bear market resulted in gains of 897% and 1894%.

However, before we get into the details of how you can target the same types of opportunities, let me go into a
little more detail about why we strongly urge you to invest in select foreign currencies.

The US Dollar has tripped and fallen into a major bear market. The US trade deficit is growing at more than
$1.5 billion a day, as the federal deficit is estimated to exceed $500 billion by 2004. At the same time, the
federal government has gone from surplus to deficit in just two years and the deficit is growing every day. In
total, the public debt is now nearly $7 trillion! It is even worse than the mid ‘80s, when soaring twin deficits
undermined the dollar and it lost nearly 50% of its value in less than three years.
However, you don’t have to stand by and watch while the value of your US assets plummet. There are ways
you can turn this potential catastrophe into a hefty profit opportunity.
In April of 2001, The Sovereign Society correctly anticipated the negative impact the debt-inducing “War on
Terror” would have on the dollar. We recommended buying 62-cent Swiss franc calls that gave the holder the
right, but not the obligation, to buy long Swiss franc futures (covering 125,000 Swiss francs) at 62 cents, and
recommended paying US $1,500 or less for each option. Because you did not have an obligation to buy Swiss
francs, your maximum risk on the trade was US$1,500 plus transaction costs.

The Black Book of Forbidden Investments Page 10
By the end of February 2003 (in just 11 months), the Swiss franc had climbed to 73.96 cents. If you had
exercised your option to buy Swiss franc futures at 62 cents and rolled the futures contracts forward, you would
be sitting on profits of roughly $13,450 per option—a return of an impressive 897% - all because of the huge
leveraged profit potential of futures.


causing interest rates to rise and bond prices to collapse. And there is a long way to go. In 1970, the entire global
bond market had a value of only US$776 billion. Today, there are US$40 trillion worth of bonds issued
worldwide!
To profit from this rise in short-term rates, we recommend buying put options on euro-dollar 90-Day CD
Interest Rate contracts. Like bonds, when euro-dollar interest rates rise, the contract falls, so your put options
rise in value. We are buying put options because they give us the right but not the obligation to be short. The
most we can lose is the cost of the option plus transaction costs.
Consider buying March 2005 euro-dollar puts for US$700 or lower while looking for interest rates to rise.
Should short-term rates rise to 5% by option expiration in March 2005, each of these puts will be worth at least
US$3,750. An increase to 6% makes them worth US$6,250. The Black Book of Forbidden Investments Page 11
Why March 2005? The Fed admitted to planning on keeping interest rates artificially low longer than it
normally would to give newly resurgent inflation a slight push. Also, the Fed may keep rates artificially low for
a bit longer to build economic momentum in anticipation of the 2004 elections. But, by keeping rates low now,
Greenspan is guaranteeing the need for a bigger tightening cycle later. Because of the lag time between the
Fed’s actions and their realized economic effects, we are choosing March 2005 for our play on higher rates.

How can you get your hands on these Euro-dollar CD options?

You can’t buy euro-dollar CD options in your stock account. You need a futures options broker. If you don’t
have one already, contact our friend Sue Rutsen at Fox Investments for more details. WATS: (800) 345-7026.
Tel.: +1 (312) 528-3494. Sue and her team have been trading foreign-currency options since 1984, and are
experts at coaching investors who are new to options. Along with account forms, ask Sue to send you a free
copy of the Short Course to Futures and Options, a quick reading guide to successful option strategies.

There remains yet another great investment that seems to always produce great returns during a crashing stock
market. Over the past years, it has consistently out-run the stock market and should continue with this trend
throughout this decade, as we expect the double-aughts to be a volatile time for US stocks…

double- and triple-digit profits in a short period of time.

We believe, that investments such as GoldCorp, Glamis Gold, and Bema Gold still represent excellent
opportunities in today’s market. As long as the economy remains sluggish and the threat of a widening war
remains over our heads, gold will continue to surpass the performance of stocks. The Black Book of Forbidden Investments Page 12
Newmont—King of the Gold Hill

The Sovereign Society is refreshing our original January 2002 recommendation on Newmont Mining (symbol
NEM) which was up 102.90% as of October 30, 2003 from the date of our original recommendation. We are
also recommending ASA Limited (ASA) which is up (as of October 30, 2003) 235.65% since the heart of the
market crash (October 2000).

Newmont Mining is the world’s largest gold mining concern. In February 2002, Newmont completed the
acquisition of Normandy Mining Limited and Franco-Nevada Mining Corporation Limited, making it the
world’s largest gold producer. NEM continues to show its strength with significant assets and operations in five
major continents and an active role in exploring and acquiring gold in the world’s best gold districts.

This company is also the largest private sector precious metal royalty owner in the world, managing an equity
portfolio valued at approximately $300 million as of the second quarter of 2003.

For 2003 alone, Newmont expects to sell between 7.2 million and 7.4 million ounces of gold at total mining
costs of between $198 and $208 per ounce—even while the price of gold now sits at $380.

NEM is a U.S. traded security on the New York Stock Exchange and may be purchased through your local
broker. For more information on Newmont Mining, please visit www.newmont.com
.



The Black Book of Forbidden Investments Page 13
In this report, we’ve looked at five classes of investments that Wall Street has effectively hidden from you. And
we’ve looked at 10 specific current Sovereign Society recommendations you can add to your portfolio right now
to diversify across regions, sectors and asset classes to reduce volatility while increasing potential return.

Until today, much of this information was available only to the extremely wealthy and well connected. Yet, as a
new member of The Sovereign Society, you can expect to find these types of elite investments every month in
The Sovereign Individual newsletter and on a weekly basis in The Sovereign Society Offshore A-Letter,
delivered to your email.

In the next and final section of this report, you’ll learn about another little-known, top-performing investment
class. It has handily beaten stocks for more than 20 years… yet it has also been effectively off limits to the
average investor, until now, that is.
We cannot reveal the name of this particular investment in this report because it is a current recommendation of
Commodity Trend Alert (CTA), one of our premier investment services. Yet you’ll learn how you can try CTA
on a risk-free basis and receive a special report on this very special investment. An investment we refer to as…

The #1 Investment of the World’s Wealthiest 1%
Shh…They Really Don’t Want You To Know

The best investment class by far over the last 30 years is an investment class most people don’t even know
exists. They’re called Commodity Trading Advisors, or “CTAs.”

CTAs are a very unique breed of hedge fund that typically go long and short the market at the same time. They
aim to limit risk, while profiting from rising and falling sectors of the market at the same time.

CTAs specialize in trading futures and options markets with high leverage. That means they invest in
commodity “futures” (agreements to buy or sell a particular commodity at a certain price by a certain date).
CTAs can invest in futures on everything from oil, gold and other metals to agricultural commodities,


After that, your minimum investment is just $5,000!

One of the World’s Most Profitable Investments Is Now Available to You

Years ago, if you wanted to invest with Warren Buffett, you had to pay the full freight of the Berkshire
Hathaway A shares. With a single A share trading at about $70,000, that put the expertise of the best stock
picker in the world out of reach for all but the wealthiest of investors. But then Buffett introduced B shares—
offering the same returns, but selling for about 1/35
th
the price of the A Shares.

Similarly, the best CTA in the world over the last seven years has now made the most profitable investment
class in the world available to most individual investors. But most will still never learn about it—simply
because it’s not the kind of thing the mainstream press tends to write about or brokers get told to push by their
bosses.

So now, it is possible for you to participate in the #1 investment of the wealthiest 1% with just $5,000…

And you get a great deal for that very affordable minimum investment. This particular CTA has more than
doubled from June 2002 through October 2003, and it’s up 410% since inception in the spring of 1996. (The
S&P 500, by contrast, is up only about 80% in that time.)

This CTA, in short, has an unparalleled track record of posting huge profits in both bull and bear markets. In
fact, in very rare coverage of this class of investment by a major magazine, Worth Magazine was so blown back
by this CTA, it raved…,

“Remarkably, its trading has demonstrated a positive correlation to the S&P 500 when the index rises and a
negative correlation when the index falls.”


service. It’s called Commodity Trend Alert and it’s written by Eric Roseman, a veteran analyst and a true expert
on commodities investing and global mutual funds. Visit
www.commoditytrendalert.com
.