We are seeing a big turnaround in the gold market. Who’s buying? It is not who you think…So what happened? How did this “stealth” rise in gold happen? Words: 1200

So asks Sara Nunnally (www.insideinvestingdaily.com) in edited excerpts from her original article*.

 Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Nunnally goes on to say, on part:

Governments…[bought] five times more…gold bullion in 2011 than in 2010…[and] now have more than 30,788.9 metric tons…in [their] vaults – and… [it is anticipated that they will] buy another 190 metric tons (more than 6.7 million [troy] ounces) is in the first half of 2012. At yesterday’s opening spot price for gold, that means governments could spend $11.56 billion on gold in the next six months. That’s $64.2 million a day, every day until the end of June!

[It is the] emerging markets who have been buying gold:

• Turkey added 63 metric tons of gold between October and November 2011
• Thailand bought 52.9 metric tons in 2011
• South Korea bought 40 metric tons, and
• Russia bought 65.2 metric tons
• China bought 85 metric tons in October with an estimated 100 tonnes in November

Together these countries make up more than half of all the gold buying in 2011. That is a huge statistic. Think about this for a second. If Thailand [bought] all that gold on the spot market today, it would spend $3.22 billion, or nearly 15% of its entire GDP growth in 2011…

Meanwhile developed economies have been selling gold.

• Germany dumped almost 166,000 ounces last October and more than 169,000 ounces in 2010.
• France sold 56.7 metric tons of gold in 2009, worth at today’s price $3.45 billion.

I bet they wish they had that back now, eh?

[The chart below] is gold’s spot price over the past 30 days…The low on Dec. 29, 2011, was gold’s lowest point in six months, and represented a drop of more than 19% from its record price above $1,900 an ounce. [Why?] Because everybody was selling gold – [people such as] billionaire hedge fund manager John Paulson [who] dumped one-third of his holdings in GLD last fall [even though] he had been calling for gold at $4,000 back in May 2011, when George Soros sold his gold holdings – and [all] that weight led to investors turning a blind eye to gold in this first month of 2012.

Now, [however,] big names are swaying bullish for gold this year. Morgan Stanley thinks gold will average $1,845 an ounce in 2012, while Goldman Sachs thinks gold will hit a new record of $1,940 this year. [Then there those who think gold will go dramatically higher in 2012 - read These 8 Analysts See Gold Going to $3,000 – $10,000 in 2012! Here’s Why]

According to Morgan Stanley gold could see $2,175 in 2013 [and many others see gold going even higher than that as per these articles: $10,000 Gold is Coming in 2012/13! Here’s Why and Contracting Fibonacci Spiral Puts Gold Near $4,000 by 2013 and $7-10,000 by 2020 and New Analysis Suggests a Parabolic Rise in Price of Gold to $4,380/ozt.] 

There are plenty of reasons why gold is going to be a major investment again in 2012, and emerging markets, particularly China, are going to play a big part in that. China bought 454 metric tons between 2003 and 2009 and one analyst is projecting China’s total gold imports for 2011 [to exceed that] at 490 metric tons — more than all the gold the world’s central banks added for the entire year last year! [Indeed, according to  Eric Sprott - Aggressive Chinese Buying Will Spike Gold Price]

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We’ll know soon enough but how [should we] to play it? [May I suggest you read this article for some insights on how to do just that: There is a MUCH Better Way to Own Gold Than Via ETFs and ETRs – Here’s How]

*http://www.insideinvestingdaily.com/

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1. These 8 Analysts See Gold Going to $3,000 – $10,000 in 2012! Here’s Why

Back in 2009 I began keeping track of those financial analysts, economists, academics and commentators who were of the opinion that it was just a matter of time before gold reached a parabolic peak price well in excess of the prevailing price. As time passed the list grew dramatically and at last count numbered 140 such individuals who have gone on record as saying that gold will go to at least $3,000 – and as high as $20,000 – before the gold bubble finally pops. Of more immediate interest, however, is that 8 of those individuals believe gold will reach its parabolic peak price in the next 12 months – even as early as February, 2012. This article identifies those 8 and outlines their rationale for reaching their individual price expectations. Words:1450

2. Goldrunner Called $1,920 Gold High Exactly; Now Expects $3,000 – $3,500 by Mid-Year

Short-term volatile moves in Gold, as we have seen over the past few months, do not affect our projections for the future price of Gold based on our fractal (pattern) “model” off the late 70′s Gold Bull. Just as we correctly projected the $1,920 high in our April article entitled Goldrunner: Gold on track to Reach $1860 to $,920 by Mid-year (gold reached $1,917.20 in late August and $1,923.70 in early September, 2011), our current analysis indicates that Gold will enter a range between $3,000 and $3,500 by mid-year 2012. Words: 975

3. $10,000 Gold is Coming in 2012/13! Here’s Why

I am increasingly confident that the consequences of fragile sovereign debt, precious metals market manipulation, insufficient physical supply, and the need for a safe haven investment refuge, will contribute to rampant price inflation and drive precious metals bullion and mining stock to a parabolic peak price of $10,000 sometime in 2012 or 2013 at the [...]

4. Contracting Fibonacci Spiral Puts Gold Near $4,000 by 2013 and $7-10,000 by 2020

Gold is operating on a smaller Contracting Fibonacci Spiral Cycle that is in synch with the larger Contracting Fibonacci Spiral the markets are in. Adding together the sum of parts… the price of gold will move up in price in 2013, 2016, 2018, 2019 and 2020, with each subsequent leg moving less in percentage terms than the prior move. Gold advanced 4 foldish from 1999 until 2008 ($252/ounce to $1046/ounce) suggesting that gold should top out below $4000/troy ounce by the end of January, 2013…[on its way] to $7,000 and $10,000 per troy ounce by 2020. [Let me explain.] Words: 834

5. New Analysis Suggests a Parabolic Rise in Price of Gold to $4,380/ozt.

According to my 2000 calculations, if interest rates and inflation stay constant over the next 2 years, we could expect to see (with 95.2% certainty) a parabolic peak price for gold of $4,380 per troy ounce by then! Let me explain what assumptions I made and the methods I undertook to arrive at that number and you can decide just how realistic it is. Words: 740

6. There is a MUCH Better Way to Own Gold Than Via ETFs and ETRs – Here’s How

Late last year the Royal Canadian Mint intoduced an Exchange Traded Receipt (ETR) in another long line of paper-gold investments that are now trading on securities exchanges worldwide. It, like all of the other programs, comes with a slew of fees and risks. [Why not take personal physical possession of your gold or silver, store it in an allocated and secure non-government vault, be able to have any or all of it shipped to you immediately upon request - and for dramatically less than any ETF or ETR? Let me explain how easily it is to do just that.] Words: 1601

For a decade I have been urging my subscribers to move into gold – either physical bullion or otherwise Richard Russell: Demise of the “Yankee Dollar” vs. the Rise in Gold] . Now I am at it again: PLEASE MOVE INTO GOLD. [Here's why you should.] Words: 720

So says Richard Russell (www.DowTheoryLetters.com) in edited excerpts from the original article*.

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Russell goes on to say, in part:

Those who think gold has lapsed into a bear market simply do not know what they are talking about. Gold has simply been correcting in an on-going bull market [See my article entitled These Charts Say It All: GOLD Is STILL a BUY] .

This is a time when almost every central bank in the world is grinding out paper currency, grinding it out by the car-load. This is a time when people are searching for safety. People are frightened and confused. Where is the land of safety?

There is only one safe asset on the planet – and that safe asset is gold. Uninformed people believe gold is just a commodity. Wrong! Gold is absolute money. Gold alone is the world’s only completely safe currency. Gold has no counter-party against it, and no central bank has ever found a way to create gold. The fact is that gold can only be produced by the sweat ingenuity and capitalization of men.

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The key to the entire situation today is something you don’t hear anyone talking about. I am referring to PAIN. I am referring to the fear and avoidance of pain. When a man loses his job, it’s painful. When a man does not know how he’s going to feed his family, it’s painful. These are basics that every politician knows about.

The first job of every politician is to get reelected. If the politicians’ constituents are feeling pain they will not vote for the politician who represents them. Every politician knows this, and thus politicians always vote for spending plans that they hope will keep their constituents happy. [For more on the subject read America’s Political Process Guarantees Another Financial Crisis!] During the years following World War II politicians have OK’d an endless parade of spending bills. As a result the U.S. national debt has grown to over $13 trillion dollars – an amount that would have been considered inconceivable just a few years ago. Almost every nation on earth has indulged in the same kind of fiscal madness.

To cover the insane spending, nations have had to create an almost endless amount of fiat currency. This avalanche of “money” has steadily reduced the buying power of almost every currency. The result is that it takes increasingly more paper currency to buy one ounce of real money – gold.

*http://www.silverbearcafe.com/private/01.12/movetogold.html 

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1. These Charts Say It All: GOLD Is STILL a BUY

With what is happening with the price of gold these past few days it is imperative to take a look at the long and short of it all (the trends, that is). In doing so it shows that we are still very much in a long-term bull market but in a short-term (yes, short-term) bear market. Let’s take a look at some charts that clearly outline where we are at and where we could well be going. Words: 625

2. America’s Political Process Guarantees Another Financial Crisis!

A perfect storm of converging criteria is almost perfectly timed and aligned with the 2012 election cycle. When the moment arrives, the financial earthquake will rapidly demolish the existing highly precarious financial system. Government will stand by helpless, unable to shield itself, much less its vulnerable citizens or private financial institutions from the tsunami of debt and currency destruction. Let me explain. Words: 2055

3. Richard Russell: Get Prepared – A Gold Tsunami is Coming

If the temperature of full gold fever is a hot 106, we’re only at 99 now, but I can feel it, I can tell you that the temperature is rising, rising. The panic to buy gold will override everything else. It will be one of the greatest financial phenomena that most of today’s investors will ever see. It will blot out everything else like a cloud blotting out the sun. After the calm, comes the storm. We’ve been watching ten years of gold climbing amid an atmosphere of calm. The great gold tsunami lies ahead. It will be historic. Words: 480

4. Richard Russell: Demise of the “Yankee Dollar” vs. the Rise in Gold

Sadly, the great American public doesn’t understand what is happening…[and that it will be] on a greater scale than has ever occurred before in the history of mankind. It’s going to hit the current generation of Americans like a whirlwind. It will be historic in its intensity and destructiveness. [Here is an attempt to enlighten them.] Words: 939

Have you ever wondered what money really is [and why we need to own some gold as a result]? You’ll notice that everyone you read has a strong opinion , but who’s right? [Let look at the situation and see if we can come to an answer that we both can agree on.] Words: 3086

So says Danny B (www.fofoa.blogspot.com) in edited excerpts from his original article*.

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The report’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

 The article goes on to say, in part, that:

Is money really just one single thing and then everything else has varying levels of moneyness relative to real money? [For instance:]

• is gold real money?
• is money whatever the government says it is? 
• is money whatever the market says it is?
• is silver money in any way today?
• are US Treasury bonds money?
• is real money just the monetary base or is money all the credit that refers back to that base for value?
• is money supposed to be something tangible, or is it simply a common unit we use to express the relative value of things?
• is money really the actual medium of exchange we use in trade or is it the unit of account the various media of exchange (checks, credit cards, PayPal) reference for value?
• should the reference point unit of money itself ever be the medium of exchange? Some of the time? All of the time? Never?
• is money a store of value and, if so, for how long?
• is money supposed to be the fixed reference point (the benchmark) for changes in the value of everything else or is it simply a shared language for expressing those changes?
• is money something that changes over time or is money’s true essence the same concept that first emerged thousands of years ago?
• and probably the most important question: does the correct view of money produce answers that are vastly superior to the blind conjecture prescribed by all other views.

Answers

Everyone has a strong opinion about what money actually is so “everyone” will probably disagree with what I write but that doesn’t mean they are right and I am wrong. I want to challenge you to use your own mind and see for yourself. Take what I say and then take what they say, compare, contrast, analyze and then decide for yourself. The prescription produced by my view is quite simple – and only you can decide if it is vastly superior to their blind conjecture.

The Pure Concept of Money

According to Webster’s the word ‘money’ emerged in the English language sometime during the Medieval period in Europe, maybe around the late 1200s. Wikipedia suggests a possible etymology originating with the Greek word for ‘unique’ or ‘unit’. The Western term for physical coins that emerged sometime around the late 1500s was ‘specie’ from the Latin phrase for “in kind” or “payment in kind,” meaning “payment in the actual or real form.” The word ‘currency’ came a little later from the Latin word for current or flow, and was married to the money concept in 1699 by the philosopher John Locke who described the “circulation of money” as a flow or current of monetary payments made in specie.

Etymology is important, because with money or “the moneyness of things” we are talking about a vital concept that predates the word by thousands of years and it’s only by understanding the pure concept that we can see the ways the word has been bastardized by…[the debtors and the savers] over centuries. The meaning we commonly assign to words may change over time, but that never changes the original concept underlying the emergence of the word in the first place.

Case in point: Is ‘money’ equal to ‘wealth’? Is “gathering wealth” the same as “gathering money?” [Such an understanding of just what those words actually meant in the language of the time can be seen in the way Proverbs 13:11 was translated over the passage of time]… and which I think will help to illustrate my point about words and concepts:

(Wycliffe Bible 1395) Hasted chattel, that is, gotten hastily, shall be made less; but that which is gathered little and little with hand, shall be multiplied.

(King James Version 1611) Wealth gotten by vanity shall be diminished: but he that gathereth by labour shall increase.

(Young’s Literal Translation 1862) Wealth from vanity becometh little, and whoso is gathering by the hand becometh great…

[The Living Bible Version 1967) Wealth from gambling quickly disappears; wealth from hard work grows.]

The point is, your modern understanding of ‘money’, and the pure concept of money that emerged long before the word, may be substantially different things. I’ll go even further to say that the modern understanding of money is so confused and disputed by the two opposing money camps [the debtors and the savers] that the only way we can hope to have a clear view of what is actually happening today is by reverting our understanding to the original concept, before it was corrupted by the two camps so now let’s go back to the etymology at the top of this section… If we look at the specific etymology I highlighted, we are pretty close to the pure concept which I will confirm from a couple different angles [as follows:

'Money' is a "unique unit" that we use as a kind of language for expressing the relative value of things other than money. The modern example would be "dollar". Not "a dollar," not a physical dollar, but the word "dollar" as it is used to say a can of peas costs a dollar, or my house is worth 100,000 dollars, or you owe me a hundred dollars. If you give me two grams of gold you won't owe me a hundred dollars anymore. You don't have to give me actual dollars. That's just the unit I used to express the amount of value you owed me. That's the pure concept of money.

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This is where it gets a little tricky and mind-bending. The actual physical dollar, that physical item we call "a dollar," is not money in and of itself. In other words, it is not intrinsically "money". It is only money because we reference it when expressing the relative value of goods, services and credit. If we stopped referring to it, it would cease to be money even though it would still be a dollar. Can you see the difference? Like I said, it's tricky.

A dollar is just a thing, a tradable item and it will continue being that same thing even if we stop referring to it when expressing relative values. It will still be a dollar, it just won't be money anymore. Therefore it is not money in and of itself. It is just a thing. Take the old German Reichsbank marks from 1923. Some of them still exist. They are still marks with lots of zeros but they are no longer money. We can still trade them. I might trade you a few Zimbabwe notes for an original mark, but that obviously doesn't make them money. The same goes for gold. Gold is just a tradable item.

We could be using seashells as money. If we were, then all the seashells available for trade would be the monetary base. That's the base to which I would be referring when I said you owed me one hundred seashells. A single seashell would be the reference point, the unique unit, but the whole of all available seashells would be the base around which money flowed. You could pay your debt to me with either an item that I desired with a value expressed as 100 seashells, or with 100 actual seashells. So if the total amount of seashells available (the monetary base) suddenly doubled making them easier for you to come by, I'd be kinda screwed. Of course I'd only be screwed if the doubling happened unexpectedly between the time I lent you the value of 100 seashells and the time you paid me back.

Getting back to our etymology, the concept behind the term 'specie' meant actual units of the monetary base. In the 1500s, that was the total of all metal coins-of-the-realm available for trade. That was the monetary base of the day and the term 'specie' arose as a way to express payment in the monetary unit itself rather than payment in bulls, or hats, or anything else but original concept aside, the meaning of the word became married to coins and stuck to this day as defined by the Online Etymology Dictionary which says: "Specie: 1610s, 'coin, money in the form of coins' (as opposed to paper money or bullion), from phrase in specie 'in the real or actual form' (1550s), from L. in specie 'in kind,' ablative of species 'kind, form, sort'."

Notice it says "coins… as opposed to… bullion." That's because while gold coins were referenced in the use of money at the time the word 'specie' emerged, gold bullion was not. "Gold" was not money in and of itself. It was just a thing; a tradable, barterable item. Notice also that it says "money in the form of coins." The coins themselves were also not money in and of themselves. They were only called money because, in that coin form, they were the monetary base that was referenced when expressing the relative value of everything else at that time. Some of those gold coins from the 1500s and 1600s still exist today. Today they are not money, but they are still gold coins. Can you see the difference yet?

Now remember, there's no right or wrong at this point. There's only the usefulness of a perspective in delivering the correct analysis of what's actually happening today and the best prescription for your personal action. You can't use a perspective until you get it and then, and only then, you can use your own mind to decide if it is the correct perspective and then act upon it. Later it will be proved correct or incorrect...

The pure concept of money is our shared use of some thing as a reference point for expressing the relative value of all other things. Money is the referencing of the thing, not the thing itself...Money is a value stored in your head! Money is not something you save. Money in its purest form is a mental association of values in trade; a concept in memory not a real item… the value is in your association abilities. This is the money concept, my friends...

The Monetary Base

The big secret [about money, however,] is that the people’s money is simply credit and by “the people’s money,” I mean our money, the real producing economy’s money. The monetary base is only the banks’ and governments’ money, except for that little bit of cash you keep in your wallet for emergencies. Let me explain.

Today’s monetary base is a clearly defined thing – it is all physical currency plus reserves held at the Fed. We the people cannot have electronic base money. We cannot open an account at the Fed – only banks and the government can. We use commercial bank credit and private credit to keep the economy churning. The reference point of our credit is the base. We reference that base when we transact in “dollars”.

Private and commercial bank credit appears and disappears spontaneously all the time, all throughout the real economy. This is what actually lubricates the economic engine; having a base of stable value to which we refer in monetary transactions. Private credit is generally cleared using bank credit and bank credit is cleared using the monetary base – but all credit denominated in dollars refers to that base and relies on a stable unit value or price stability.

It is the banks’ job (both commercial and central banks) to make sure that bank credit (the people’s money) and base money (the banks’ money) are fungible. That is, they are always freely and equally exchangeable…[although,] of course, they are two separate things, credit and base money, with two very different volumes. Under normal conditions, there’s a lot more credit money floating around than there is base money so keeping them fungible can be a juggling act on occasion. For the most part, however, we the people choose to hold bank credit as our money rather than cash and, in fact, it is the limited availability of cash in the system (its relative “hardness”) that keeps our money stable in unit value.

Think about it this way: We are free to choose cash at any time and when we go to the bank to exchange our credits for cash, we put that bank under pressure to come up with cash that is relatively “harder” to come up with (more limited in volume) than credit. Let’s say, for example, that “demand deposits” (those that can demand cash on the spot) are ten times larger than the total volume of cash in the system. Is this good for our money? Yes, because it means that the reference point unit we use is in limited supply, which keeps a vital tension on the overall system. The operations the bank must do to come up with our cash (sell off some value) maintain value in our credits.

Monetary Debasement

Say the base volume is one trillion dollars, which is about what it was in October of 2008. That means the base unit reference point for all dollar credit in the world is one one-trillionth of the base volume, all the available above-ground dollars ever mined throughout all of history. Then imagine you doubled that base to two trillion dollars. The unit reference point will have been cut in half, from one one-trillionth to one-half of one one-trillionth of the base volume.

Say you’ve got a contract or a credit for a kilo of gold. Now obviously the total volume of gold can’t be doubled overnight like the dollar base was, so what would be the equivalent effect? Well, it would be like someone cutting that reference kilo in half. Your one kilo contract, since it is denominated in kilos, refers to this unit reference point that has just been cut in half. It has suddenly become twice as easy for your creditor to deliver on his obligation. By the way, the volume of the dollar base has more than doubled since Oct. 2008. It’s now at 2.7 trillion, which means the unit reference point was actually given a 63% “haircut” in three years, from one one-trillionth to little more than one-third of one-trillionth of the total volume.

Now, before you start arguing your own favorite economic pet theory, let me remind you that there is no right or wrong at this point. There’s only the usefulness of a perspective in delivering the correct analysis of what’s actually happening today and the best prescription for your personal action but [remember,] you can’t use a perspective until you get it. Then, and only then, you can use your own mind to decide if it is the correct perspective and then act upon it. Later it will be proved correct or incorrect.

Clearly the 63% destruction of the dollar unit reference point over the last three years did not immediately translate into a 170% rise in prices at the grocery store and I wouldn’t expect it to. It never works like that. Henry Hazlitt explained it like this: “The value of the monetary unit, at the beginning of an inflation, commonly does not fall by as much as the increase in the quantity of money, whereas, in the late stage of inflation, the value of the monetary unit falls much faster than the increase in the quantity of money.”

If you have a large 401K, IRA or pension fund full of credits for dollars, you may be taking comfort in the fact that the 63% haircut in the very unit your retirement nest egg references has not yet shown up at the stores where you shop but the fact remains that the dollar has been debased. That’s why they call it debasement. The base is diluted by expanding its volume which reduces the value of the unit used for reference relative to the volume of available units.

There are, of course, plenty of economic theories out there that are wholly designed to distract your attention away from this plain and obvious debasement and to tell you why it doesn’t matter, and how the presently slow price inflation is proof that it doesn’t matter if they debase your money and your life’s savings. Some will tell you that the apparent fungibility of credit and cash means they are the same thing. Some will even try to tell you that the base unit reference point derives its value from the volume of credit rather than its own volume, and that the base volume is essentially meaningless but I think that if you are keeping your wealth in the form of money, sheep being periodically sheared is an image worth keeping in mind.

The Pure Concept of Wealth

Another concept of concern today is that of ‘wealth’…The fundamental property of wealth is that of “possession.” It is by this property that wealth is identified, and thereby it becomes ‘wealth’. In the world of wealth, worth is enhanced because the supply is lessened by this ‘possession attribute’ and possession is how most people in antiquity understood wealth.

Have you ever noticed how the super-rich seem to stay super-rich no matter how much money they spend? Not only that, but they seem to get wealthier the more they spend! They buy amazing super-homes, expensive antique furniture to fill the homes, and priceless artwork to hang on every inch of their fancy walls, yet somehow they retain their wealth. That’s not to say that they don’t also participate in the Western tradition of “the something for nothing game” we call the paper markets. They do, but that participation does not constitute their ‘wealth’ yet we, the commoners, are told constantly, by state-approved financial advisors, to put our entire nest egg at risk in this “something for nothing game.”

We can’t afford that nice furniture and art that the super-wealthy buy, so we buy low-priced crap from China that is worth half what we paid for it the minute we walk out of the store. What is going on? Is it possible to imagine a new monetary system that would put common people on equal footing with the super-rich when it comes to possessing our wealth?

In this world we…must have currency and an enduring, tradable wealth asset that places our footing in life on equal ground with the giants around us – and that is GOLD! 

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4. 2012: More Money-printing Leading to Accelerating Inflation, Rising Interest Rates & Then U.S. Debt Crisis! Got Gold?

Evidence shows that the U.S. money supply trend is in the early stages of hyperbolic growth coupled with a similar move in the price of gold. All sign point to a further escalation of money-printing in 2012…followed by unexpected and accelerating price inflation, followed by a rise in nominal interest rates that will bring a sovereign debt crisis for the U. S. dollar with it as the cost of borrowing for the government escalates…[Let me show you the evidence.] Words: 660

5. Fiat Money: Exactly What Is It? Why Is It Such A Scourge?

Considering the fact that you can fool some of the people some of the time but you cannot fool all of the people all of the time, is it any wonder millions, both through the Tea Party demonstrations and now the Occupy Wall Street Movement across the country and elsewhere around the world, are protesting the abysmal scourge that fiat currency has brought upon us as a result of that fateful day back on July 25th, 1965. To appreciate the significance of that historic day we must fully understand what fiat currency is and why such a concept is about to implode and this article does just that. Words: 1372

6. Egon von Greyerz Interview on Future QE, Hyperinflation and the Price of Gold

Assessing the relative levels of greed and fear in the market at a given point in time is an effective way of timing the market. This article outlines the 6 most popular momentum indicators and concludes that trading gold using just 3 of the indicators would have generated an annual return of 39.6% compared to the YTD buy-and-hold return of only about 13%! Let me explain how, why and where they should be used and examine their specific application relative to the price movements in gold and the HUI. Words: 1450

So says Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) in an article written on behalf of www.PreciousMetalsWarrants.com (The Authority on Warrants). Please note that this paragraph must be included in any article reposting with a link* to the article source to avoid copyright infringement.

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Wilson goes on to say:

Securities ebb and flow, surge and retreat, and such action is measured by oscillators which are powerful leading indicators of the security’s immediate direction and its speed and are most useful, and issue the most valid trading signals, when their readings diverge from prices.

Bullish divergences occurs when prices fall to a new low while an oscillator fails to reach a new low. This situation demonstrates that bears are losing power, and that the bulls are ready to control the market for the stock or index again and such divergence often marks the end of a downtrend.

Bearish divergences signify up-trends, when prices rally to a new high while the oscillator refuses to reach a new peak. In this situation, bulls are losing their grip on the security, prices are rising only as a result of inertia, and the bears are ready to take control again.

There are a number of different approaches to this concept, as follows:

1. Stochastic Oscillator (SO)
- is a momentum indicator that compares a security’s closing price to its price range over a given time.

The theory behind this indicator is that in an upward-trending market, prices tend to close near their high, and during a downward-trending market, prices tend to close near their low.

There are two components to the SO: the %K which is the main line indicating the number of time periods (usually 14), and the %D which is a three-period moving average of the %K. Buy/sell signals occur when the %K crosses above/below the %D.

A %K result of 70 (or 30), for example, is interpreted to mean that the price of the security closed above 70% (or below 30%) of all prior closing prices that have occurred over the past 14 days and assumes that the security’s price will trade at the top (or at the bottom) of the range in a major uptrend (or downtrend).

A move above 80 suggests that the security is overbought and therefore should be sold while a move below 20 suggests that the stock or index is oversold and, as such, is a buying signal.

The SO, which ignores market jolts, is an ideal companion to the MACD to provide an enhanced and more effective trading experience. Using the two together gives traders an opportunity to hold out for a better entry point on an up-trending security or to be more sure that any down-trend is truly reversing itself when bottom-fishing for long-term holds.

However, on the downside, because the stock or index generally takes a longer time to line up in the best buying position, the actual trading of the security occurs less frequently, so you may need a larger basket of stocks to watch.

2. Relative Strength Index (RSI)
- is a momentum indicator that compares the magnitude of recent gains in price to recent losses in an attempt to determine overbought and oversold conditions of a security.

The RSI, on a scale of 0-100, indicates that a stock is overbought when it is over 70 and oversold when it is below 30.

Because large surges and drops in the price of a security will create false buy or sell signals the RSI works best when it is used in conjunction with short-term moving average crossovers such as the Stochastic Oscillator to confirm a directional shift.

3. StochRSI
- is created by applying the Stochastic Oscillator to the Relative Strength Index values rather than standard price data thereby giving the trader a better idea of whether the current RSI value is overbought or oversold – a measure that becomes specifically useful when the RSI value is confined between its signal levels of 30 and 70.

If you had used the above 3 indicators as your guide to buy and sell physical gold throughout 2011 you would have:

1.  bought gold on Feb. 1st at approx. $1,325 and sold out on April 21st just prior to the Good Friday/Easter long weekend at approx. $1,500 for a profit of $175 or 13%
2. bought back in at approx. $1,500 on July 5th after the long weekend and sold out at $1,850 or so on September 6th immediately after the Labor/Labour Day long weekend for a tidy profit of approx. $350 or 23%

The above 3 indicators do not yet suggest that you get back into gold – yet. Nevertheless, trading gold using the above 3 indicators would have generated a profit of $525 for an annual return on your gold investment of 39.6% over just 132 days – compared to a YTD buy-and-hold return of  only about 13%! (Perhaps I should have titled this article “How to Triple Your Returns in Gold“.)

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Now let’s look at a chart for the same time period using the TRIX, CCI and ROC momentum indicators and see what they reveal:

4. TRIX
- is a momentum indicator that displays the percent rate-of-change of a triple exponentially smoothed moving average of a security’s closing price.

TRIX is designed to filter out security movements that are insignificant to the larger trend of the security. The user selects a number of periods (such as 15) with which to create the moving average, and those cycles that are shorter than that are filtered out.

TRIX is also a leading indicator and can be used to anticipate turning points in a trend through its divergence with the security’s price.

5. Commodity Channel Index (CCI)
- is an oscillator which quantifies the relationship between the security’s price, a moving average of the security’s price, and normal deviations from that average to determine when a security has been overbought or oversold.

The CCI, when used in conjunction with other oscillators, can be a valuable tool to identify potential peaks and valleys in the security’s price, and thus provide investors with reasonable evidence to estimate changes in the direction of price movement of the security.

6. Price Rate of Change (ROC)
- measures the percentage rate of change, indicating the strength of the momentum, between the most recent price and the price over “x” periods (the narrower the better) thereby identifying bullish or bearish divergences.

The ROC is able to forecasts sooner than almost any other indicator an upcoming reversal of a trend and whether or not a security’s price action is created by those over-buying or over-selling it. A number other than zero can be used to indicate an increase in upward momentum and a number less than zero to indicate an increase in selling pressure.

An analysis of the movement in the price of gold in 2011 using the TRIX, CCI and ROC indicators, however, would not have been nearly as effective in identifying entry and exit points to the extent that the STO, RSI and StochRSI indicators do.

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Precious Metals Stocks and Warrants

A look at the 1 year chart for the HUI Index below using the Full STO, RSI and StochRSI shows that these momentum indicators are also very useful in capturing points in time to buy and sell large cap gold and silver stocks and their associated warrants where available. (For information regarding long-term warrants associated with such stocks please read two recent articles of mine entitled Gold and Silver Warrants: an Insider’s Insights and Gold & Silver Warrants: What are They?)

If you had used the above 3 indicators as your guide as to when to buy and sell a basket of large-cap gold and silver mining and royalty stream company stocks throughout 2011 you would have:

1. bought in around Jan. 21st and sold out around April 8th for a return of approx. 13%
2. bought back in the week of May15th and sold out around Sept. 8th for a return of approx. 14%

As with gold the above 3 indicators do not yet suggest that you get back into the gold and silver mining stocks - yet. Nevertheless, trading such stocks using the above 3 indicators, and the HUI as a proxy, would have generated an annual return on your investment of approx. 27% over just 190 days – compared to a YTD buy-and-hold return of about -11% !

Conclusion

So there you have it – an extensive and in-depth assessment of how to evaluate the momentum impacting your securities of interest . The next time you analyze an asset you will be in a better position to determine which direction it is trending and what are appropriate times to buy and sell the security throughout the year.

In the next few weeks I will be posting further articles on trend indicators and market strength and volatility indicators to better enable you to time the market over the course of 2012 to avoid losses and maximize returns.

*http://www.munknee.com/2011/12/buying-selling-gold-using-momentum-indicators-generated-a-39-6-return-in-2011-heres-how/

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1. Gold & Silver Warrants: An Insider’s Insights

Record lease rates are a primary driver for the near historic sell-off we have experienced but, when negative gold lease rates drop like they are now doing, the underlying tension in the supply and demand for gold as a source of liquidity collapses suggesting that the gold sell- off is likely coming to an end. That said, the next time we approach the previous thresholds..it will likely indicate that another gold-derived liquidity rubberband “breach” is imminent. [Let me explain further so you won't be "had" next time.] Words: 1054

So says Tyler Durden (www.zerohedge.com) in edited excerpts from his original article*.

One of the more curious dynamics for those who follow the gold market closely, has been the relentless grind lower (or higher if looked at on an absolute value basis), of gold lease rates (defined as Libor minus GOFO i.e., London interbank offered rate minus Gold Forwards Offered rate) [go here** for the daily rate), which recently hit all-time record lows (i.e., negative), for the 1 month version [see chart below], although the more traditional 3 Month (as it is based on the benchmark 3M USD Libor) was also quite close to breaching historic low levels [see chart below].

A good summary [of the nuances of Libor-GOFO or the lease rate] was presented in a Jesse’s Cafe Americain article a few days ago [see*** below - also see **** below which gives a very detailed outline of the mechanics of the various Libor minus GOFO transactions ], which correctly suggested that record lease rates are a primary driver for the near historic sell-off we have experienced. In a nutshell, negative lease rates mean one has to pay for the “privilege” of lending out one’s gold as collateral – a prima facie collateral crunch.The lower the lease rate, the greater the use of gold as a source of liquidity and since the indicator is public it is all too easy for entities that do have liquidity to game the spread and force sell-offs by those who are telegraphing they are in dire straits and will sell their gold at any price if forced, to prevent a liquidity collapse, i.e. to force a firesale.

Well, we are happy to announce that the sell-off spring clip potential that is embedded in a near record negative lease rate has now been discharged courtesy of the $100 or so dump in the price of gold lately. The decline may have happened for a plethora of reasons and nobody can tell why precisely, but one thing is now sure: the underlying tension in the supply and demand for gold as a source of liquidity has collapsed. That said, the next time we approach the previous thresholds we will advise readers as it will likely indicate another gold-derived liquidity rubberband “breach” is imminent.

[Last 2 weeks LIBOR-GOFO:]

3 Month LIBOR – GOFO:

and long-term LIBOR – GOFO:

Charts: Bloomberg

The Jesse’s Cafe Americain article goes on to say, in part:

As can be seen from the first two charts [below] showing the LIBOR GOFO spread, the lease rates reported in the press are a derived rate and actually represent the amount that can be earned from the gold carry trade. I do not like to look at just the Lease Rate which is really just a calculated derivative like the ‘spot price’ based on the present value of the futures front month, but at the two major components that constitute it. Which one is driving the change in the spread, and why?

I do not think that the major bullion banks finance their gold leases through LIBOR anymore in these days of excess reserves and quantitative easing, but it is a useful reference for most others. This tends to put a little more emphasis on the nominal level of the Gold Forwards Offered Rate but this is just my opinion and I could be wrong. There is an obvious ‘chicken and egg’ argument embedded in this phenomenon. For example, some might say that the high spread between GOFO and LIBOR [see the last 2 charts below] makes it difficult for those who wish to short gold to obtain it since the price one pays to finance the deal is quite high…This is an interesting theory, because it seems to suggest that without the ability to borrow gold from central bank holdings and perhaps those others who can lease in large numbers like ETFs and not the spot market, shorting gold is not possible at these prices and the natural tendency of the clearing price is to stay the same or to increase. This suggests more manipulation than market demand and supply.

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I tend to think that the spreads widen as the bullion banks must borrow more heavily to support their short positions with some sort of physical backing. When the pain of the spread becomes too great, they have the incentive to throw contracts at the paper price in a desperate effort to break the price and relieve the short term pressures….On these dips one would imagine that long term buyers are taking advantage of the low prices to acquire bullion and store it as a future hedge. As the bullion banks seek to return the borrowed gold, their demand attracts the momentum trading hedge funds that are now selling, so we see a big rally in the metals. The big rally in the metals causes the LIBOR – Gold Forwards pain to increase, and so the banks cry to be rescued – and so on it goes on, until something breaks.

All figures in the charts below are priced in US dollars and are from the London Bullion Market Association (LBMA). The cumulative gold price is the daily change between London PM fixes.

 

• *http://www.zerohedge.com/news/negative-gold-lease-rates-collapse-gold-sell-likely-coming-end 
• **http://www.lbma.org.uk/pages/index.cfm?page_id=55&show=2011
• ***http://jessescrossroadscafe.blogspot.com/2011/12/interest-rate-for-lending-gold-in.html
• **** http://finance.google.com/group/google.finance.702696/msg/313cd30428b83418?dmode=print

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1. Gold Could Go Down to $1,600/ozt. – Even Lower – in this Correction! Here’s Why

With what is happening with the price of gold these past few days it is imperative to take a look at the long and short of it all (the trends, that is). In doing so it shows that we are still very much in a long-term bull market but in a short-term (yes, short-term) bear market. Let’s take a look at some charts that clearly outline where we are at and where we could well be going. Words: 625

There’s no corner of the market more emotional than gold investing and, with bullion down more than 10% this month and 20% since early September, a war of words has broken out among North America’s most influential bullion investors. [For an understanding of who said what, please read on.] Words: 1315

So reports David Pett (www.financialpost.com)  in edited excerpts from the original article*.

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has further edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

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Pett goes on to report, in part

The fight started last Wednesday when Peter Grandich, the well-known goldbug and author of The Grandich Letter, wrote a scathing missive that called out fellow investment newsletter writer Dennis Gartman on his assertion earlier this week that gold is now entering a bear market [when he said, as reported in an article** by Bloomberg entitled Death of Gold Bull Market Seen by Gartman:

Since the early autumn here in the Northern Hemishere gold has failed to make a new high. Each high has been progressively lower than the previous high, and now we've confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.

Even more disconcerting is the fact that China has been an aggressive buyer of gold in recent weeks... and while buying of that sort should have sent gold prices soaring, instead they plunged. One of the oldest rules of trading is simply this: a market that cannot or does not respond to bullish news is a bearish market not a bullish one. This was manifestly bullish news and it was received very bearishly indeed.

Given how much psychological damage has been done to the gold market in the past week, and with so many long positions being caught off guard, he thinks wholesale liquidation and perhaps forced selling will be the outcome. It really won’t take much to push it there. 

 Grandich's reply to what Gartman said is as follows***:

Dennis Gartman, a true master of self-promotion but who’s actual track record (if anyone in the media actually delved into it I believe they would see for themselves) better suits him for the lead role in “The Boy Who Cried Wolf,” has once again grabbed headlines with yet another the-gold-bull-market-is-over assertion.

Mr. Gartman is one of three people who many in the media continue to quote despite a nearly decade-long poor overall track record on gold. He, Jeff Christian and Jon Nadler have demonstrated to me (and I suspect many others) that a broken clock’s percentage of telling the correct time in any given day is about the same as their actual accurate forecasts for gold in the last decade.

Yours truly has called this the “mother” of all gold bull markets and, by making the following offer to the Three Stooges of gold forecasting, I would like to offer up a million reasons why:

I will wager any one of them (or a combination of all three) one million dollars U.S. that gold will hit $2000 before it hits $1,000 on the COMEX. I have arranged for the law firm of Lomurro, Davison, Eastman & Munoz of Freehold, New Jersey to hold the funds in trust.

For once, let one or all of the most arrogant and often wrong gold forecasters truly put their money where their mouth is when it comes to gold forecasting. This offer shall be good until midnight, December 31, 2011 (I will donate my winnings to charities).]

Mr. Gartman responded to Mr. Grandich personally in a letter****…, [as follows:

Dear Peter,

Firstly, sir, I wish you a Merry Christmas. I trust that your animosity toward me and toward John Nadler and Mr. Christian does not preclude me from making this statement.

Now, having said that, let’s clarify one or two things that clearly need clarification.. I have not said in recent days that gold was to plunge to $1000; I simply said that gold seemed extended to the upside, had performed rather poorly relative to equities, and appears likely to sustain a material decline. I have been around the markets long enough to know that putting a price upon a direction is a fool’s game. Gold is under some pressure, and has begun to weaken relative to equity investment, made rather clear by the fact that the GLD/SPX ratio has broken a longer term support line that had been in gold’s favour for several years. That trend line remains broken this morning and likely it shall remain broken for some while longer.

Too, until quite recently I have been manifestly, steadily, rather relentlessly bullish of gold for the past several years, standing aside once in a while after massive rallies, but always remaining either bullish of gold (in EUR terms primarily) or very bullish of gold, or merely neutral of it. I am, at the moment, neutral of gold and although I fear it may falter farther, I shall likely remain neutral of gold… standing hard upon the sidelines and awaiting a hoped for test of very long trend lines extending back for a decade or more.
This then should hardly be construed as being bearish; I have simply chosen to stand aside, and that my friend is why I’ll not take up your bet. I simply cannot see gold trading to $1000/ounce, although I do suspect that $1350-$1425 is reasonable and perhaps likely in the course of the next several weeks.

Again, I wish you well. I bear no animosity toward you, understanding fully that your anger with me was spawned by the violence of the gold market’s move yesterday. You and I have been around these markets for a very long while. Making enemies… even of those we disagree with in the short term…. Is a mug’s game I prefer not dealing in.

Warm holiday regards,

Dennis Gartman

The Gartman Letter, L.C]

 As for Mr. Nadler and Mr. Christian, they were a little less gracious when reached for comment. Mr. Nadler said in an email:

Mr. Grandich is not worth my time, or my attention. He ought not to be worth yours either. If Romney-style wagering about who is right and/or wrong is what the gold industry is being reduced to, we have a serious and very sad problem on our hands.

Mr. Christian, the managing director at CPM Group, has had a buy recommendation for intermediate-term investors with a 2 – 3-year time horizon since November 2000… and stated recently that gold was likely to spike to US$2,000 an ounce between now and the second quarter of 2012. Last week, he lowered that to US$1,920. [As such,] Christian…said in an email that he was not sure what to say about Mr. Grandich…describing Grandich as an “anti-intellectual liar who distorts my views” going on to say: 

Since we have thus been saying that gold possibly could touch $2,000 before it touches $1,000, I would be a bigger fool than Grandich to take his bet since I would be betting against my own views. Since Grandich knows CPM Group’s price projections, it is curious that he chose to structure his bet in such a way that what he is suggesting we take as the other side of the bet would run counter to our published price projections. What does that suggest of him and his intentions? Furthermore, I don’t engage in such cheap theatrics.”

 [Stay tuned! This clash of egoes is probably far from over.] 

• *http://www.canada.com/nationalpost/financialpost/story.html?id=b4c3f17e-a139-4a91-9850-2e5e812726e0 
• **http://www.bloomberg.com/news/2011-12-13/death-of-gold-bull-market-seen-by-gartman.html 
• ***http://www.grandich.com/2011/12/a-million-reasons-why-i-love-gold/ 
• ****http://www.grandich.com/2011/12/follow-up-to-1-million-offer/

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1. Gold: Will it Go to $12,500 – $24,000 – or $39,000/ozt. – by End of Decade? Here’s the Rationale for Each

4. Where are We Now in the Bull Market in Gold – and How Many Years/Months are Left?

You have no doubt read countless articles on the price of gold costing x dollars per “troy ounce” or perhaps just x dollars per “ounce” but the difference between the two measurements is significant. For that matter, what’s the difference between a 24 karat gold ring and an 18 karat gold ring?  Let me explain. Words: 863

So says Lorimer Wilson, editor of both www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!). Please note that this paragraph must be included in any article reposting with a link* to the article source to avoid copyright infringement.

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Wilson goes on to say:

Definition of a ”Troy” Ounce

A “troy” ounce (ozt) is a unit of imperial measure for weight that dates back to the Middle Ages. Originally used in Troyes, France, it is most commonly used to gauge the weight and therefore the price of precious metals. One troy ounce is equivalent to 1.09714 avoirdupois (our conventional every day measurement) ounces – i.e. 9.714% greater in weight – and 31.1034768 grams. 1 kg. consists of 32.1507466 troy oz. Please keep the distinction between ounces and troy ounces in mind when buying small quantities of gold and/or silver.

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Definition of “Karat”

The term “karat” is used to describe the unit of measurement for the proportion of gold (i.e. % purity of the gold content) in a piece of jewellery, coin, ingot or bar as per the above table.

Gold will often be mixed with “filler metals” such as silver, palladium, platinum, nickel and even copper to combat the softness of pure 24 karat.

• Gold which contains a degree of silver, platinum or palladium is referred to as ”white gold” and will classify with a higher amount of karats while the presence of nickel leads to a slightly lower designation of karats.
• Copper is used to give gold durability and give it a golden rosy tone.

Below is a table outlining the karat designations at various gold purity levels plus the extent of ”fineness” as is used in some countries such as Italy.

(In some countries “karat” and “carat” are used almost interchangeably although, strictly speaking, the words’ correct meanings are as defined in this article where “carat” refers to the weight of a gemstone (see below). The correct word to use when referring to the weight of an object of gold, silver or other precious metals is to speak in terms of troy ounces as below, kilos or metric tonnes.)

100% pure gold is defined as having a purity of 24 karats so if something is 24 karat gold then it’s made of gold and nothing else – regardless of size… Gold is a relatively soft metal and high-karat gold tends to be easily damaged and, as such, a 24 karat item is usually reserved for display or ceremonial use as the picture of me with “my” 100kg. Canadian Maple Leaf 99.99999% pure gold coin which is now worth in excess of $5,465,626.92 USD! (100kg. x 32.1507466 troy oz. x $1,700/ozt. USD)

All jewellery is required by law to be stamped so consumers will know the quality of gold used. Jewellery made in North America is typically marked with the karat grade (10K, 14K, etc.), and jewelry made in Italy is typically marked with the “fineness” such as (417, 583, etc.). Most retail gold items have a karat rating in the range 9 to 18. In the U.S. the minumum karat value for an item to be sold as gold jewelry is 10. In the UK 9 karat is more common.

The number 24 may have originally been chosen to represent pure gold because it divides evenly by 2,3,4,6 8 and 12. Thus it’s easy to talk about a gold item being half pure (12 kt), two thirds pure (16kt) etc. Nine karat would thus be three eighths gold, 18 karat would be six eighths (three quarters).

Conclusion

Never again will you be misled when reading about or considering the purchase of any item in which such terms are (often loosely) used.

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1. Canadians Take Note: Own Physical Gold via Canadian Mint’s New Gold ETRs

The Royal Canadian Mint has announced that it is making an initial public offering of exchange-traded receipts (ETRs) under the mint’s new Canadian Gold Reserves program. Unlike other gold investment products currently available which only enable the purchaser to own a unit or share in an entity that owns the gold, the ETRs will enable the purchaser to actually own the physical gold bullion which will be held in the custody of the mint at its facilities in Ottawa. Words: 650

2. History Says Silver Could Become the Next 10-Bagger Investment! Here’s Why

If you concur with the 159 analysts (see below) that maintain that physical gold is going to go parabolic in price in the next few years to $3,000, $5,000 or even $10,000 or more then you should seriously consider buying physical silver. Why? Because the historical gold:silver ratio is so way out of wack that silver should appreciate much more than gold as it goes parabolic in the years to come. Indeed, silver could easily reach $100 – $200 per troy ounce, maybe even $300 and conceivably in excess of $400 depending on how high gold goes. The aforementioned may be hard to believe but an analysis below of the historical price relationship between silver and gold suggests that such will most likely occur if gold does, indeed, go parabolic. Take a look. Words: 1423

Whilst it is true, more often than not, that mining stocks move in the same direction as gold [and historically outperform that of the physical metal based on their better beta statistics] there are periods where this relationship does not hold. That is one of the reasons we currently have no interest in trading or investing in mining stocks. Why form a bullish view on gold and buy mining stocks based on this view, only to see gold rise and mining stocks fall? [Instead,]… our preferred strategy to optimize and maximize potential profits… is using options that are directed based on the price of gold with no other factors influencing their performance. [Let us explain why.] Words: 1235