How to Play Gold – So it Doesn't Play You

We agree with having a portion of your investment in gold. We are commodity brokers and have seen a big interest in gold options over the last two years. This tool gives the investor a postion in the gold market with leverage and limited risk. For option trading ideas please feel free to give our brokers a call at 800-779-1515.

Thankful that we can be in the know, Thank you – Charlie

I have a very significant proportion of my portfolio in Goild Mining Stocks, many of them smaller producers with expaning production targets and good reserves, almost all in Australia. Some are international with miines in Africa and South And North America.
While a few of them are solidly Green with gains of 25-100%over the past say 2 years, many are still in the red by -5–45%.
I have no physical or ETF gold
I read about impending corrections etc and hear people say get liquid. I am a Gold Standard Association supporter and Austrain economics believer.
I am also at an age (60) where I cannot afford to lose my retirement funds.
I am betting on a few years of value and growth before I switch to income.
Does anyone think I'm mad or savvy? my financial planner simply says buy bank stocks.
I dont hold any bank stocks and he shakes his head.
Any comment/

I have not traded options before. You say $3500 can option 100oz of gold. How long is the $3500 option ?? Can one buy two year options or three year options and what would be the cost of the longer options ?? John Burton

What is risky is worthless fiat paper and computer-bits. The world has never been in the same position as it has been the past few decades… with ZERO gold or silver backed currencies, and insanely irresponsible borrow and print philosophy of western governments (and others).

The quantity of utterly worthless fiat toilet paper has become so extreme, THAT is the bubble, not gold or silver. And when they fail, as they ALWAYS have, and as they must, the conversion rate of gold and silver will necessarily shoot through the roof.

However, read that carefully. What is happening is, gold and silver are retaining their value in terms of purchasing power, and fiat currencies are headed down the toilet, which is appropriate for toilet paper. So don't be confused by the crazy prices of gold and silver over the next few years… that's only because you're measuring their value in government sactioned toilet paper, not real value.

Everyone will know this phase is over when the mainstream media and average folks start talking about the price of the remaining fiat currencies in terms of gold… not the other way around.

This all is “cut and Paste” from Wikipedia (my comments begin with a “1.”
http://en.wikipedia.org/wiki/Money
Money is anything that is generally accepted as payment for goods and services and repayment of debts.[1][2] The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred payment.
Money originated as commodity money, but nearly all contemporary money systems are based on fiat money.[3] Fiat money is without intrinsic use value as a physical commodity, and derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for "all debts, public and private".
The money supply of a country consists of currency (banknotes and coins) and demand deposits or 'bank money' (the balance held in checking accounts and savings accounts). These demand deposits usually account for a much larger part of the money supply than currency. Bank money is intangible and exists only in the form of various bank records. Despite being intangible, bank money still performs the basic functions of money, being generally accepted as a form of payment.[7]

http://en.wikipedia.org/wiki/Currency
In economics, the term currency can refer to a particular currency, for example the British Pound, banknotes of a particular currency, which comprise the physical aspects of a nation's money supply. The other part of a nation's money supply consists of money deposited in banks (sometimes called deposit money), ownership of which can be transferred by means of checks or other forms of money transfer such as credit and debit cards. Deposit money and currency are money in the sense that both are acceptable as a means of exchange, but money need not necessarily be currency.[1]
Historically, money in the form of currency has predominated. Usually (gold or silver) coins of intrinsic value commensurate with the monetary unit (commodity money), have been the norm. By contrast, modern currency, as fiat money, is intrinsically worthless.
http://en.wikipedia.org/wiki/Precious_metal
The best-known precious metals are the coinage metals gold and silver. While both have industrial uses, they are better known for their uses in art, jeweler and coinage. Gold and silver are often seen as hedges against both inflation and economic downturn. Silver coins have become popular with collectors due to their relative affordability, and unlike most gold and platinum issues which are valued based upon the markets, silver issues are more often valued as collectables, far higher than their actual bullion value.
To tie this altogether:
1. Money performs the exact same function as an IOU. You borrow your neighbor’s lawnmower while yours is in the shop. You and your neighbor decide on a fair compensation. ie: 1. You’re responsible for returning it in the same condition that you receive it; 2. You agree to return it with a full tank of gas; 3. You shake hands—no written contract—your handshakes and agreement confirms the legality of the transaction.
2. Currency is used to perform transactions when you leave the country for a vacation. It’s best to go to your local Travel agent and take some of the foreign currency for your cab ride from the airport to your hotel. The Travel Agent will charge you a “processing fee” to obtain the foreign currency and will sell it to you at the “current exchange rate” between the two countries.
3. There are very few (if any) countries that still use precious metals as money or currency. No bank, foreign or domestic, (that I’m aware of) that will exchange money or currency for a comparable amount of any precious metal. The majority (by a huge disparity) is held by “Government controlled” entities
Re: the government IOU (mis-identified as a $1.00 bill or any other denomination including coinage). Very strange: when the copper in a penny became more valuable than the penny, pennies were our last great monetary hope. The government gives you your $10.00 bill without any physical collateral (no lawnmower or sweat from your brow). The government can also produce more and more currency—totally un-collateralized which diminishes the IOU’s you already have. “Paper” US money isn’t paper at all—it’s cotton. It shouldn’t be out-of-the-realm of possibility that you’ll save more money by sewing your own clothes with US paper money or burning it instead of gas, oil, coal or electricity.
Currency is not complicated. In the US, it’s called “Treasury Bills”. During the “Great (luckily it wasn’t referred to as the “Greater” or “Greatest”) Depression, these were “sold” to the US populace as “War Bonds”. The populace considered the highest patriotic privilege to buy “War Bond” stamps at 10 cents apiece until they filled up the “collecting” book and take it to a bank to redeem it for a different piece of paper—a Treasury Bond. I still have some given to me by my grandparents as way to show appreciation of our mighty nation. Now, our national government (Federal Reserve-Bernanke, et. Al) not only can’t sell US Bonds (up until now, has always been the very best and dependable investment) to foreign countries, but can’t even sell them domestically. Bad news: foreign already own the majority of our debt—Good news: it’s only paper and is worthless.
Precious metals will ALWAYS their purchasing power no matter if they are exchanged for money or currency. IF inflation spikes (almost a certainty), 1 oz of gold will be worth the exact same value in relation to money. For instance: A loaf of bread costs $2.00 (I don’t buy the groceries, so this may be way off guess). At current gold price ($1200/troy ounce) it would take about about .025 ounce of gold. If inflation strikes, a loaf of bread goes up to $4.00/ loaf. But gold will have gone up to match the inflation rate, so the same loaf of bread would still cost .025 ounce of gold. Most pundits would have you believe that you can get “huge returns” by investing in gold—that’s probably true but should NOT influence your decision to buy gold. How much physical gold should you own, how to store it (Banks have two very different contacts for lock-box contracts. One allows them free access to whatever is in your box (cheaper), the other disallows the bank to open your safety deposit box (more expensive, but the bank acts as a custodian and cannot lock their doors to separate you from access to your gold—at least that’s the law of the land, at least for today.

I would like to address Richard's post of 6/15 as well as make some general comments that will address some other posts. First, I am 61 yrs old and agree with Richard's idea of attempting to build his wealth with precious metals before going more conservative. I feel like I have a lot of ground to make up after letting my financial planner talk me into a lot of unproductive, or even disastrous, investments.
Some others asked whether to invest in stocks or physical metals. Stocks have the capability to far outshine the physical metal once prices take off. I think Richard is wise to invest in stocks of countries such as Australia where the currency should remain stronger than the U.S. dollar. In fact, I wouldn't mind knowing some of the companies he likes. However, I think a person is wise to have at least some physical precious metals should the U.S. economy become truly a basket case and the dollar virtually worthless.
I also firmly believe that silver, whether in physical form or in stocks of mostly foreign countries is a much better investment than gold. JP Morgan has been shorting silver to a much greater degree than gold, and they have wisely been dumping it on others as the COMEX investigates the massive (and illegal) short positions in it. This has served to artificially depress silver prices which given the strong, and growing, industial uses for it has made it, in reality, more scarce than gold. I would urge anyone wishing to investigate my points further to read anything by Ted Butler who knows more about silver than, probably, anyone in the world. Without investing in his newsletter, you can contact IRI (Investment Rarities Inc) of Minneapolis who always run comments by him in their newsletter. They are dealers in precious metals, both gold and silver but also hold the view that silver has far more upside potential, with less risk, than does gold.