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Gold Jumps After Fed Announcement

The Truth About Gold!

Written by Jeff Siegel
Posted September 23, 2013

Last week, the Fed stood firm... and I watched many of my stocks soar.

All of my energy plays were up, and even gold got a nice respite from its lows. Gold actually jumped more than $60, and droves of hibernating gold bulls perked up.

But before they gear up to ride the stampede, they may want to slumber a little longer — at least, for a few more months.

Not that I'm anti-gold in any way...

In fact, I continue to believe that one of the smartest investments you can make these days is in gold.

Despite all the positive news coming out of Wall Street right now, there isn't a single thing any banker, analyst, or politician can say to challenge the fact that inflation is coming.

And you know better than anyone that gold will be your lifeline when that happens.

Which is why you should absolutely be in preparation mode now, locking in on some cheap gold plays that, in a matter of months, could be the single defining factor that separates you from the herd — and puts you into an entirely new category of what it means to be truly wealthy.

Fortune is Around the Corner

There's an old joke in the industry that goes, "You can't mine gold for $500 an ounce, sell it for $300, and make up the difference in volume."

And that's precisely the problem with most companies that own property containing gold...

Getting the valuable material out of the ground costs money... money that cuts into profits. Cut enough of the profit and eventually, that land embedded with all those millions of ounces of gold becomes worthless.

Just imagine something worth billions of dollars... and nobody willing to shell out a dollar to own it.

Twenty-five years ago, when gold was trading at $350, finding properties like this wasn't hard.

More importantly, buying them was even easier.

Because no matter the size of the property — or how many million ounces of gold it held — anybody with an average-grade deposit who decided to start mining right then and there would be doomed to bankruptcy, making those properties worthless.

For those willing to bide their time, however, unimaginable fortune was around the corner.


The Sweet Spot

Let's say you have a three million ounce gold deposit, an entry-level purchase for any major mining operation...

With cost of production at, for example, $400/ounce, that deposit would be functionally worthless when gold's market value is at $400/ounce. The owner would neither profit nor lose from the development of that property.

But if the market price rises by just a single dollar from that $400/ounce baseline, that property suddenly becomes worth $3 million.

Historically, though, your gains would have been much, much bigger...

If you'd bought this three million ounce property back in February 1987, when gold was trading for $400/ounce, you'd have an asset with an overall value of zero dollars.

Three months later when gold hit $470/ounce, that formerly worthless property would now be valued at $210 million.

By December of that year, with gold up to $500, it would be worth $300 million.

Of course, the obvious catch here is that you have to buy when the market price of gold is as close to its break-even point as possible — basically, when the cost of production to gold market price ratio is near or at 1.

It's really all about hitting that sweet spot.

So our in-house gold analysts recently put together a report for you. It shows you exactly how to find that sweet spot — and how to profit from it.

You can access it here.

Although most investors continue to shun gold, decades of historical data proves without a doubt that gold is one of the best insurance policies you can own.

And of course, it's during times like these that we're looking for bargains.

Because make no mistake; when the proverbial poop finally hits the fan — and it will — it'll be the guns you have and the gold you own that'll help you protect you, your family, and your wealth.

To a new way of life and a new generation of wealth...

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Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks and Weekly Score. For more on Jeff, go to his editor's page.

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