Cash in On The Crash
Cash in On The Crash
Cash in On The Crash
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Cash In On the Crash Mike Burnick
Hi! Mike Burnick here, and together, we are about to embark upon a
journey into the world of gold and silver.
A journey that will help you position yourself for the profits of a
lifetime, as gold prepares to more than double and probably triple in
the years ahead, and as silver prepared to more than quadruple!
Over the course of five instructional chapters that I have created for
you, I will be giving you all the knowledge and expertise you’ll need to
help maximize your profits in the precious metals.
Why now? Why should understanding gold and silver be a priority for
you?
I am 100 percent confident that gold and silver are headed substantially
higher in the years ahead. T o over $5,000 an ounce in gold, and over $12 5
in silver!
We’ll explore the origins of the human love affair with gold.
We’ll look at some of the first gold coins ever used as currency.
We’ll learn about how gold fueled the rise and fall of civilizations
over the course of the last thousand years.
Next, we’ll talk about the Gold Standard. Why it was created… what
it achieved … and why it was abandoned by governments but should
be embraced by you
As we conclude our history lesson … with a new appreciation for
gold…and silver … we’ll take a close look at the role gold still plays
in today’s monetary system.
Finally, I’ll explain in broad terms how and why you should still
take gold and silver seriously today … and why you should buy them
as a store of value, and trade in and out of them to make oodles
more money.
And then, in …
Chapter II, I’ll show you How To Build Your Own Gold Standard — by
helping you understand the different types of gold and silver bullion
that are available for purchase …
And even how to safely store your precious metals onshore here in the
U.S. or offshore in vaults like Singapore …
Plus, I’ll give you some very important tips to help you save hundreds, if
not thousands of dollar every time you purchase gold or silver, or any
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Cash In On the Crash Mike Burnick
And to top it all off, I’ll then get right into the most popular derivative
precious metals investments, such as ET Fs, futures and options …
And to make sure you are ready for my subsequent modules — where I’ll
give you the basics to trade gold and silver to positions yourself for
MAXIMUM profits — while at the same time, using some very basic
techniques to help you reduce your risk as much as possible.
Chapter I:
T he Midas T ouch and a four-thousand-year obsession with gold.
It was fashioned into jewelry, crowns and other exotic and decorative
items. And this collection of gold bullion objects represented the wealth
of the owner.
It was money … from the outset. Even before it was fashioned into what
we perceive as money today, in the form of coins.
In a very real sense, even back then, it was the world’s first currency,
because every civilization — even if divided by oceans, continents and
time — agreed to its unrivalled value.
Its value and power is so great, gold has driven the rise and fall of
countries and whole civilizations.
What is one of the first things an invading army does after it has
vanquished its foes? It steals their gold.
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Cash In On the Crash Mike Burnick
In more recent times, California was built on the back of the Gold rush
in the mid-1880s.
Gold was and still is our most coveted possession — whether we buy it,
steal it or kill for it.
I’m telling you all this for a very important reason. T o understand gold
and the gold markets, you have to first understand the unique place
gold holds in the human psyche. Our relationship with gold is unique.
And this is true across all countries and all major cultures.
In an age where computer systems, and the information they hold, are
vulnerable to cyber-attacks, there is much to be said for owning physical
gold and keeping it in a safe place.
At a time when wars and social chaos threaten to engulf large parts of
the world, it’s good to know you have some of your wealth in a form that
is both secure and portable.
Remember, gold always has and always will be valuable. Love of gold is
hard-wired into the human brain. T hat’s what makes it such a safe and
reliable possession, and such an important investment.
Section One:
What you need to understand here is that the minting of gold coins
finally gave a specific value to gold, in comparison to the price of goods
and services. A certain amount of gold bought you a fixed number of
camels, for example.
Finally, people could actually measure the wealth they had when they
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Cash In On the Crash Mike Burnick
owned gold.
Gold coins also became the basis of “finance” and financial transactions.
In the 4 th century BC the Greeks were creating rudimentary banks and
extending credit between one city and another, based on gold deposits.
All this was made possible because gold and silver were recognized as
money, with each coin representing a known value.
None of this, mind you, ever prevented authorities from devaluing their
money. So in a very real sense money has always been fiat, from the get
go, subject to the whim of the powers that be.
But throughout history, each and every time authorities devalued their
money by lowering its gold content, guess what happened? T he
importance of gold to the private sector merely rose.
So much so, that today, as you will soon see, while there is not a
government on the planet that backs its money with gold or silver …
T he importance of building your own gold and silver standard has never
been more critical!
Section Two:
T he gold standard, and what happened when it was abandoned.
T he gold standard had its heyday between 1875 and 194 0, although
there are versions of its existing both before and after that period. T he
gold standard has existed in one form or another since the late 17th
Century in England, and it died its final death only in 1971, in the U.S.
Unfortunately, the gold standard works only when things are going well
in the world, and where little of significance changes. T hrow in a few
sharp shocks to the system, or even high population growth, and the
gold standard falls apart.
T hat may sound good on the surface, but reality is different. T he truth
of the matter is that a gold standard, back then and even today, would
be nothing more than outright deflationary for the global economy.
In fact, one of the first death knells of the gold standard came in 1933
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Cash In On the Crash Mike Burnick
when President Roosevelt cut the dollar’s ties with gold, allowing the
government to fight the Great Depression, pump money into the
economy and lower interest rates. And did do precisely that, it helped
the U.S. get out of the Great Depression.
If that sounds like too much history, let me tell you why I wanted to
share all that with you.
First, it explains why so many people still equate money with gold. Until
relatively recently in the history of gold and banking, a bank note was
simply a voucher or coupon, representing a certain amount of gold.
It was the gold that was real money. T he bank note was simply the
promise of gold.
After all, with the disappearance of the gold standard central banks are
no longer under any obligation to do so.
Remember, central banks stored gold only because they were required
to back all of their cash assets with an equal value of gold bullion.
Section Three:
For most financial transactions today, gold is irrelevant. Wall Street can
carry on quite happily without ever even thinking about gold.
Central banks still buy it by the ton. Wealthy individuals are building
their own vaults and storing gold bullion. And regular people, all over
the world, are buying gold coins and bars faster than ever before.
And for the two decades between 1980 and 2 000 the price of gold fell,
even while inflation still rose. So why bother?
First, over time, the price will almost certainly rise significantly. T his
has very little to do with the markets, and a lot to do with its scarcity.
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Cash In On the Crash Mike Burnick
All the gold ever mined is estimated to be only about 150,000 tonnes,
and less than a third of that amount is still in the ground and
recoverable.
Based on current gold production levels, all the world’s known mines
will be pretty much exhausted in about 2 0 years.
Stop and think about that for a moment. Scarcity plus emotion.
T hink back to our historical relationship with gold. T hink of our desire
and greed for gold.
Now think about what will happen to the price when there is no more
gold in the ground.
Sure, we’re talking about 2 0 years from now. But think about what will
happen to gold prices when everyone realizes we are just five years
away from the end of production. Or 10 years away.
T he U.S. and many other Western countries have national debts, deficits
and entitlement spending that are out of control. T heir positions are
unsustainable.
So the question you have to ask yourself ― as you think about your
investments and savings ― is this: Do I trust Washington to keep my
money safe? If not, then you’ll want to put a proportion of your wealth
into gold bullion.
Also, buying gold is like buying insurance. You insure your home and
your car, just in case something bad happens. When you buy home
owners insurance, it’s not because you want your home to be consumed
by fire, of wrecked by a hurricane. But you protect yourself nevertheless.
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Cash In On the Crash Mike Burnick
It’s the same with gold. Owning gold doesn’t mean you want there to be
a catastrophic meltdown of the financial system. But you buy it anyway,
just in case. Buy it and keep it close. So it’s there for you, just in case
the rest of your wealth suddenly takes a huge hit.
Earlier I mentioned how gold has a few downsides, like its historical
inability to keep up with inflation. And the fact that it doesn’t pay any
dividends or offer a guaranteed return.
But let’s not knock gold too much. Because cash isn’t such a great store
of value or wealth either.
T here are plenty of stories about people who store cash under their
mattresses or in boxes buried in their back yards. T hey do that because
they don’t trust banks. And that’s fair enough.
But it’s not such a smart move when you consider that the US dollar lost
over 98% of its purchasing between 1900 and the year 2 000.
And when we look at how the Fed has been pumping billions of “fresh
printed” dollars into the system since 2 008, it would be foolish to think
that this century will see any less of a fall of value in the dollar.
Within that context, these hoarders would have done much better to
bury gold in their yards instead of cash.
And while you can carry a fortune in gold in your jeans pockets, the
same isn’t true for silver.
In Module T wo we’ll look at the various ways in which you can both
secure and grow your wealth with gold.
Section One:
If you want to own gold as wealth, there are three ways to go … gold
jewelry, gold coins and gold bars.
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Cash In On the Crash Mike Burnick
For our purposes, we are going to look at gold bullion coins and gold
bullion bars. Both have a long history.
For example, the British Sovereign is a gold bullion coin today. But its
history as a coin of the realm began when it was first minted in 14 89,
during the reign of Henry VII. It was minted in Britain right up until
1917, shortly after the country abandoned the Gold Standard.
In other words, gold coins are “coins” because of their origins as real
money. T hey are of a size and shape that makes them convenient to
carry in your pocket or purse. And their value corresponds to their
history as coinage. A one-ounce coin of 2 4 karat gold is worth
approximately the spot price of gold on any given day.
Of course, when gold coins were used as currency, for buying goods and
services, their value was much lower. As money, the gold Sovereign was
the precursor to what is now known as the British Pound … worth less
than two dollars US.
T he size of the gold bullion bar we are perhaps most familiar with is the
4 00-ounce bar. T his is the heavy bar stored in the Vaults of Fort Knox or
the Bank of England.
It’s also the size of bar we see in the movies, when intrepid thieves dig
tunnels into bank vaults and then load the gold into a waiting truck.
Put simply, and generalizing a little, gold coins suit the buying power of
individuals. And large gold bars suit the buying power of nations.
Keeping in mind that gold coins were once used as money, it should
come as no surprise that many different countries offer their own gold
coins.
If, like me, you started buying gold in the 1970s, your first purchase
would probably have been a one-ounce South African Krugerrand, which
was first minted in 1967.
Here are a few of the better known and most widely purchased coins:
T he Krugerrand
T he Gold Sovereign
T he Australian Kangaroo
And there are some variations within different gold coins. T hat’s right,
not all “one-ounce” gold coins are the same.
First, some gold coins are pure gold, while many are not. For example,
the Canadian Gold Maple Leaf coin is 99.99% pure gold. As are the Gold
American Buffalo and the Austrian Philharmonic.
But the American Gold Eagle is 91.67% gold, 3% silver and 5.33% copper.
T he coin still contains a full ounce of gold, but has a slightly different
color and is, of course, a little heavier in total than one ounce, at 1.0909
ounces. T he same goes for the Krugerrand. But don’t worry, when you
buy a one-ounce gold coin, you do get a full ounce of pure gold.
Another variation ― and this one you need to pay attention to when
you’re buying ― is the premium you pay over spot price.
I’ll be going into detail on calculating what you actually pay for your one
ounce of gold in the next Module. For now, just understand that just
because one-ounce gold coins all contain the same amount of gold
doesn’t mean that you’ll pay the same amount for any coin.
T hat isn’t the case at all, and if you buy several coins at once, and pick a
coin with a high premium over the day’s spot price of gold, you’ll be
paying a lot more than you need to.
One other variation is the relative liquidity of different gold coins. For
example, if you want to sell your gold coins ― for whatever reason ― in
North America, any buyer will be happy to buy an American Gold Eagle or
Canadian Gold Maple Leaf.
But they might not be so eager to buy an Austrian 100 Corona. Why not?
Simply because they don’t feel familiar and comfortable with it. And if
you are selling to a dealer, he or she might not feel confident about
finding a buyer for your coins.
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Cash In On the Crash Mike Burnick
T hey know that wherever they are, the Sovereign will be recognized and
accepted. Another coin that is recognized worldwide is the Krugerrand.
I have plenty more to tell you about gold coins, and gold bars. But to
make sense of what I want to cover next, we first need to understand
the fundamentals of how gold bullion is priced.
T he pricing of all gold begins with the spot price. T he spot price is the
price of pure gold, right now, as a commodity.
However, when you buy gold ― whether as coins or bars ― you will
always pay more. You will pay a certain amount over spot.
How much you pay over spot will depend on a variety of factors —
including the type of gold coin or bar you buy, the size of the gold coin
or bar you buy, the volume of your total purchase, and the dealer you
buy from.
I would then go to a dealer and see what the purchase price of the coin
is, and would find that the dealer is selling a one-ounce American Gold
Eagle coin for lets say $1,385. T hat price is $59 over spot. Or 4 .35% over
spot.
Why the difference? First, you have to factor in the manufacturing cost.
It costs something to turn mined gold into a gold coin. Next, you have to
accept that the dealer needs to make a living too. So some of that money
goes to the dealer.
T hen I change my mind again about the coin I’m going to buy — in search
of a better deal — and discover I can buy a one-ounce Krugerrand for
$1,355. T hat’s just $2 9 over spot, or 2 .16%.
In other words, when you’re buying gold bullion, you have to do some
careful research before deciding on what to buy, and from whom.
We’re going to talk more about these costs later, but before we do, I
need to tell you about fractional gold coins, and gold bars.
T here are one-ounce coins … but then there are also fractional gold
coins.
As with any currency, you get more than one size and value of coin. T he
standard gold coin, whatever its country of origin, is one troy ounce. But
within each “currency” you get smaller coins with lower denominations.
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Cash In On the Crash Mike Burnick
In the real word, we call this “small change”. In the world of gold
bullion coins, we call these fractional gold coins.
For example, when looking at the American Gold Eagle, you can buy the
full, one-ounce coin, or you can buy coins of lesser weight and value ―
at ½ oz., 1/4 oz. or a 1/10 th oz.
So … why would you want to buy fractional gold coins instead of a full
ounce?
T here are a number of legitimate reasons why you might want to. But
there are also some reasons why you might want to think twice before
taking the “fractional” route to owning gold.
T he first reason to buy a fractional gold coin is that the price of a full
ounce is more than you can afford.
Another reason to buy fractional coins is when you want to give them as
gifts. And you want to spend a few hundred dollars on your gift, and not
over $1,000.
Finally, you may be thinking about the future, with the “prepper”
mindset.
You might foresee a time when fiat currencies collapse and you’ll want
to use your gold to buy food, clothing and other necessities. In that
scenario, it would make sense to carry gold coins of smaller sizes and
values.
Fair enough. But let’s see what buying fractional coins does to the costs.
However, if we multiply that by 10, we get a price per ounce of $1,4 90.
T hat’s $164 over our spot price of $1,32 6. Or 11.64 % over spot.
Keep this in mind when buying fractional gold coins. You might have
good reasons for buying gold in smaller units, but you’ll pay well over
the odds for the privilege.
T here are other costs you might need to consider, including delivery and
insurance costs. But we’ll talk about those later.
As I said earlier, the gold bar we are most familiar with is the bar stored
by central banks, the 4 00 oz. bar. Let’s say it’s priced at about $500,000.
T hat’s out reach for most of us. As a result, mints all over the world
create smaller bars.
But let’s take a closer look at the one-ounce bar, which contains the
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Cash In On the Crash Mike Burnick
same amount of gold as a one-ounce coin. I can buy one of those for
$1,357. T hat’s less than the price of an American Gold eagle, but a tad
more than a Krugerrand.
And, as with gold coins, you’ll find some variation between dealers.
If the price between gold coins and gold bars of the same weight is
about the same, why buy gold bars?
Good question. T ruth be told, I would opt for a one-ounce gold bar. Chief
reason: I like to pay as little a premium over spot as possible, and with
the occasional exception of a Krugerrand, with bars you will almost
always pay less.
And I would buy a gold bar if I had $15,000 or $4 5,000 to spend on gold.
Particularly if I were not taking physical delivery of that gold, and didn’t
have to worry about carrying it around.
(We’ll talk in a few minutes about the pros and cons of taking physical
delivery of your gold. And in Module 3 we’ll look at what you need to
watch for when buying gold bars. Don’t get ripped off!)
Section Two:
You need to make up your mind about whether you are investing in
buying gold bullion, or buying rare gold coins. T here is nothing wrong
with buy collectible rare coins. But it’s not the same as buying pure gold
bullion.
In fact, buying and selling rare gold coins can make you a lot of money.
But you have to be really, really good at it. Just as you would if dealing
in rare stamps or 17th century European paintings.
What’s the difference between buying gold bullion coins and rare gold
coins? With bullion you are paying for the coin’s weight of gold. With
rare coins, the weight of gold plays a much smaller part. Most of the
value lies in the rarity of the coin and its condition. Just the same as
with stamps.
For example, this 1897 quarter Gold Eagle in new condition is on offer
for $32 ,500. Clearly the value is not about the gold … it’s about the
rarity of the coin and its new condition.
If you do want to buy rare gold coins, let me give you a bit of advice.
First, commit to learning everything you can about the subject. Second,
take great care when it comes to the dealers your work with. T here are
a ton of bad players out there who will try all kinds of scams in order to
make more money. Some even chemically alter a rare coin to try and
make it rarer, and, they often get away with it, fleecing the customer.
Next up … buying
commemorative gold
coins.
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Cash In On the Crash Mike Burnick
Sure, it might be nice to own some limited edition gold coins which
commemorate the latest Olympic Games or some other notable event or
person. But instead of paying a 2 -5% premium over spot, you could find
yourself paying 100% or even 1,000% over spot.
In other words, you are not paying for gold bullion. In fact, you are
paying for the massive marketing budgets that go into promoting these
coins.
Also, while you can almost always find a buyer for your gold bullion or
your rare gold coin, don’t count on the future liquidity of a
commemorative coin. In short, I don’t recommend buying commemorative
coins.
T hese really are bullion coins, coming from the same mints as any other
bullion coins. But they are pitched as being special and rare. T hey are
neither.
T hese coins are struck multiple times with the mint die to give greater
detail and a finer finish to the coin. T hey have some aesthetic appeal.
But underneath all the shine, they are simply gold bullion coins that
have been struck by the die more than once.
Mints will tell you these are rare. T hey are not. And they will tell you
they are more valuable than regular bullion coins. T hey are not …
except in the minds of fools.
If you want to buy gold bullion, buy a regular gold bullion coin or bar, or
smaller ingot. If you want to buy rare gold coins, buy genuine rare coins.
Section Three:
Let’s say you have made the decision to buy some gold bullion. You have
the money and are ready to buy.
Well, hold up a minute. Before you buy, you need to decide whether to
take physical delivery of the gold, at your home address. Or buy
allocated gold, which is stored for you elsewhere. Or buy unallocated
gold, which is simply the promise of gold.
Physical delivery…
T his is where you buy one or more gold coins or bars and have them
shipped to your home address by courier. In other words, you want to
hold your gold in your hand and then figure out for yourself where and
how you are going to store it.
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Cash In On the Crash Mike Burnick
A lot people like to take physical delivery of gold. Certainly the preppers
won’t feel comfortable unless they have the gold in hand. And plenty of
other buyers feel more comfortable about being in actual possession of
their gold.
Of course, taking physical delivery of your gold will usually increase the
buying cost. First, there is the cost of the courier, from whichever dealer
you are using. T here will also be an insurance cost, because the dealer
won’t ship your gold without also insuring it.
Even the most reputable dealers seem to see these shipping and
insurance costs as a source of additional income. In other words, they
are higher than they should be. Watch these numbers carefully, because
they can wipe out any savings you have made by finding a deal with a low
price over spot.
You can reduce the impact of the shipping and insurance costs by
waiting until you can buy several coins, rather than incurring these
costs on every coin or small bar you buy. Also, depending on where you
live, you might have to pay sales tax as well.
Allocated gold.
Also known as non-fungible gold, allocated gold is physical gold you buy
… but you don’t take physical delivery of it. It is stored in a vault on your
behalf.
You do own that gold. It is a coin or bar with your name attached to it
and you can ring up the company and ask for it to be shipped to you at
any time.
Where can you buy unallocated gold? My preferred source is Hard Asset
Alliance. You buy the gold through them and then choose where you
want your gold to be stored … in New York, Salt Lake City, London,
Zurich, Singapore or Melbourne.
(We’ll be talking more about storing gold overseas in the next module.)
T his is when you buy gold, don’t take delivery and don’t have your name
attached to a specific coin or bar of gold.
Some people like this idea because it drives their costs down even lower.
With allocated gold there is a small storage and insurance fee. With
unallocated gold there is not.
However … if the company you are dealing with ever went bust, you
would lose everything, because unallocated gold appears on the
company’s balance sheet. It is one of their assets.
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Cash In On the Crash Mike Burnick
With allocated gold, your gold coins or bars are not on the company’s
balance sheet. So if they go bust, you don’t lose your gold.
Section Four:
So far we have been talking about buying gold bullion. Whether we take
delivery or not, we buy gold to own the actual coin or bar.
Sure, if you time your purchases well, you can certainly get a return on
your investment of cash into gold.
But you can’t look at buying physical gold in the same way you would
look at buying shares in a tech stock, or buying bonds.
In the next module, we’ll drill down and deal with the specifics of buying
gold and silver bullion.
You are going to find out how to buy at the best price, without putting
yourself at risk. In particular, I’ll tell you how to find the deals and the
dealers who sell gold at a low premium over gold spot price.
And I’ll show you how to avoid the biggest scams out there … including
outright counterfeits.
T hen, we’ll talk about storing your gold bullion. Where should you keep
it? At home? In a safety deposit box at your local bank? Overseas?
And finally we’ll wrap things up with some instructions on how to add
gold and other precious metals to your IRA or 4 01K.
We talked in the last module about the premium over the spot price of
gold you pay when buying gold bullion. T his is true for both coins and
bars.
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Cash In On the Crash Mike Burnick
As I said, you want to keep that premium to a minimum. Aim for no more
than 5% over spot. Any higher than that and you should keep shopping.
And don’t assume that today’s best buy will be the same a year from
now. T here is also that issue of supply and demand. If a coin becomes
particularly popular among the buying public, the price over spot will
likely increase.
T o help get you started, here are the coins I like to buy when my focus is
on getting the best deal … the Austrian 100 Corona and the Hungarian
100 Korona.
T hese are often your best buys when it comes to paying as little as
possible for every ounce of gold.
Are these the only coins I buy? No. because I also want to factor in
liquidity, which means I want some gold coins which I know I can sell at
any time, to anyone, anywhere in the world.
T o get the best deal for your money, the price over spot isn’t your only
consideration. You also want to make your purchase at point where the
price of gold dips below its average for the time.
Ideally, of course, we would buy all of our gold at the lowest possible
price. Better still, we would get in a time machine, go back to 1971, and
buy as much as we could at $35 an ounce!
Failing that, it makes sense to follow the price of gold, listen to one or
two experts you really trust, and buy when gold hits its relative lows.
And what happens if you miss-judge a few of those lows, and pay more
than you should have? My advice is not to beat yourself up about it. Do
the best you can … and buy on a regular basis. T his gives you the
longer-term advantage of dollar-cost averaging.
But if you save up your cash — and make big, occasional purchases ―
one big mistake in judging the price can haunt you for years.
the price quickly move up to over $1,900. His error was in selling at the
wrong time, rather than buying at the wrong time. But his action
illustrates the danger of making big deals when the timing is wrong.
And by the way, don’t worry — timing your buying — and your selling —
of precious metals will be the subject of module 5, where I go into some
very basis — and not so basic — trading strategies.
When trying to get your gold at the best possible price, one other
factor to consider is the cost of shipping and insurance.
T his applies when you are taking physical delivery of your gold.
As an example, with the spot price of gold at $1,32 6, and the price of a
one-ounce Krugerrand at $1,355, you are paying just $2 9 over spot, or
2 .16%.
But when you look at your invoice, you see that you are also paying $30
for shipping and $12 for insurance.
Assuming you purchased just one coin, and you add in those extra costs,
now you are paying $1,397 for your Krugerrand. T hat’s the equivalent of
$71 over spot, or 5.2 1%.
You can usually lower those costs by taking delivery of more than one
coin at a time. Now you are spreading your shipping and insurance costs
over the several coins.
“But hang on Mike,” You say. “I thought you just told me not to buy too
much gold at a time.”
Well, “too much” is a relative term. Some people save up to buy a single
coin at a time, while others regularly spend $2 0,000 or more on gold
bullion bars.
Either way, this is one of the reasons why it makes sense to buy
allocated gold.
As you will recall from Module T wo, when you buy allocated gold, you
don’t have to take delivery of your gold. As long as you’re storing it in a
totally secure vault, you can then avoid delivery costs, which save you a
bundle.
T hat also means you can buy your coins on a regular basis, without
taking delivery of each coin. T hen, at any time in the future, you can
choose to have several or all of your gold coins or bars shipped to your
home.
Yes, there are storage fees involved. And insurance. But buying
allocated gold will almost always cost you less than taking physical
delivery and then having to deal with the costs and/or risks of storing
your bullion closer to home.
Also you’ll want to avoid paying sales tax, when it’s possible and legal.
In the U.S., if a state has a sales tax, gold purchased and delivered
within that state is almost always subject to sales tax.
However, many dealers allow you to buy by phone and have your
purchase shipped out of state. In these cases, the dealer will generally
not impose a local sales tax. An exception is where the dealer may have
offices in, say, your home state where you are taking delivery.
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Cash In On the Crash Mike Burnick
If a New Jersey resident places an order through the New York office,
the dealer is generally still supposed to charge the New Jersey sales
tax. If the only office was in New York, the dealer probably wouldn’t
impose the tax.
Wherever you are buying, look into the sales tax issue and don’t be shy
about phoning a dealer and asking for advice or clarification.
Be careful about bullion scams ― with gold bars and gold coins
Missing out on the best possible price when buying gold bullion may
have you slapping your head and promising yourself to do better next
time.
But that frustration pales into insignificance compared to how you’ll feel
if you get scammed. Imagine buying some gold coins or bars and then
later finding that they are not the real thing at all. T hat’s right … there
are a huge number of counterfeit gold and silver coins out there.
NOT E: T his is why you should never, ever, ever buy gold bullion at flea
markets or online auction sites like eBay. You’re just begging to get
ripped off.
How, you might ask, can one create a counterfeit of a one-ounce gold
coin or a one-kilo gold bar? After all, just weighing the coin or bar will
tell you whether it’s gold or not. Right?
Wrong … for the simple reason that tungsten has the same density as
gold, down to three decimal points. T his means someone can create a
coin or bar with tungsten, and then add a thin layer of 0.999 gold on the
exterior.
He then makes fakes with a tungsten core and a 0.999 gold exterior. T he
bogus bar weighs the same, looks the same and has the exact same
markings as the pure gold bar.
He ships back the bogus bars that look, weigh, and are hallmarked
perfectly. He includes a copy of the original purchase slips showing the
weight, hallmark, etc.
Now the counterfeiter has his five genuine kilo bars, while the dealer
has five bogus kilo bars.
Scary, right?
As you can imagine, a big time counterfeiter is more likely to invest his
time in creating fake kilobars than one-ounce coins.
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Cash In On the Crash Mike Burnick
But don’t relax just yet, because there are plenty of fake coins out there
as well. Years ago, one of the oldest, largest and most experienced
wholesalers in the world got stuck with $3.5 million of counterfeit gold
coins. T hey were stung.
I’m not trying to scare you or put you off buying gold bullion. Far from it.
But I am urging you to be smart and cautious. And the first step in being
smart and protecting yourself against fraud is to buy gold from only the
most reliable dealers.
If you have friends or family members who are already buying gold, you
can ask them what they think of the dealers they use.
FideliT rade
3601 N. Market Street
Wilmington, DE 19802
1-800-2 2 3-1080
www.fidelitrade.com
Sprott Money
111 Queen Street East, Suite 501
T oronto, ON M5C 1S2 Canada
1-888-861-0775
www.sprottmoney.com
I’m going to spend some time telling you about the benefits of Hard
Assets Alliance, for a couple of reasons.
First, because I genuinely believe they are a smart choice for gold and
silver buyers, however much or little bullion you plan to buy.
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Cash In On the Crash Mike Burnick
itself.
Here goes …
An account at Hard Assets Alliance allows you to buy and sell as easily
as with paper gold — and it’s as easy as a click of a mouse button. It
gives ownership in real bullion in an allocated account. Once you have
opened an account, it takes just minutes to buy and sell your gold or
silver. You can store your metals internationally but take domestic
delivery if you choose to do so. Simply select a bullion product and place
your order online. In minutes, the physical metal is yours and yours
alone.
Purchase premiums are among the best in the industry. You get world-
class storage, with non-bank, commercial vaults for storage, insurance
and transportation services to its customers. All precious-metals
transportation and storage is fully insured through Lloyd’s of London.
And last, but not least … When you buy precious metals and store them
offshore, you may get an exemption from U.S. reporting requirements.
U.S. customers are exempt from both the Report of Foreign Bank and
Financial Accounts (FBAR) and Form 8938 filing requirements if offshore
metal storage is elected.
Always check with your tax professional who is familiar with tax laws
both in the US and the country you wish to store your bullion. T ax laws
change all the time. Additionally, you might have to pay foreign taxes, so
check with your tax professional.
Even when you trust your bullion dealer 100%, it still makes sense to
protect yourself against unforeseen events. Particularly when taking
physical delivery of your gold.
Yes, over the years, more than one bullion dealer has gone bankrupt.
And if a dealer closes its doors between the time you pay for your gold,
and the delivery of your gold, you could lose both … your cash and your
gold.
With a sight draft you make an arrangement with your bank to act as an
intermediary between you and the gold dealer. When you order the coins
from the dealer and lock in your price, you don’t send the funds right
away. Instead, the dealer pre-ships the coins to a bank of your choice,
usually to the attention of an assistant vice president or higher. Once
the coins are received, you have the ability to inspect, to verify
authenticity, and to accept or reject the shipment. Once you’re satisfied
your banker has exactly what you ordered, you release the funds. T he
banker forwards the funds to the dealer and simultaneously releases
the coins to you.
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Cash In On the Crash Mike Burnick
T his is when you walk into a dealer with your money and walk out with
your gold. T his is a great way to avoid any possibility of the dealer going
belly up with your money and your gold.
However, not every dealer offers the cash and carry option. Also, you
need to consider the sales tax issue, and weigh the risks of walking out
of a dealer’s offices with gold in your pocket.
Perhaps the best way to protect yourself is to make sure your dealer
segregates its investment funds.
Put simply, this means that payments from investors go into an account
that is segregated and separate from the dealer’s operational accounts.
In other words, your money doesn’t go into the same account they use to
pay their rent and salaries. It goes into an account that the dealer
CANNOT use for operational purposes.
When you are considering a dealer, always ask if investor funds are
segregated. Unless they answer with an unequivocal yes ― and with
documents to prove it — move on to another dealer.
T here are also those buyers who simply want to be able to see, touch
and hold their gold and silver. Physical possession has meaning to them.
For myself, I would split your gold ownership between allocated gold ―
stored safely elsewhere ― and physical gold that you keep at home or
close to home.
But if you do want to store gold at home, you need to get serious about
protecting it, and follow a simple rule that may remind you of the movie,
Fight Club.
The first rule of storing gold at home is to tell NO ONE that you are storing
gold at home. T ell your spouse, by all means. And maybe the family
lawyer who handles your estate. But NOBODY else. T hat’s your best
protection.
And the best place to store your gold at home is in a safe. And not a
cheap safe that a team of thieves can rip out of the wall and walk away
with. T he most secure safe is a floor safe that is set in concrete in your
basement. T he lid is flush with the floor, and you can drag a box or
chest over the site of your safe to hide if as an added precaution.
Do NOT use a “diversion safe”. T hese are small hiding places disguised
as items like soup cans. You unscrew this pretend can of soup and there
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Cash In On the Crash Mike Burnick
is a handy space inside for your gold coins. Naturally, you hide this can
along with other food cans in your kitchen or pantry.
Other diversion safes include bogus wall sockets, hollowed out books,
rocks and so on. T he trouble is … every self-respecting thief has seen
all the same ads for diversion safes.
Also, be careful about other “cunning” hiding places. One gold owner
hid his gold coins in the battery compartment of an old cassette
recorder, and put it in a box of old electronics in the attic. He was right
in thinking a thief wouldn’t find his gold, or be interested in stealing
out-of-date electronics. His mistake was in not anticipating that his wife
might throw away the entire box on garbage day. Which she did.
Also, be careful when burying gold in your yard. Gold owners like to bury
their gold in waterproof plastic boxes or short lengths of vinyl piping,
sealed at both ends. Well, today’s metal detectors are not the same as
they were in your grandfather’s day. T hey are a lot more advanced. T hey
can see the gold inside the plastic box or vinyl pipe.
How about a metal box or pipe? Sure. But when a thief finds this big
lump of metal with his metal detector, what’s he going to do? He is
going to dig it up.
And, of course, you can store gold “close” to home by renting a safety
deposit box at your local bank. Are there risks to doing that? Of course.
T he bank vault might also be a target of professional thieves. But if you
do the math, using a safety deposit box in a bank is statistically a lot
safer that keeping gold in a box under your bed.
At its heart, buying and owning gold is about safety. It’s about
protecting your wealth in the event of calamity.
If you want to put safety first, and cover all the bases, then you should
store some of your gold overseas. Why? In case the federal government
decides to confiscate privately-owned gold bullion, as it did back in 1933.
In case the federal government introduces capital controls, preventing
you from transferring or taking any of your money out of the country. In
case the federal government, in a time of crisis, turns around and starts
to steal the financial assets of private citizens.
T rue … none of these scenarios seem terribly likely right now. But they
have all happened before, and though I do not think government
confiscation is a worry today, there’s no sense in underestimating what
desperate politicians are capable of.
As for how to store your gold bullion abroad, you can do that with
purchases of allocated gold through the Hard Asset Alliance. T hey offer
insured, independent vaults in New York (Brinks), Salt Lake City
(Brinks), Zurich (ViaMat), London (ViaMat), Singapore (Malca Amit) or
Melbourne (Brinks).
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Cash In On the Crash Mike Burnick
Notice that these vaults are not owned by banks. T hey are privately
held, independent vaults. So you can store gold across different
countries, and outside of the global banking system.
Now you have two levels of safety. You are not only diversifying within
your portfolio, but you are also protecting yourself by storing part of
your wealth abroad.
But what about your retirement, and your retirement savings? Wouldn’t
it be good to apply the same levels of safety and diversification to those
savings as well?
Well … you can. It is possible to include physical gold within both an IRA
and a 4 01K. You can’t take delivery of this gold, because of the tax
issues. So your gold is held by a “custodian”. For all intents and
purposes, this is like owning allocated gold. But it is within your
retirement fund. You can talk to your financial advisor about adding
gold, silver and other precious metals to your IRA or 4 01K.
Or you can create your own precious metals IRA directly, with a company
like Hard Asset Alliance. (T hey already store allocated gold for their
customers, in both the US and overseas. So it was a simple step for them
to become an IRA custodian.)
Now for a quick preview of the next Module, module Four. T hat’s
when I’m going to review for you the derivative gold and silver
investments, such as ET Fs, and futures and options.
For some time now, ever since gold peaked in September of 2 011, I’ve
been a lone voice crying in the wilderness doing everything in my power
to show you why I believe that collapsing governments in Europe and
eventually, the United States will end up sending precious metals into
the next phase of their bull markets — their biggest moves up yet.
And my goal is to give you the best information available to help you
profit from this tsunami of money-printing …
So I’m delighted you’ve stuck with me through the first three modules of
my educational course, and most importantly that you are now with me
for the remaining modules — the meat of the course, where I review
with you the derivative gold and silver investments …
We’ll start with this module 4 , where I review for you the best derivative
precious metals investments that you need to know about. T hen, in
module 5 I’ll give you my number one technique for timing your buying
and selling or precious metals, both physicals and leveraged vehicles.
I’ll also introduce you to an advanced trading technique I use that very
few are aware of — but that can help you make a lot of money, and I
mean a LOT .
Now, I fully realize, and I am sure you do too, that no one can foresee
the future with precision or guarantee profits. But make no mistake — I
expect plenty of profit opportunities in the months and years ahead, and
with this module and the next two, I am going to do my darndest that
you have the edge you need to make those profit opportunities come to
fruition.
T here are five basic vehicles for derivative gold and silver investments
that I want you to know about. T hey range from the unleveraged, where
you get one for one leverage, all the way up to the most leverage
possible, as much as 100 to one leverage.
T hey are …
1. Unleveraged ET Fs.
2 . Leveraged ET Fs.
3. Mining shares.
4 . Futures.
5. Options.
Most of you are already familiar with ET Fs, so I won’t bore you with all
the details. Suffice it to say they are a great way to invest and trade in
paper gold and silver, and also platinum in palladium.
T he advantages of ET Fs include:
— T hey have much lower management fees than traditional funds, thus
reducing your expenses.
— T hey give you far-better transparency. You always know what you own
via the ET F.
But very frankly, I don’t see a problem with that till gold gets over
roughly $2 ,500 an ounce.
Single Leverage
PM ET Fs
T icker Description Expense Avg. Short- Long-term T ax
Ratio Volume term tax tax rate Form
rate
GLD SPDR Gold T rust .4 0% 7,752 ,817 35% 2 8% 1099
SLV iShares Silver .50% 7,155,82 9 35% 2 8% 1099
T rust
IAU iShares Gold T rust .2 5% 2 ,72 9,667 35% 2 8% 1099
SIVR ET FS Silver T rust .30% 113,4 00 35% 2 8% 1099
DGL PowerShares DB .79% 110,2 60
Gold Fund
PALL ET FS Physical .60% 88,935 35% 2 8% 1099
Palladium Shares
PPLT ET FS Physical .60% 39,2 63 35% 2 8% 1099
Platinum Shares
Now, let’s go up the ladder a tad, to the next set of ET Fs that you can
trade, where you do get leverage, with a tad more risk. But the risk is
well worth it in my opinion, because these leveraged ET F investments
are where you can really turbocharge your profit potential.
For example:
— Between April 17, 2 009 and April 2 9, 2 011, for instance, gold prices
rose 79.9% …
Also, between January 13, 2 009 and August 2 2 , 2 011, for example, gold
prices jumped 130.8% …
But double long ET Fs could have made you between 34 2 .6% and 356.7%
richer … again, over T WO T IMES MORE!
But double long ET Fs you could have grabbed gains of 398.5% and
4 2 7.6%.
T hat’s nearly T HREE T IMES more money than bullion investors earned!
All of these are great vehicles for short-term trading in the precious
metals, offering you double and triple leverage on the underlying price
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Cash In On the Crash Mike Burnick
of the metals.
Chief reason: Although they are not actively managed, all of them are
designed by professional money managers, and unlike buying or selling
on margin, with leveraged ET Fs — provided you are not trading these on
margin — you can never get a margin call.
One of the great beauties of precious metals ET Fs is that there are also
ET Fs that allow you to profit from the inevitable pullbacks that occur in
the precious metals, via what are called “inverse ET Fs.”
With some giving you the potential for as much as $3 in gains for every
one-dollar gold declines during temporary pullbacks. For instance …
Between March 17, 2 008 and October 2 4 , 2 008, gold prices fell 2 6.7% …
And between February 2 0, 2 009 and April 17, 2 009, gold prices dropped
12 .5% …
But the ProShares UltraShort Gold increased 2 4 .5% in value and the
PowerShares DB Gold Double Short (DZZ) generated a 2 7.6% GAIN!
Naturally, all of these are just examples, and in some cases — extreme
examples. We can’t go back and grab those gains, nor could we grab the
entire move. But I wanted to illustrate how profitable these inverse
ET Fs can be, when you get your timing right, which is of course, the
subject of my next two modules.
Now, let’s go on to the next investment vehicle you are going to want to
use as gold, silver and other precious metals resume their long-term
bull markets. None other than mining shares!
First, diversification. While it’s critically important that you hold some of
your precious metals in the form of physicals and ET Fs, the right mining
shares — for the long haul — are also critical to maximizing your profit
potential.
Second, during gold and silver’s three year bear market since 2 011,
most mining shares have been beaten to a pulp, for a number of
reasons. T hat said, select mining shares now off you some of the most
outstanding buys you can find in the precious metals arena …
And during the next phase of the bull market in the precious metals, I
expect select mining shares to double and double again, and even again
— as gold and silver head to new record highs.
And third, and perhaps most importantly, the right mining shares can
offer you tremendous leverage on the price of gold or silver.
Plus, as gold and silver prices rise, the gross profit margins of select
mining shares expand exponentially, raking in huge profits for the
miners, sending their share prices into the stratosphere.
T aken as a sector, from 2 001 until Nov 12 , 2 012 , physical gold soared
537% …
While gold stocks as measured by the NYSE Gold BUGS Index (also
known as the HUI Index), gained a whopping 936%!
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Cash In On the Crash Mike Burnick
Now, let’s explore miners in a bit more details. T here are essentially
three types of gold and silver miners — big, medium-sized, and small.
Once the new bull market in precious metals is truly underway, I will
likely be recommending a mix of mining companies, for diversification.
I also like to trade mining share ET Fs, which are a great way to own
basket of mining companies, with one simply click of a mouse.
Now, let’s move up the ladder even more, to one of the very best ways
to leverage your profit potential in the precious metals and related
investments — without risking one penny more than you invest!
seller.
Most people are familiar with the concept of stock options that come
with an employment compensation package. If you join a corporation,
they may give you an option to buy stock in the company at a low fixed
price, no matter how high the stock price rises.
If your company does well and the stock price rises, you exercise the
option. You buy the company’s stock at the low price and reap a great
benefit. If the company doesn’t do well, you’ve lost nothing.
First, the options are shorter term. Stock options, like the type you get
as an employee, can be good for several years. Most actively traded
options expire in a matter of months, though some options extend
beyond a year (called “LEAPS”) are also available.
Second, options are listed on an exchange. T hey can be bought and sold
at almost any time. You just buy and sell the options themselves, just
like a stock.
Importantly, I never recommend that you exercise the option and buy or
sell the underlying security.
T hird, you have access to two kinds of options — options to buy, called
“call options” … and options to sell, called “put options”.
Buying call options allows you to profit from rising prices, while buying
put options lets you profit from declining prices.
Fourth, options are available not only on individual stocks, but also on
ET Fs, indexes and futures.
Both puts and calls have great potential, are usually liquid (easy to buy
or sell), and trade on regulated exchanges with low commissions.
When you buy an option, you never have the obligation to take a position
in the underlying security as long as the option is sold before expiration.
T hus, you never risk one penny more than your original investment —
the price of the option plus commissions.
A call option gives its owner the right to buy a specific item (underlying)
at a specific price (strike price) for a specific period of time (through
expiration day).
A put option gives its owner the right to sell a specific item (underlying)
at a specific price (strike price) for a specific period of time (through
expiration day).
T he option universe has its own vocabulary, and if you’re going to invest
in and trade options, it’s essential that you learn the most basic of
options terminology.
T he Premium — that’s the price of the option contract, the price you pay
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Cash In On the Crash Mike Burnick
Second is the Strike Price — that’s the price at which the call owner has
the right to buy or the put owner has the right to sell, the underlying
security. It’s a fixed price, compared to the actual underlying price of the
security at the time of the purchase (or sale).
T hird is the Expiration Date — that’s the last date the option is valid
through Once that date arrives, the option must either be sold, or you
face exercise. Or, if the option is worthless and has not worked out, you
simply let it expire.
Fourth is whether the option is “in the money”, “at the money” or “out
of the money.”
An in the money call option is when the strike price of the call option is
lower than the price of the underlying.
Conversely, when the strike price of a put option is higher than the
price of the underlying, that put option is also in the money.
An at the money call options means that they strike price is essentially
equal to the underlying security price, in the case of with a call or put
option.
And an “out of the money” call option is when the strike price of a call
option is higher than the price of the underlying, or conversely, when
the strike price of a put option is lower than the price of the underlying.
Which type of option you use — in the money, at the money or out of the
money — depends upon a lot of factors. But in general, I like to follow
two simple scenarios for buying options.
But you would want to use out of the money options in this type of
“large move” scenario.
T he second is when you expect a decent move, but you don’t think it’s
going to be a rapid move. In that case, you want to buy at the money
options, for the simple reason that they will not lose as much time value
as out of the money options would.
When you have a sideways market, you don’t want to trade options,
period. At least not until you think the end of the sideways market
action is nearby.
T here are other strategies to use when trading options, when one
might do for instance, what is called a “combination trade” — which is a
position consisting of two different options, usually one of which has
been purchased and the other sold.
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Cash In On the Crash Mike Burnick
Straddles and strangles are the basic terms used to describe some of
these option combinations.
A straddle is a position consisting of one put and one call option. T hey
both have the same underlying security, the same expiration date, and
the same strike price.
Disadvantage #1: Options are wasting assets. T hat’s because when you
buy an option, you are buying time. So if the market remains unchanged,
the value of the option will naturally decline as time goes by.
Disadvantage #2: Options can expire without value. T his follows from
the first disadvantage. T he expected market move has to take place — or
at least get underway — before the option expires. Otherwise, the
option can expire worthless and you will lose the entire amount you
invested in that option. But importantly, when you purchase options, you
can never lose a penny more than you invest.
In other words, the number that change hands in a given day (the
volume) is low and the total amount held by investors (the “open
interest”) is small.
You want to avoid these less liquid options contracts. T he cost of buying
and selling them — via market slippage due to lack of volume and
liquidity — is often too high.
Now, let’s look at the advantages of options. In my opinion, the two main
advantages of options easily outweigh the disadvantages:
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Cash In On the Crash Mike Burnick
First, since it’s an option and not the actual underlying security, the
price you pay to buy the option is far less than you would pay to buy the
actual underlying security.
And second, each option often represents 100 shares of the underlying
stock or security, allowing you to effectively control the underlying for
mere fractions of a penny.
One simple example will suffice. Suppose you expect a large move up in
gold, and you already have your physical gold in place as core holdings,
but you want to speculate and profit from gold’s next move up.
And you want the most leverage you can get, with the smallest amount
of pre-determined risk, and at the same time, you want to speculate on
the actual price of gold, and not say, mining shares.
A call option is the perfect way to go. More specifically, a call option on
one of my favorite pure gold ET Fs, for instance, on the SPDR Gold
T RUST (GLD).
Each call option on GLD effectively gives you control over 100 shares of
GLD, and since each share of GLD represents one tenth of an ounce of
gold, buying one call option on GLD effectively gives you control over 10
full ounces of gold.
With gold, at say, $1,300 an ounce, buying 10 ounces of gold would cost
you $13,000 … while buying 100 shares of GLD would cost you about the
same.
But with an at the money call option on GLD, you would pay roughly
$1,770 to effectively control the same amount of gold — effectively one-
7th of what you would pay if you bought the gold or the ET F outright.
T hat’s the leverage you get, more than 7 to 1! And the beauty of it all
brings us to …
Advantage #2: Limited risk. When you purchase either a call or put
options, you never lose a penny more than you invest, and you always
know how much is at risk.
T hat said, and since many options are often very cheap to buy — and the
leverage can be very tempting — always be sure to budget your
purchases and never invest too much on any one recommendation.
T o the sandbox where I cut my eyeteeth, where the big boys trade.
If you really want to achieve the goal of multiplying the profit potential
from the next bull legs higher in the precious metals …
You simply must learn more about futures trading of gold and silver,
where I cut my eyeteeth over 35 years ago.
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Cash In On the Crash Mike Burnick
And please, don’t let futures trading scare you. Granted futures trading
is not for everyone, but the futures markets are some of the oldest
markets on the planet, the most liquid markets on the planet, and some
of the most stringently regulated markets as well.
And they are not as complex as you might think! Quite the contrary, I
consider the futures markets to be the ultimate and the single best way
to maximize your profit potential in the precious metals.
Imagine how much you could make trading, say, two contracts as gold
explodes higher by 2 0% … 30% and more! T here could be gains of 2 4 0%
… 363% and more. An investor could walk away with pre-commission
profits of $4 8,000, $72 ,000 or more on a single trade!
But that’s precisely why I’m such a stickler for solid, risk-reduction
tactics. Although not foolproof, I believe they are extremely effective —
and essential — for success.
T hird, futures don’t lose value in sideways markets the way options do.
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Cash In On the Crash Mike Burnick
Forecasts don’t always come true. And for those that do, it sometimes
takes longer than expected. With futures, it’s a lot easier to wait — to
give the market some more time to respond to the powerful fundamental
forces we see driving the precious metals higher.
Fifth, your costs for broker commissions and fees are among the lowest
of any publicly traded investment. T hat means you can keep more of your
profits and reduce your overall transaction costs.
You can never eliminate risk entirely, but — when used prudently —
futures can be part of a strategy to moderate that risk.
One of the chief reasons I find it easier to manage risk in futures is that
futures markets trade virtually 2 4 /7 and almost exclusively on an
electronic basis.
T his means that you no longer have to rely on a broker on the floor of
an exchange to hold your order and execute it. It’s all computerized and
done automatically.
It also means that when you place what are called “Good-T ill-Canceled”
(or GT C) stop orders, your position is automatically monitored virtually
around the clock, so you can sleep peacefully at night.
T hat doesn’t guarantee against losses. But it does let me manage risk
efficiently.
What kind of future do I trade most? T here are only two futures
contracts each for gold and silver that you need to know about:
First, are what I call the full contracts; that is the gold and silver
futures contracts traded on the New York Mercantile Exchange. T hey
are the liquid gold and silver futures contracts in the world … each
contract represents 100 ounces of gold and 5,000 ounces of silver … and
they trade virtually 2 4 hours a day, six days a week.
Second, are what I call the mini-sized gold and silver futures contracts.
T hey trade on the NYSE, via the NYSE Euronext of LIFFE market. T hey
offer the smaller 33.2 -ounce mini-gold futures contract and the 1,000-
ounce mini silver contract.
I can manage risk more efficiently than ever and sleep nights in the
knowledge that, barring some extremely rare event, I can almost
certainly lock in my profit — or limit my losses.
T he bottom line is that I have been trading commodity futures for nearly
36 years — and I have never … never once felt that my risks weren’t
properly managed.
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Cash In On the Crash Mike Burnick
— A $12 ,337 profit in gold in just under two months: I invested $10,12 5
and banked a 12 1.8% gain in less than 60 days!
No, you are not going to become an expert in futures trading overnight.
It takes time and most of all, self-discipline to make money in futures.
But in the next module, I am going to get you started — by showing you
some of the simplest most profitable trading strategies you can find on
the planet … whether you are trading physical precious metals, ET Fs,
options or even futures!
And Second, a more advanced technique to help get you started on your
way to trading gold and silver more actively for the incredible shorter-
term profits they can offer you.
Mind you, I cannot cover everything in this section, even if it were itself
broken down into smaller modules and ten times the length of today’s
module.
I’ll also tell you about a unique way you can learn more — much more —
including having me right by your side to help you.
Let’s get started, first, with a very simple technique that I want you to
have to help you time your long-term gold and silver investments.
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Cash In On the Crash Mike Burnick
In the first part, I tell you about a simple technique to help guide you to
the long-term trends in gold and silver. Let’s call that part A.
T hen in the second part, let’s call it part B, I am going to give you my
proprietary demining signals — to use in conjunction with Part A — to
further refine your long-term gold and silver investing.
Whenever you see gold — or silver — trading below their 60 Day Moving
Averages, but ABOVE their 12 0-day moving average …
AND the shorter 60 day moving average is ABOVE the 2 00-day moving
average — consider it a BUY signal!
Why? Because in bull market mode, both gold and silver tend to snap
back very quickly to trade again above their 60-day moving average.
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Cash In On the Crash Mike Burnick
Here is a daily chart of gold all the way back to 1992 . T here are two
things you want to notice. First, on the left hand side of the chart,
notice how gold traded below both moving averages, the blue line being
the 60-day moving average and the red line, the 12 0-day moving average.
T hat’s when gold was in a bear market, and naturally, it was trading
below both moving averages and at best, sideways. Plus, the shorter 60-
day moving average was bouncing up and down compared to the 12 0-day
moving average.
But then notice how once the bull market got going, the blue 60-day
moving average moved above the 12 0-day moving average, and the price
of gold moved above and held above both lines as well.
Moving further to the right of the chart, you will notice three periods
that I have circled.
T he first one came in late 2 001, when the price of gold was above both
moving averages, yet the 60-day moving average was below the 12 0-day
moving average. T hat means that gold was not yet ready to fully
breakout to the upside, and since the 60-day was below the 12 0-day
moving average, you would not have added any positions and instead,
you would have waited for the 60-day moving average to cross back
above the 12 0-day average, which it did in the early part of 2 002 . T hat’s
when you would have bought gold or added to your positions.
Now, fast forward to 2 009. From 2 002 to 2 009, gold held above both
moving averages, and the 60-day moving average stayed above the 12 0
day. A very nice bull market.
T hen, in 2 009, we have the financial crisis and a huge pullback in gold.
But notice how the 60-day moving average stayed well above the 12 0-day
average, and even though the price of gold fell below the 12 0-day
moving average, it quickly rebounded back above the 60-day moving.
Now look at the third section I’ve drawn for you. T hat’s after gold had
peaked and started its three-year bear market.
As you can see, the price of gold first started to fall below its 60-day
moving average. T hen, it fell below its 12 0-day moving average. At that
point, you would have still been long gold, because the 60-day moving
average had not fallen below the 12 0-day average.
But as soon as the 60-day average moved below the 12 0-day moving
average, you had a sell signal. At that point, you would have two
choices: Sell your gold, or silver, or, hedge them up.
Now, this is a very simple but outstanding technique to use to help you
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Cash In On the Crash Mike Burnick
get a big picture view of your precious metals holdings and the longer
term trends. But I want you to have more, which I’ll give you in a
moment.
First, a note on how you can do this yourself. It’s easy: If you have a
trading platform, you simply set your gold or silver data to daily and add
the two moving averages. T hat’s it.
Under the chart, you will find various parameters to play with. I
recommend using High low close bars, turning everything off, and simply
adding the 60 and 12 0 day moving averages. It’s simpler than you think,
so certainly check it out.
Now, let me give you something no one else but you will receive: My
proprietary timing signals for the next legs up in gold and silver. T hese
are not based on moving averages, but on 2 0 levels of cyclical analysis
that I perform on gold and silver.
My proprietary models to fine tune the dates in the future when gold
and silver are most likely to make important highs and lows … and
perhaps most importantly, when you can expect the final highs in their
next legs up.
You will want to write these dates down, and keep them by your side.
And please, DO NOT DIVULGE T HEM to anyone else, except perhaps
your loved ones. Here they are:
For both gold and silver, you are going to want to watch it very closely
as it approaches the following dates:
Looking at this table, there is a very good chance that gold and silver’s
bull markets will extend out into September 2 018, then some
consolidation and another new high in May of 2 019.
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Cash In On the Crash Mike Burnick
I want you to have these because they are kind of like a road-map as to
when you can expect important highs and lows. As times goes by, you
will notice how uncanny they are, and I always update the important
turning points via my newsletter, the Real Wealth Report.
Now, let’s talk about a very popular analysis methodology, Elliott wave
theory.
Now, I’m going to teach you a little trick that is simply wonderful.
It’s absolutely wonderful. And if there’s one thing you take away from
this quick trading session, it’s this very simple method I discovered in
the late 1980s that a 5-year-old could use to make a lot more money in
the markets.
Bottom line: I am going to let you in on a little secret that has helped
me make a lot of money over the years and it is very, very easy to do.
In the early ’80s, when I was studying cycles I discovered that trends
begin when you have four consecutive higher lows, or four consecutive
lower highs for a bear market … and that counter-trend reactions
against a major trend tend to occur in units of one to three.
You need bar charts to do this. But the first thing you do is you identify
what looks like a spike low or a cycle low in the market.
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Cash In On the Crash Mike Burnick
T hen you start counting your lows. T he first low becomes bar #1.
Notice the second bar, where you have a higher low. T hat becomes bar
#2 and is labeled as such.
T hen you have a sharp rally — but, importantly, you do not have a third
and fourth bar with higher lows right next to each other.
So you have what I call a “1-2 .” Next, the markets move back down in a
congested fashion.
T hen you get another low. T hat would count as #3 after the congestion
period. T hen, on the next bar, you get a higher low AND you get a higher
high or a higher close. T hat becomes bar #4 .
T his market is now in a trend mode up. It’s completed the trading cycle
and gone from a reactionary period to a rising trend.
You would immediately go long the next day, on the open. You would put
your protective stop one tick below the bar #3 to reduce risk.
You are in the market and if you had acted on this four bar count, look
how much the market went up right after. It is a very simple way to get
in the market with low risk.
Rule #2: Bars #3 and #4 must also be consecutive, with bar #4 having
a higher low than bars 1, 2, and 3.
Rule #3: Bar #4 must also have either a higher high than the previous
bars, or, a higher close.
Rule #4: In between bars #2 and bar #3 you can have no more than
five bars.
It takes a little practice, but once you get it down, you will be amazed
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Cash In On the Crash Mike Burnick
how much more money you can make and how you can reduce your risk.
It works on a daily basis, weekly, monthly, yearly, quarterly. On a five-
minute basis if you’re a day trader, etc.
For a bear market, you would reverse the process and you would be
using the same rules but you would be using highs instead of lows.
Let’s now say you went long on the above chart, and the market kept
running higher. How would you reduce your risk further, and even raise
your stop to perhaps lock in a gain?
It’s simple: All you do is repeat the process starting your count over
again from the next isolated low (or isolated high in the case of a bear
market).
You move your stop up to just below the new third bar, or down to just
above the high of the new third bar I the case of a bear market. If the
market runs further, you repeat the process again and again, until you
are stopped out. T his is a very simple, yet very powerful tool.
Now, as I said at the outset, there is simply no way I can impart my four
decades of experience trading gold and silver — without spending
literally, days and days with you. But with these simple methods I just
gave you, I am confident you will be able to juice up your profit potential
in gold and silver.
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