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How to Profit from Coming Aggressive Monetary Stimulus

Stocks in this article: GLD IAG SVM CEF ASA

So here's the plan on how to profit from the reaction to the eventual monetary stimulation and massive injections of capital (and increased monetary velocity) that is coming sooner than later.

Begin with assets that will go up as a result of the weakening of the paper currencies. It's not rocket science, but whenever we've had Federal Reserve style quantitative easing, the symbols of wealth preservation went up sharply in value.

Here's a 5-year chart of the SPDR Gold Share ETF (GLD). You can see where economic stimuli and Quantitative Easing (QE) began in late 2008. QE1 was announced at the end of August 2010 and QE2 kicked in the spring of 2011. Each time it fueled gold's ascension higher and higher.

Two interesting ways to profit from the coming rebound in both gold and silver is to consider these two ETFs: the Central Fund of Canada (CEF) and the ASA Gold and Precious Metals (ASA).

As the Central Fund of Canada web page makes clear, the purpose of CEF is to make it relatively easy to invest in both gold and silver in a tradable, priced-per-share basis. Over 95% of the money invested is split between gold and silver bullion, with the remaining 5% kept in cash for redemptions.

The fund's gold and silver bullion is stored in "the highest security rated treasury vaults at a Canadian Chartered Bank on an unencumbered, allocated and segregated basis".

That means there's real gold and silver behind the net asset value of each share of CEF. It's not co-mingled with other bullion and, as far as we were told, it is insured and fully inventoried.

As of May 24, the share price is selling for a 1.2% discount to its net asset value. So with each share you'll be able to participate in the rise of both precious metals, and they WILL rise IF aggressive monetary stimulation is implemented.

The ASA Gold and Precious Metals ETF is a unique breed of "self-management" investment trust.

The firm invests in publicly-traded stock markets across the globe. It primarily invests in stocks of companies engaged in the exploration, mining or processing of gold, silver, platinum, diamonds, or other precious minerals. ASA was founded in 1958 and is based in San Mateo, California.

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