This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

How to Profit from Coming Aggressive Monetary Stimulus

Stock quotes 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.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,782.24 -260.66 -1.53%
S&P 500 1,946.93 -25.36 -1.29%
NASDAQ 4,421.1990 -72.1910 -1.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs