Special Report

The 3 Best Ways to Invest in

GOLD

A special report by Jeff Clark, Editor of Caseys Gold and Resource Report

2010 Casey Research

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

Welcome to Casey Research!

currencies by lowering interest rates, and many have resorted to quantitative easing, a fancy term that means Were glad youve joined us in what we believe will be the nothing more than printing money. As evidence, M2, bull market of a lifetime. one measure of money supply, is up in all G7 countries, which signals that tomorrows inflation is being baked in It might surprise you to hear that were not the cake today. recommending investing in gold because were gold bugs. We do it because gold is the safest way to protect And the U.S. governments proposed 2010 budget calls yourself from failing economies and out-of-control for a deficit of $1.75 trillion but the real number is governments... and because its the best way to profit actually more like $2.5 trillion, because thats how much from fundamental factors working in your favor. they will have to borrow to get through the year. By the end of 2010, U.S. debt is expected to exceed $14 trillion.

Why Should You Invest in Gold?

Lets call the global crisis what it is: the worst financial collapse since 1929. Housing prices are down 30% from their bubble peak in 2006 and we believe the end of the decline is still not in sight. While worldwide stock markets have recovered some of their 2008 losses, few investors are confident that a lasting recovery is here to stay. Unemployment continues rising in most developed countries. Governments the world over are debasing their

And how has gold responded to all of this? Between January 2007 and January 2010, gold rose 75%, while the S&P 500 fell 21% in the same period. And for 2009, take a look at the chart above how gold has fared against other major investment categories. Golds long-term picture is even more dramatic. Since January of 2000, when the price of gold bottomed at $282.05 an ounce, its up 297% over the course of the decade.
www.caseyresearch.com

-2-

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

Is It Too Late to Invest in Gold?

No! While gold has had a good run, our research shows that whats ahead will be, quite frankly, spectacular. By positioning yourself now, youll be in ahead of the crowd and will profit tremendously as the greater masses rush in. A Think about this: the four-digit gold price weve seen so far is with no price inflation to speak of, no effects of the atrocious increase in the money supply, and despite a rising dollar. What happens to gold when each of those pictures gets turned upside down high inflation, excess cash jolting the economy, and a falling dollar? After all, golds performance to date has been powered only by general anxiety, not by any visible erosion in the dollars value. Heres why we think its not too late. 1. Gold is an inflation hedge. First, while everyone

worries about deflation, we wholeheartedly believe its not here to stay. As the Fed continues cranking up the printing presses, flooding the economy with paper money, and as national debt skyrockets at unprecedented rates, there is no question that sooner or later (we think sooner), inflation will come roaring back with a vengeance. And given the current worries about deflation, its easy to dismiss the case for inflation and many do. Thats a mistake. Theres no doubt that the current administration and Federal Reserve are committed to printing enough money that the dollar will continue to be devalued. And gold is the #1 way to protect yourself from the results of their actions. 2. Gold is a dollar hedge. While the dollar is bouncing as we write, keep in mind that were still only in the first chapter of its crisis. At some point, the dollar will not be able to withstand the pressures mounting against it from

-3-

www.caseyresearch.com

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

negative real interest rates and the debasing from all the government bailouts, debts, and money printing. Gold has moved higher against the U.S. dollar every year since 2000, and its done even better against euros, Swiss francs, Canadian dollars, or British pounds. Thats a solid, unbroken, global bull market.

you a nice suit. Your neighbor, on the other hand, would have a hard time finding even a decent necktie for his money.

At some point, it might well be cheaper to use your depreciated paper money as toilet paper than to buy actual bathroom tissue with it. When, not if, that situation occurs, gold will take the proverbial moon shot Think about this: Unlike paper money, which has lost that weve been talking about for years. A 96% of its purchasing power since the inception of the Federal Reserve in 1913, golds purchasing power has 3. Gold is money. Throughout recorded history, gold essentially stayed the same. has been an accepted means of exchange worldwide. It

Imagine that in 1930, when the average monthly wage was $165 and gold sold for $21 an ounce, you had hidden a one-ounce coin under your mattress. Back then, that coin would have bought you a good-quality suit. And lets say your neighbor stashed the same amount of money away $21 in one-dollar bills. Fast forward to today: that one ounce of gold will still buy

fulfills the four criteria for money: its divisible, portable, durable, and limited in supply (in the era of Ben Helicopter Bernanke, the fourth criterion technically disqualifies dollar bills as money). Even though its price is subject to fluctuation, gold has never been worth zero. And if times get truly desperate
-4www.caseyresearch.com

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

such as the Greater Depression Doug Casey has been predicting for years a pocketful of gold coins would hold much greater value than a pocketful of dollar bills. Were not the only ones who think so... Legendary hedge fund manager John Paulson made gold his largest position, increasing his holdings to 3.8 million ounces, more than several major countries combined. And Michael Pento, chief economist at Delta Global Advisors Inc, announced that the firm is doubling its gold holdings to 8%, adding that Anything the government cannot replicate by decree, I want to own. There are a growing number of voices expressing the same sentiment.

coins were suspended by the U.S. Mint in December 2009, due to supply not keeping up with demand (not the first time that happened). And hedge funds, too, are showing interest: Greenlight Capital, Eton Park, and Pequot all have GLD as one of their top 3 holdings. Before the gold rocket takes off, lets look at the 3 best ways to invest in gold so youre positioned ahead of the crowd.

BEST WAY #1: Physical Gold

Given the state of the global economy and the government continuing to administer large doses of the wrong medicine, we first recommend all investors place up to one-third of their investments in gold bullion and coins. We dont mean one-third of your gold portfolio; we mean one-third of all your liquid assets. Sounds extreme, we know. But even if the global economy remains in a deflationary dip and gold struggles for a while, gold remains the safe harbor during the upheaval. Remember, its not simply a question of inflation or deflation; its crisis. And thats exactly what gold ownership is for. Bernanke and Geithner wont be rewriting history; theyll be part of it. Nothing replaces having physical gold in your possession and under your control. Of course, making a commitment to stockpile gold coins and small bars is of no value if you cant obtain them. That was the dilemma faced at times by many investors last year, as a worldwide shortage developed and premiums charged by dealers soared. As part of our mandate to keep our finger on the pulse of the market, we were able to find gold bullion with reasonable premiums and delivery times. Our subscribers were able to steadily accumulate gold in 2009, in spite of the supply crunch. And they were able to do so at premiums of 5-6%, while others were paying up to 10% over spot to purchase from dealers or on eBay.

When Will Gold Take Off?

While no one knows for certain when gold will make a dramatic move, the historical record indicates that a surge in money growth has its peak effect on economic activity about 9 to 18 months later. Add another 12 months or so for the peak effect on consumer price inflation. In other words, the Federal Reserve is always driving with a loose steering wheel. Most of the experience behind those numbers is with relatively tame ups and downs in the business cycle not the kind of financial violence weve been seeing lately which adds another variable. And on top of that, the numbers are about peak effect, not initial effect. So while pinpointing the exact timing is difficult, what we do know is that there are clear and unavoidable consequences to wildly energetic money creation, including, sooner or later, rampant price inflation. Are there signals? The primary sign wont be inflows to ETFs (although they are indicators), or jewelry sales (the 70s bull market had nothing to do with bracelets), or even sales of physical bullion (we had that in 08 and gold was up 5.5%, hardly meteoric). No, the payday rise in gold will occur when there is a significant shift in the psychology of the general public. And that shift is already starting to appear: According to the World Gold Council, investment demand for gold rose an incredible 105% in 2009. All one-ounce gold

-5-

www.caseyresearch.com

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

Where to Buy Physical Gold

If you know an honest, reputable coin dealer in your area, thats a good place to start for smaller purchases. Our editors buy their gold either with a local dealer or online, but either way, its important to find a reputable dealer... as in every line of business, theres no shortage of crooks here. In our experience, the best places to buy physical gold are: 1. Kitco.com (1-877-775-4826 in North America). With offices in both Montreal and New York, Kitco is our first online choice. Kitco has one-stop shopping for the more popular precious metals products, and at reasonable premiums. Shipping is a flat $30 for the U.S. and Canada, and insurance is $4 per $1,000/gold and $24 per $1,000/silver. 2. assetstrategies.com (1-800-831-0007 in North America). Asset Strategies International in Maryland carries a full range of one-ounce bullion coins. Shipping depends on the value and weight of the package, but a fair range is $25 to $35 for a small order, including insurance. ASI also offers the option of storing gold outside the U.S. 3. thecoinagent.com (1-888-494-8889, or email thecoinagent@gmail.com). Proprietor Wayne Lemonier has some of the lowest costs weve seen in the industry: currently 5.5% above spot for most coins (6% for Eagles), and shipping and insurance are a flat $20 (silver is charged by weight). 4. bordergold.com; 888-312-2288, ext. 7). Border Gold in Vancouver, B.C., is where we go for the Canadian Maple Leaf. Border Gold can ship Maple Leafs (fewer than 10) to both Canada and the U.S. Premiums are only 5.5%. Shipping and insurance are only $25 for one or two coins, so total costs likely beat your local coin shop. Premiums and delivery times will fluctuate according to market conditions, so double check on these when calling.

There are other online stores out there, and some may have good prices, too. The things to watch for are total costs (for gold bullion you should expect to pay 5% to 6.5% over spot, which is why we dont use the U.S. Mint) and availability (if they claim it will be several weeks to locate the product, we wouldnt buy there). We also know some sites will try to talk you into other products, so beware of the hard sell. We havent had that experience with our recommended dealers. Where do you store your gold? There isnt a magic bullet for safe-keeping, as each form has its own risks. Physical gold is subject to theft; paper gold is subject to fraud. The most prudent approach is to own more than one form of gold, in more than one location, with an edge toward physical ownership. Weve prepared an in-depth report that outlines your options here.

Gold Pool Accounts

These are exactly what they sound like, accounts that keep track of your personal gold ownership but store the actual bullion in a vault somewhere, in pooled form. That means your gold is part of a centralized stash, along with that of any number of other customers. Pooled gold accounts may be convenient for those investors who arent overly concerned with the touch factor in metals investing, or who wish to own quantities sufficiently large that delivery and private storage become impractical. Allocated vs. Unallocated Allocated gold is a specific lot of bullion that has your name on it. Unallocated gold is an amorphous pile of the stuff, no part of which belongs to any particular person; yours is merely in there somewhere. In either case, the vault is always supposed to have access to enough gold to fully cover a forced liquidation. Thats all well and good, but it seems to us that it would be a lot easier to cheat on unallocated than on allocated gold. Itd also be more tempting to lend out some of the former in fact, some institutions specifically reserve the right to do this. So allocated gold is definitely more secure.
www.caseyresearch.com

-6-

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

The trade-off between the two types is that you will pay more for the additional security of allocated gold, in the form of a high annual storage fee. Most unallocated pools store the metal for no or low cost. Where to Find Them Many different organizations are offering pooled gold accounts at this time, with the number likely to grow as the bull market picks up speed. Once youve concluded that this kind of investment is for you, your next decision is whom to trust for the purchase and storage. Youre looking for a firm thats reliable, experienced, with an unmarred track record. The last thing you need is to get involved with some flyby-nighter whose only actual asset is a website. If you come across a deal that sounds too good to be true, it probably is. As a guideline, here are some reputable purveyors of pooled gold accounts were familiar with. EverBank EverBanks Metals Select accounts are available in either Holding Accounts (allocated) or Pooled Accounts (unallocated). Gold is offered by the ounce, in bars or coins. There is a minimum deposit of $5,000 for a pooled account, $7,500 for a holding account. The trading fee is approximately 1% above the spot price of gold when you buy or sell. There are no management, insurance or storage fees for pooled accounts, but a 1.5% storage fee for holding accounts. You may take delivery of metal, but only from a holding account. If you have a pooled account, it must first be converted to a holding account if you want the gold, and a fabrication fee is charged for the conversion. There is also a delivery fee, and both are based on market prices. Call 800-926-4922 or go to http://www.everbank. com/001Metals.aspx. Kitco Kitco does not store allocated metal, but will arrange with HSBC New York to store your allocated gold there, subject to HSBCs storage fees. Kitcos pooled (unallocated) account has no storage fee and no minimum. Pooled gold can be converted to metal for a premium, plus shipping and handling fees. The premium ranges from $17 to $112/ounce depending

on the kind of coin or bar. Call 1-877-775-4826 or go to https://online.kitco.com/sellprice/selling_pools.html. GoldMoney While GoldMoney is an electronic gold service, it also offers allocated gold and silver stored in an offsite vault outside of London, England. It does not deal in unallocated metal. There is no minimum, and purchases can be made in amounts as small as one gram. There is no storage fee for gold; an account fee is charged, fixed at the value of 1/10 of a gram of gold per month, regardless of the size of your holding. Metal is stored only in bar form, and customers can only take physical delivery of 400 oz. bars, subject to delivery fees. Phone: United Kingdom +44-1534-760-133 or go to http://www.goldmoney.com. BullionVault This London-based facility stores only allocated metal in bar form, in an offsite vault through Via Mat. BullionVault is primarily designed as a vehicle for buying and selling; it also delivers only 400 oz. bars, subject to fees. Purchases can be made in any size, from one gram up. Trading fee is typically 0.4% from spot, with a maximum commission of 0.8%, falling to 0.02% for dollar amounts above $30,000. There is a custody charge of 0.12% per annum. Customers buy or sell gold already in the vault, allowing them the possibility of making their own bids and asks. See www.bullionvault. com or call London at +44 (0)208 6000 130. Perth Mint Certificates This is the only governmentbacked bullion storage program, vaulted and insured by the state of Western Australia. They store both allocated and unallocated metal. There is a US$10,000 minimum initial purchase. No storage fee for unallocated metal, 1.5% per annum for allocated. There is a one-time $50 certificate fee. In allocated form, you can purchase specific coins or bars from 12 oz. up. Trading fee is about 1% on the buy, 0.5% on the sell. Very safe, and a tidy way to put some of your wealth outside the U.S. See www. perthmint.com or buy through Kitco or Asset Strategies. Risks Pooled gold accounts are pretty secure, provided that you are dealing with reputable people.

-7-

www.caseyresearch.com

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

What about defaults: have there ever been any? Well, yes and no. The past is littered with unscrupulous bullion dealers who sold people gold, promising to hold it for them, and then skipped out with both the cash and the metal, if in fact there was any to begin with. On the other hand, we were unable to turn up any instances of reputable certificate programs in which account holders lost their gold. Again, it matters whom you do business with. One good way to maximize safety is to be certain the people selling you the gold are using a disinterested third party to store it for you. If youre not sure, ask. All things considered, we still have a preference for the personal physical possession of gold. But once you have a sufficient amount in your personal possession say, enough to get through six months in an emergency pooled gold accounts offer an attractive alternative for holding unleveraged gold at reasonable prices.

it and ETFs is that ETFs are structured to keep the share price very close to net asset value (NAV). Not so with a closed-end fund, which responds much more strongly to market sentiment about the fund itself. This means that shares in a gold-based, closed-end fund can trade at a steep discount to NAV or at a premium. Over time, while CEF rises and falls in tandem with gold, those who buy at a discount and sell at a premium will get an added kicker. And those who do the opposite will get kicked. To watch for the best entry point, visit the CEF website from time to time, at http://www.centralfund.com and click on Net Asset Value. The figure is updated daily. 3. Perth Mint Certificates (PMCs), as mentioned above, are a form of paper gold. The additional advantage a PMC provides over the ETFs is that it gives you instant international diversification. The disadvantage is that it doesnt trade like a stock, as theyre designed for more long-term holdings.

BEST WAY #2: Paper Gold

While there is no substitute for having physical gold under your immediate control, holding paper proxies for the metal can be a useful portfolio supplement. In recent years, the market has responded to burgeoning demand for convenient ways to trade commodities by creating a galaxy of exchange-traded funds (ETFs). These are designed to mirror the ups and downs of the underlying commodity and can be bought and sold like a stock. 1. The largest and most popular gold ETF, SPDR Gold Shares (GLD) buys and holds gold bullion in a secure London vault, with each share trading at approximately 1/10 the price of an ounce of gold on the spot market. GLD did a very good job of following golds lead in 2009, posting a gain for the year that was only slightly below that of the metal itself. GLD is a core holding in the portfolio of our monthly newsletter, and it represents a simple, effective way of extracting some paper profits from golds bull run. 2. Want a fund with both gold and silver? Central Fund of Canada (CEF) is a closed-end fund thats made up of 55% gold and 42% silver. The major difference between

BEST WAY #3: The Right Gold Stocks

Gold stocks are a leveraged way to play a rising gold price. You might look at gold as your defense and gold stocks as your offense. When the gold price really heats up, gold stocks will rise exponentially more. It is this volatility that will bring us what we believe will be lifechanging profits. One bit of caution, though: with this added leverage comes added risk. Gold stocks exhibit greater volatility than gold in both directions. This has two implications: Our company recommendations should not be viewed as family heirlooms you can hold into old age or leave to your children. At some point we will be selling our stock positions to lock in big gains. We recommend you avoid trading. You may read others who recommend this, but trading, in our opinion, is not a prudent way to capture the big gains. Keep in mind that you must be right twice to make one profitable trade; you must correctly time the bottom and correctly time the top to capture a gain. A wrong call on one of those can keep you from
www.caseyresearch.com

-8-

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

profiting. And worse what if you get caught on the sidelines and they take off without you? Our best advice on how to buy a gold stock can be summed up in three words.

limited supply. And although world gold production rose slightly in 2009, it is still below its 2001 peak. And of the eight largest gold-producing countries in the world, six have declining production and thus bring fewer and fewer ounces to the market every year. Further, the World Mining Congress reported some alarming statistics last year: Based on historic averages, 75% of all discovered gold has been mined. In spite of massive increases in exploration spending, new discoveries are declining. The traditional search space for gold is depleting. Newer mines are being found in more technically challenging and politically risky areas. Make no mistake: a decrease in global gold production will underpin the bull market for years. At the same time, demand is skyrocketing. Central banks were net buyers of gold in 2009, the first time thats happened in 22 years. And 20 out of 22 fund managers interviewed last year bought physical gold for personal investment because they fear quantitative easing programs may lead to inflation. In other words, not only are they buying gold in their funds, theyre stashing some at home. Another fundamental factor developing is the spread between energy costs the largest single expense for a mining company and the rising price of gold. With relatively low oil prices right now, the positive effects of cheaper energy and a higher realized gold price will begin to show up on miners balance sheets. We expect 2010 to be a very good year in this regard. Despite the insatiable world appetite for the yellow metal, the companies that produce the stuff have not been appropriately rewarded. Their stock prices remain relatively inexpensive. That will change. As gold moves steadily higher, gold stocks will start to catch up. When the investing public
-9www.caseyresearch.com

Buy. Hold. Repeat.

Buy when prices drop and give you attractive entry points. Gold stocks wont go up in a straight line, and when those inevitable pullbacks come, you are being given the opportunity to initiate or add to positions at great prices. Thats what the Caseys Gold and Resource Report editors do. Hold, meaning dont trade it, time it, or run the risk of getting caught on the sidelines with stocks taking off. Plus, you get to sleep better at night than those who try their hand at timing. And Repeat until the rest of civilization joins us and pushes our prices much higher. By following this simple strategy, one can accumulate substantial positions over time at good prices. In fact, Doug Casey has often said that his success as an investor has come down to one key factor: being able to recognize the difference between somethings price and its value. Whenever theres a large discrepancy between these two, in any form of investment, its an opportunity to profit.

Why Gold Stocks Are Gathering Strength

Investors are becoming increasingly antsy to find a place to put their money that doesnt lead to the kind of negative returns that are inevitable for stocks, bonds, houses, and Alex Rodriguez autographed bats, for the foreseeable future. Once inflation begins to ramp up, there will even be a widespread questioning of the value of currency itself. People will turn to historys premier safe haven, gold. As we said before, gold is money when nothing else is. One of the criteria that make gold suitable as money is

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

comes around to recognizing gold as an uncertainty hedge, as our EverBank friend and Daily Pfennig author Chuck Butler calls it, major gold mining stocks are next in line to take off after the physical metal... which will give early birds a definite edge over the latecomers to the game.

and the remaining 80% in producers. It thus has more risk as well as more reward. UNWPX has an annual expense ratio of 1.5%.

There is a second conservative way to buy gold stocks that most of the investing public is not yet aware of: gold royalty companies. These are the least risky gold stocks Big, institutional investors are usually the first at the because they buy a fixed percentage interest in a mines trough. The move towards gold majors has already gross production and let the mining company do the started, as recently reported by Bloomberg: Steven dirty work. In other words, they profit as gold is mined Lehman, the Federated Investors Inc. fund manager who and the price rises, but they have no risks to production beat 99 percent of his peers last year, is betting on bullion troubles or rising costs. Theyre conservative but dont with Toronto-based Yamana Gold Inc. and Goldcorp mistake this to mean they wont be profitable: royalty Inc. And this is just the beginning. company Royal Gold was our top performer in 2008, and silver streamer Silver Wheaton topped our 2009 The stocks that prosper the most will be those producers portfolio. And when gold (and silver) take off again, that are best at combining growing revenue streams with profit margins of these companies will soar. effective cost controls and properties in areas where mining activity is welcomed.

Our Secret to Picking Gold Stocks

Mr. Conservatives Approach

The easiest, simplest, and most conservative way to profit with gold stocks is to buy into a gold stock mutual fund that has a low expense ratio. While there are thousands of mutual funds, there are only a couple dozen gold stock funds, and not all make a good investment, in our opinion. Caseys Gold and Resource Report recommends the best in the industry, run by experienced resource professional Frank Holmes. He was Mining Journals Mining Fund Manager of the Year for 2006, and two of his funds, World Precious Minerals Fund (UNWPX) and Global Resources Fund (PSPFX), received Lipper Fund Awards for being the top funds in their respective categories for both 2007 and 2008. Our gold stock fund picks: 1. U.S. Global Investors Gold and Precious Metals Fund (USERX) invests in producers only (no juniors), and the annual expense ratio is 1.5%. 2. U.S. Global Investors World Precious Minerals (UNWPX) has 20% of its investments in junior mining

When it comes to picking gold stocks, Caseys Gold and Resource Report seeks out the most undervalued and makes them long-term holdings. We do it by analyzing the standard metrics: P/E ratios, revenue growth, market capitalization (or market cap), and debt/equity. That last one is particularly important; if a company is carrying too much debt and has to refinance to fund operations, its not likely to raise the cash on very favorable terms. But there are other factors unique to our sector that must be considered. We know demand is raging and supply dwindling, so we look closely at what proven reserves a company has in the ground, how quickly theyll be able to get them out, and at what cost. Once we know this, we can calculate a net asset value for each miner that enables us to compare it to its peers. And this net asset value, put through our proprietary mathematical model, allows us to assign each company a number we call the Valuation Ratio (VR). A VR of 1.0 denotes a company of average value, so the farther a companys VR falls below 1.0, the more undervalued it is. Conversely, companies over 1.0 would be overvalued. Our valuation ratio is updated every 30 minutes during trading hours.

- 10 -

www.caseyresearch.com

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

And you as a subscriber can follow the VR of these companies at any time, by simply logging on to the Caseys Gold and Resource Report portfolio page of Casey Research and clicking on the tab, Valuation Ratio for Largest Gold Miners. Stock prices and VRs are updated every 30 minutes (at :12 and :42 past the hour). After taking into consideration a gold (or silver) miners VR, along with the standard metrics, we then plug in the intangibles, asking questions like: Are the companys mines in politically stable areas? How is managements experience? Are the local governments supportive? And so on. The answer to some of these questions explains why we dont recommend some of the largest gold mining companies, despite having low VRs. In the end, we arrive at a list of what we believe are the best of the best.

Our mid-tier producers include Agnico-Eagle Mines, Randgold, Yamana Gold, and Eldorado Gold (who happens to be the largest gold producer in China). Small Producers. These are companies that are either just starting to produce or have smaller operations. They tend to have higher risk because they may lack diversification and are thus vulnerable if they experience a problem with their primary project. Yet, they tend to see the highest growth profile, and as they add reserves or other properties, the market will typically revalue the business and reprice its stock upward. More risk, but more upside. Minefinders began production on its Dolores project in Mexico last year and is already turning a profit. Silver Standard has more silver in the ground than any company in the world and just started production in late 2009. With 15 primary projects, theyll be producing for decades. Silvercorp is the largest silver producer in China, a well-run company with a strong balance sheet. To check the current status of our recommended stocks, see the portfolio page on our website. The present market is a challenging one, no doubt about it. But crisis and opportunity are as tightly bound as gold and value. There are ways to profit in even in the most uncertain of times. If you seek out those opportunities, you can find them. Personally, we expect 2010 and beyond to provide a profitable return for both gold and the companies that most efficiently mine it.

Gold Stock Recommendations

There are different sizes of gold producers, each with its own level of risk and reward. Heres the breakdown and the companies we currently recommend: Major Producers. These companies have multiple deposits, usually in multiple countries, and are considered majors because of the size of their reserves and market cap. Generally, a major produces over 1 million ounces of gold per year. In our portfolio, this includes Barrick Gold, known as the 800-pound gorilla of the gold mining industry since theyre the largest producer in the world. Kinross Gold, the aggressive kid on the block, and Lihir Gold, our Australian connection, produce 2 million and 1 million ounces per year, respectively. Mid-Tier (or Intermediate) Producers. A mid-tier company produces 60,000 to 1 million ounces of gold per year. Risk varies from company to company. Perhaps more so than the majors, their profitability is closely tied to the price of gold; as gold rises, these companies will show exponentially greater profits.

- 11 -

www.caseyresearch.com

The 3 Best Ways to Invest in Gold

Caseys Gold and Resource Report - Special Report

The Casey Research web site & Kitco Casey web site, Caseys Investment Alert, Caseys International Speculator, Caseys Gold & Resource Report, Caseys Energy Confidential, Caseys Energy Report, Caseys Energy Opportunities, Caseys Trend Trader, The Casey Report, Caseys Extraordinary Technology, Conversations With Casey, and Caseys Daily Dispatch are published by Casey Research, LLC. Information contained in such publications is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained in such publications is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and there is no obligation to update any such information. Doug Casey, Casey Research, LLC, Casey Early Opportunity Resource Fund, LLC and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. Corporate policies are in effect that attempt to avoid potential conflicts of interest and resolve conflicts of interest that do arise in a timely fashion. Any Casey publication or web site and its content and images, as well as all copyright, trademark and other rights therein, are owned by Casey Research, LLC. No portion of any Casey publication or web site may be extracted or reproduced without permission of Casey Research, LLC. Nothing contained herein shall be construed as conferring any license or right under any copyright, trademark or other right of Casey Research, LLC. Unauthorized use, reproduction or rebroadcast of any content of any Casey publication or web site, including communicating investment recommendations in such publication or web site to non-subscribers in any manner, is prohibited and shall be considered an infringement and/or misappropriation of the proprietary rights of Casey Research, LLC. Casey Research, LLC reserves the right to cancel any subscription at any time, and if it does so it will promptly refund to the subscriber the amount of the subscription payment previously received relating to the remaining subscription period. Cancellation of a subscription may result from any unauthorized use or reproduction or rebroadcast of any Casey publication or website, any infringement or misappropriation of Casey Research, LLCs proprietary rights, or any other reason determined in the sole discretion of Casey Research, LLC. 1998-2010 by Casey Research, LLC.

- 12 -

www.caseyresearch.com