Terry Sacka Discusses Reasons Behind the Temporary Low Oil & Gas Prices

Terry Sacka on the Wealth Transfer show on CTN (Christian Television Network) Thursdays 10pm EST & Saturdays 10am EST.

This series explains the reasons behind why we are seeing such low oil and gas prices right now in America. Terry Sacka, AAMS goes on to illustrate what is really going on and how prices are being manipulated, thus causing this short term price drop.

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Most investors today keep the vast majority of their capital in stocks and bonds, which is fine. But truly wise ones also diversify into alternative investments, which simply means not stocks, bonds, or cash. Gold has always been the leading alternative asset, largely thanks to its strong negative correlation with the stock markets. Gold thrives when stocks are weak, making it indispensable to managing overall portfolio risk.

American stock investors’ preferred vehicle for diversifying into gold is the flagship SPDR Gold Trust ETF (NYSEARCA:GLD). This is the world’s largest gold ETF by far, and offers some great advantages to stock traders. They can instantly buy or sell GLD shares, gaining or shedding gold exposure, with normal stock-trading accounts. And this is very efficient, with very low transaction costs.

READ: Stock Traders Flock Back to Gold

GLD’s mission is to track the gold price, which it has done flawlessly since its birth in November 2004. Investors and speculators owning GLD shares get gold-price exposure that’s virtually identical to gold’s underlying price moves. Achieving this mirroring isn’t trivial for GLD’s custodians, because the real-time supply and demand of GLD shares rarely matches gold’s own. That requires GLD to act as a conduit.

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When stock traders buy GLD shares faster than gold itself is being bought, they threaten to decouple to the upside. That would cause GLD to fail its tracking mission. So its custodians quickly step into the markets to offset that excess demand. They issue enough new GLD shares to supply that differential demand, and then use the proceeds to buy physical gold bullion that is held in trust for shareholders.