Your course of action:

Buy call options on December gold futures contracts.

Each gold futures contract is for the delivery of 100 troy ounces of gold. Gold trades at the New York Mercantile Exchange. A call option gives the option buyer the right to buy a futures contract at the designated strike price. The buyer of the option has unlimited profit potential and has a predetermined risk- the cost of the options. You can not lose anymore than the option's purchase price. Your profit is the price of gold at time of liquidation, less (strike price + option price). Your strike price is constant, call options with higher strike prices are cheaper because they are more out of the money, or less likely to be profitable. However, because they are less expensive, more can be purchased from the same size investment. So if the price of gold really takes off, the investment will yield more. This is the power of options.

If you just bought gold outright, and gold prices double, you double your money, but using options on futures if prices double, you can make more than 100 times your investment. Examine the model below and chose what strike price is best based on your expectation of future gold prices.

The model below illustrates investment returns from a minimum $3000 investment. Profit and (loss) figures reflect options strike prices as of close, Friday March 5, 1999. Current Price of gold for December delivery is $302.99

Contracts Purchased ® 7 11 15 24

Strike Price ® 320 call 340 calls 360 calls 380 calls

Future

Price Profit or lose on investment

Of Gold ¯

0 $ (2,240.00) $ (1,980.00) $ (1,800.00) $ (1,200.00)

250 $ (2,240.00) $ (1,980.00) $ (1,800.00) $ (1,200.00)

300 $ (2,240.00) $ (1,980.00) $ (1,800.00) $ (1,200.00)

325 $ 1,260.00 $ (1,980.00) $ (1,800.00) $ (1,200.00)

350 $ 18,760.00 $ 9,020.00 $ (1,800.00) $ (1,200.00)

375 $ 36,260.00 $ 36,520.00 $ 20,700.00 $ (1,200.00)

400 $ 53,760.00 $ 64,020.00 $ 58,200.00 $ 46,800.00

450 $ 88,760.00 $ 119,020.00 $ 133,200.00 $ 166,800.00

500 $ 123,760.00 $ 174,020.00 $ 208,200.00 $ 286,800.00

600 $ 193,760.00 $ 284,020.00 $ 358,200.00 $ 526,800.00

700 $ 263,760.00 $ 394,020.00 $ 508,200.00 $ 766,800.00

800 $ 333,760.00 $ 504,020.00 $ 658,200.00 $ 1,006,800.00

900 $ 403,760.00 $ 614,020.00 $ 808,200.00 $ 1,246,800.00

1,000 $ 473,760.00 $ 724,020.00 $ 958,200.00 $ 1,486,800.00

1,500 $ 823,760.00 $1,274,020.00 $1,708,200.00 $ 2,686,800.00

2,000 $ 1,173,760.00 $1,824,020.00 $2,458,200.00 $ 3,886,800.00

Futures trading is highly leveraged. A small investment can control a much larger value of the underlying commodity. Investors can and do lose their money. Therefore any investment must be Risk Capital. Please do not consider investing any funds that are not designated as Risk Capital. Minimum investment is only $3000.

Trading Hours: 8:20 to 2:30 ET

Price Quotation: Price per troy ounce

Minimum Price Fluctuation: 10 cents per oz, 10$ per contract

Trading months: February, April, June, August, October, December + nearest additional two months

Options style: American

Options expiration: 2nd Friday of month prior to delivery month.

Symbol: GC- futures, OG- Options

Position Limit: 7500 futures and options on a net futures equivalent basis, 3000 in spot month

Grade: 100 troy oz (+-5%) of refined gold not less than .995 fineness

What ever you choose, we are here to help you make the decision as easy as possible. This may be the best insurance policy you'll ever have. If you don't take action now, you'll probably forget about it. To protect all that you have worked for don't let this pass by.

E-mail: [email protected] to order

If you have questions please call 1-800-684-1566 to speak with Jim Damschroder about investing in gold futures and options.