CAN YOU PASS THE 2011 GOLD QUIZ?

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Can You Pass The 2011 Gold Quiz?
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By Jeff Clark, BIG GOLDCPM Group recently
released their 2011 Gold Yearbook, an invaluable
resource for us gold analysts. Mostly a reference
book, even a gold enthusiast might find it dry
reading.
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But I loved it, and as I studied it on a plane, I
kept finding data that made me perk up.To have a
little fun with it, I thought Id summarize what
I read in the form of a quiz. See how many you
can get correct.
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Regardless of your score, Im sure youll agree
with the ramifications each point makes for the
gold market.Ill start off easy
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1)      The main driver behind rising gold prices
over the past decade isa)      Increased
jewelry demand in Indiab)      Greater
industrial uses of the metalc)       Investment
demand
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Worldwide investment demand for gold totaled 44
million ounces in 2010. Because of the growing
demand by investors, prices have been forced
upward.
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Five exchanges began trading gold contracts for
the first time in 2010, and three more introduced
mini contracts, collectively the largest number
launched since the early 80s.
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There are now 24 gold vending machines in seven
countries, with three more countries adding
machines this year. Households in developing
countries are now moving away from gold jewelry
and buying coins and bars for their savings.
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I could go on, but suffice it to say that
investment demand will continue to be very
strong.2) True or false recovery from gold
scrap was lower in 2010 than 2009.
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Scrap rose three consecutive years in a row
until last year. Gold supply from scrap fell
2.1, to 42.2 million ounces.This is significant
because gold prices were higher, which would
normally increase the amount of scrap coming to
market.
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One of the primary reasons scrap dropped is
because investors are holding on to their metal,
reportedly because they believe prices are headed
higher. Isnt that one reason youre holding on
to your bullion?
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3) There are many reasons investors have been
buying gold over the past 10 years, but what is
the 1 reason?
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a) Safe-haven assetb) Gold coins and bars have
become more intricate, widespread,
and beautifulc) Supply and demand imbalance
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Global fears increasingly led investors to
purchase large volumes of gold in 2010 for
safe-haven purposes, despite record price levels.
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High levels of investment buying are expected to
continue in 2011 because virtually none of the
economic, political, and monetary concerns have
been resolved.
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If you got all three answers correct, youre an
investor who understands the basic reasons for
owning gold and that those reasons are still in
play.Now lets step it up a little
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4)      Gold represented what percent of global
financial assets at the end of 2010?a)     
3.1b)      0.7c)       1.6d)      2.4
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Rigid social contracts are so deeply ingrained,
especially in the developed world, that it will
take decades to resolve the monetary imbalances.
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This sobering fact means gold will likely be in a
bull market for many years to come. There are
very few options to deal with the overwhelming
debt burden in most of these countries raise
taxes, cut spending, increase growth, or print
money.
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Guess which one is most likely? Inflation from
currency dilution is baked in the cake and will
spur further gold demand and light a fire under
the price.
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If you got these four questions correct, I think
it means youre an astute investor who doesnt
worry about day-to-day price fluctuations and
instead focuses on owning enough ounces to
protect.
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your assets from the huge and intractable fiscal
problems that still have to be faced.Now here
are some questions for those of you who love gold
stocks
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8) What was the industry-average cash cost to
produce an ounce of gold last year?a)     
509b)      498c)       544d)      474
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In spite of higher costs for the producers,
margins actually rose due to higher gold prices.
Margins in 2010 averaged 680, and were only 114
as recently as 2002.
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Weve got some of the most profitable companies
in BIG GOLD, along with a number of producers
that have big growth coming online over the next
one and two years.
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Buy these stocks before that growth happens if
you shell out the bargain basement price of 79
now, I think your portfolio will be very happy
when it comes time to renew.
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9)      The average grade of gold mined on a
worldwide basis last year was how much?a)     
5.11 grams/tonneb)      3.54 grams/tonnec)      
2.96 grams/tonned)      1.83 grams/tonne
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The second lowest level on record 1.83 grams
per tonne occurred in 2010. While not entirely
negative since higher gold prices allow producers
to go after lower-grade deposits, this leads to
higher costs for both discovery and production.
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It is undoubtedly true, though, that one of the
main reasons grades are lower is because the easy
fruit has been picked in many regions around the
world.
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This is bullish for those explorers that can find
and develop higher-grade deposits and is where
much of our speculative dollars should be focused.
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Our mining exploration advisory International
Speculator tells you which companies are the best
of the best, outperforming the SP by 8.4 times
last year. So if youre not reading the
International Speculator yet, youre missing out
on some spectacular profits.
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10)   The most popular region for exploration
spending is where?a)      Latin Americab)     
Canadac)       Nevadad)      China
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Roughly 25 of all global exploration money is
devoted to Latin America. The biggest
beneficiaries are Peru, Mexico, Brazil, Chile,
and Argentina.
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If youre investing in gold and silver explorers,
make sure you have exposure to this region, as
odds are high there will be a number of major
discoveries made here.
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If you got these three questions correct, youre
well in touch with the gold stock market, and I
hope youre taking advantage of the picks we
offer in BIG GOLD and International Speculator.  
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This data clarifies and confirms why many
investors own gold and continue buying it. It
paints a decidedly bullish picture for the metal,
in spite of record price levels.
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Monetary issues are far from over, wont be
easily resolved, and will take years to play out.
Banks continue buying, and investors arent
selling
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The U.S. Mint cant keep up with demand, and yet
gold is underowned when compared to other major
asset classes. Costs are rising for the
producers, but margins are rising faster for the
better-run companies.
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When looking at the big picture for gold, I for
one draw comfort from knowing Ive got some
ounces tucked away.
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I hope you, too, see gold for what it is
protection against unsustainable fiscal
imbalances and massive currency debasement, and a
profit center for years to come.