President Obama has all-but sealed the fate of the U.S. dollar.

In doing so, however, his policies – no matter whether they’re forced upon him or deliberate – have opened the floodgates for gold and gold stocks.

In fact, they’re setting the stage for the biggest rally in gold’s history.

Over the past several months, we’ve told you why you should buy gold and highlighted one of the best gold indicators you can use to determine when to buy gold. But today, we’re simply going to show you how to profit from the yellow metal…

Three Reasons Why Gold Is Headed Higher

Okay, so Obama hasn’t specifically said, “Buy physical gold,” but  he’s certainly saying it with his actions instead. Here’s why the metal is headed higher…

1. The Printing Press: The U.S. government is printing a massive amount of money every day. In fact, we’re up to $2 trillion since last November. But here are the questions we should be asking…

~ Where’s this money coming from?
~ What is supporting this huge flow of new money?

America can print money today because the world believes that one day we’ll pay it back. But we haven’t paid down our debt in decades! In fact, over the past 30 years, our debt has increased 10-fold. (We have paid the interest though and that is better than most countries).

However, each new dollar we print is like adding a tiny little bit to the price of gold. And we are printing trillions of dollars.

1. The Currency Fear Factor: Gold is going higher because people are frightened that they won’t allow themselves to fall into the dollar/yen/pound/euro trap again.

For example, did you know that gold is at new highs against the Pound and Euro? Because those two currencies have fallen sharply against the dollar, the price of gold in both currencies is much higher than the last time gold was at this level (about this time last year).

1. More Educated Investors: With the huge amount of upheaval that the economy and stock market has faced over the past year or so, we now have a greater number of educated investors, who can plainly see that gold is the asset to hold. We wondered out loud why this wasn’t the case back in October, as investors seemed to ignore the dire news coming out each day and gold prices were stagnant. They’re not ignoring it now – and readers who took our advice to buy gold are doing very well.

But because more investors have jumped on the gold bandwagon now is exactly why you should not be buying gold right now.

That is, of course, unless you’re using a strategy that allows you to make some money or reduce your cost if the shares move down. I’ll give you an example in a minute…

Mind The Gap: Why You Should Set A Buy Alert At The $800 Level

Since mid November 2008, gold prices have pretty much moved up in a straight line.

Be warned: Like any investment, this cannot last forever.

Gold will sell off for a variety of reasons: Because they need money more than jewelry… because China and India are a little bit poorer… because investors sell for technical reasons.

Gold needs to fill a gap on a chart that goes back to the $800 level. And that is when you should buy gold. But not physical gold. Let me explain…

When Gold Hits $800 Again, Here Are Four Gold Investments You Should Buy

Rather than buying physical gold – as many people like to do – you should instead buy shares in gold mining companies. This includes…

~ Goldcorp (NYSE: GG)
~ Yamana Gold (NYSE: AUY)
~ Barrick Gold (NYSE: ABX)
~ Newmont Mining (NYSE: NEM)

You could even buy a silver-based play like Silver Wheaton (NYSE: SLW).

Here’s the thing with physical gold: Unless you’re counting on it to come in handy during something like a government coup where you need to flee the country (in which case, you’d better take a donkey with you, as it will be a heavy load), there are disadvantages to owning physical gold. Ones that result in less money for you.

For example, physical gold is difficult to store. It doesn’t pay dividends. And you can’t apply professional investment strategies like covered call writing to gain additional income.

Most importantly, gold shares move up by a factor of between two times and three times more than the percentage move for gold. So if gold prices move up by 10%, you can expect gold shares to move 20% to 30%, depending on what their cost is.

Everyone Is Buying Gold… But Not Everyone Is A Pro: Here’s The Pro Way To Profit From It

Okay, so once you’ve bought some gold mining shares, how do you start milking the investment for bigger profits than most other investors? I’ll show you…

The bottom line is that not only do you want to capture the price appreciation of your gold shares, you also want to sell call options against your stock to reduce your cost and take money off the table. Here’s how it works…

Let’s say you buy shares of Silver Wheaton for $7. Using a covered call strategy, where you sell one call option for every 100 shares you own, you can get back almost 6% in cash over the next seven months – and still have the chance to more than double your money.

Think of it as a free dividend that no one else knows about.

That’s the kind of stuff we do all the time in my Strategic Income service and every so often in our Xcelerated Profits Report (XPR) newsletter.

Gold Is Going Higher… Let It Take You Along For The Ride

The bottom line is this: Gold is going to move higher. Ultimately, much higher.

There will be opportunities to buy the metal along the way – and you’re going to hear a lot of people crowing about those opportunities.

But what they probably won’t tell you is that there’s a way of not just buying gold, but buying it through a simple strategy that pays you back and also mitigates some risk.

Understand though, that gold is not going to shoot to the moon tomorrow. That’s why we’ve taken a defensive posture on two of the gold stocks I mentioned above. One is a covered call play on Goldcorp, and the other is a spread play on Yamana Gold that has allowed us to take 95% of our money off the table, yet still left us with the chance to make over 4,000% on the money we have at risk.

The question is: Are you just going to “buy gold” because everyone else is? Or are you going to really profit from gold like the pros do?

Karim Rahemtulla
Smart Profits Report