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Gold and the U.S. Dollar

Written By Brian Hicks

Posted April 29, 2010

As I travel around to different parts of the world, one of the questions I keep hearing lately and with a sense of urgency is this:

What should I do with my money?

It seems a new block of investors has suddenly realized — and are worried — that they could lose purchasing power of their savings by keeping their money in banks or having invested in T-bills offering zero or negative return.

And it seems the options for investors in a world fiat currency nightmare are diminishing quickly; one can hear the concern in their voices.

Where can one turn for safety? they ask, knowing little or nothing related to the history of fiat currencies…

Let’s look at a chart of gold and silver’s average rate of appreciation against 23 currencies for the past ten years:

 click to enlarge
 click to enlarge

Ultimately, the graph reveals that gold and silver aren’t going up; currencies against gold and silver are going down.

As we enter the terminal phase of these abused and sinking fiat currencies, the price of gold and silver against these currencies is going to rise dramatically — taking the metals to new all time inflation adjusted highs.

I maintain that the price of gold will be at a minimum of $6,500 an ounce, with silver approaching and even exceeding $400 an ounce before this fiat currency debauchery has ended.

The reason for this is that governments all over the world are debasing their currencies destroying their citizen’s purchasing power by spending beyond their means and using debt to stay afloat.

In the United States, Bernanke is trying to goose an economic recovery with massive deficit spending.

History proves time and time again, and without exception, that this behavior cannot be sustained before economic chaos, disaster, and upheaval ensue.

Everywhere you go… schools, brokers, financial institutions all teach and espouse Keynes false doctrine.

The decade of erosion clearly shows, in my opinion, the results of politicians that are not held accountable to an honest standard. It’s come to the point of expecting politicians to be honest and wise is like asking Dracula to protect the blood bank.

Another generation of Americans and world citizens are about to find out just how costly their neglect of keeping a judicious financial watch over politicians will be.

The consequences will be more than most can bear, but hopefully it will lead to the necessary changes.

(It is a shame that societies must learn this hard lesson over and over again, instead of paying attention to history.)

Ownership of gold and silver — along with the quality precious metals mining shares — will become one of the hottest investments on the planet.

The early adopters, who wisely purchased their positions before the masses come, will sleep well at night while others fret and worry as they watch the purchasing power of their savings evaporate like water in the Sahara.

Gold offers a safe way to hedge against these falling fait currencies. But for a little more leverage — and a lot more profit potential — I invest in junior gold stocks.

To see what I mean, just look at some of the recent successes already enjoyed by keen-eyed investors who knew what to look for:

Ventana Gold skyrocketed 13,000% in six months!
• Appleton Exploration surged by more than 3,000%!
• Azteca Gold leaped 2,300%!
• La Mancha Resources jumped 2,150%!
• Norseman Gold shot up 2,067%!
• Pelangio soared 1,500%!
• Australian Solomons grew 1,400%

In the case of Decade resources, a mere four weeks on the market could have turned a $500 investment into $11,785!

My colleague Luke Burgess has found another company which could also be in for explosive gains. This play already has a sizable gold resource that’s worth 27 times the company’s market cap.

And with near-term production, he thinks share prices could rise over 920% in the next few months. Read his full report here.

Good Investing

Greg McCoach
Editor, Wealth Daily
Investment Director, Mining Speculator and Insider Alert