My Perspective

As we all know, the global economic crisis started neither in Greece, nor in Russia, nor in Europe. It came to us from across the ocean. - Russian Prime Minister Vladimir Putin, 16 February 2010

This is pretty much the sentiment of the rest of the world towards America. They have rightly blamed us for their economic problems. Why? Because the dollar is the currency that almost all nations use for their international trade. And since we have been illegally printing dollars out of thin air, this has the effect of stealing from our trading partners.

What does this have to do with gold?

As I have pointed out many times in the past, the Russians, Chinese, Indians and Arabs are all in the process of agreeing on a currency to replace the dollar. That currency will be tied to gold in some way. When that day comes, gold will rise in price to it's market equilibrium price from it's current suppressed price due to the new demand for gold.

Economics 101 - Fixed supply + increased demand = higher prices

What is that equilibrium price?

Well, THAT is the $64,000 question, isn't it?

Depending on who you listen to, that price at present is somewhere between $6,000 and $11,000 per ounce. But don't forget, markets never stop at equilibrium, but they trade at, or around equilibrium. Therefore, when gold finally does make a break for its real price, it would be highly unlikely that it would stop there. Markets always overreact on both the high and low sides. Because of this, I would not be surprised to see gold spike to $15,000 - $20,000 per ounce, before settling back down to whatever that equilibrium price really is.

In light of the above, if you are waiting on gold's price to correct a little bit before you buy a little more, I think you can see that whether you buy at $1000, or $1200, or $1500, it really won't matter too much in the long run. You're either going to be rich, or real rich. Either one will be okay with me.