From Dan Denning in Melbourne:

--At last. A >will meet in April of this year to discuss how much better the world is getting. And if you’re one of the underwriters of globalisation or a firm that’s taken advantage of the globalisation of labour, the world HAS been getting better and better.

--But here is a question: how were those two previous super-cycles of global growth different? The answer? One was based on sound money, free trade, and occurred in a world with relatively low personal and corporate taxation (there was no income tax in fact), and governed by the Rule of Law (instead of the corporatist welfare/warfare State we now suffer under).

--The other “super cycle” was what we’d call the “Keynesian super cycle.” It had one attribute in common with the previous cycle, namely the whole world used the same monetary standard. In the 19th century it was the gold standard. In the 20th, it was the U.S. dollar standard.

--But the post-World-War-Two cycle was not really the product of growing, non-coercive global trade. It was the product of shattered economies having to rebuild and reindustrialise (Germany and Japan). The U.S. enjoyed unrivalled supremacy on global markets because its industrial machine was undestroyed and consumer credit released years of pent-up war-time demand.

--If the Davos crowd is right, you can expect to see two massive trends. The first will >by 66% this year alone, then the Pilbara will be to Aussie investors as Ghawar has been to the House of Saud.

--

Gold goes up for 10 years straight. Speculators notice. They jump on board. And then the train runs off the tracks.

That's just the way it works.

Besides, remember that this Great Correction is not over yet...not by a long shot. It has barely begun to correct the excesses of the Bubble Era. A quarter of all homeowners are said to be underwater on their mortgages - that still needs to be sorted out. And the whole financial industry - with the collusion of the Fed - is sitting on trillions of dollars' worth of mortgage backed securities, pretending that they are good credits.

There are still major bankruptcies ahead...and deflation of assets prices. And in all the sturm and drang of it, the price of gold could go down too.

But if you're acquiring gold, you have some powerful competition. As nations become rich and powerful, they accumulate gold. Those that are getting weak and poor give it up. Here's The Financial Times with the latest news:

Traders said that gold sales to China had jumped 30-50 per cent since Christmas, driving the cost of kilo bars in Hong Kong more than $3 per ounce above the market price of gold, the highest level since 2008 and an indication of the tightness in the physical market.

"Physical demand has rocketed in China at the start of the year," said Walter de Wet, head of commodities research at Standard Bank.

The wave of Asian buying has propped up gold prices at about $1,360 a Troy ounce, traders and analysts said.

The metal's price has dropped 4.6 per cent from its December record price of $1,430.95, trading at $1,364.10 on Friday, as optimism about prospects for US growth has led western investors to turn their attention away from gold to other commodities and equities. "We have a balanced situation where one part of the world is buying and the other part is selling," said a senior trader in Hong Kong. Chinese and Indian investors are increasingly turning to gold to protect savings against sharply rising food prices.

Investor buying of gold bars jumped 80 per cent to a record 144 tonnes last year in India, according to GFMS, the precious metals consultancy, while across east Asia bar hoarding was up 125 per cent at a 15-year high.

Asians build their holdings of gold. Americans add to their supplies of paper money. The Fed is adding some $600 billion of it in the first half of the year. And it is already considering what to do next.

How about this: stop. Admit that you've been a fool. Renounce QE, Keynes and the devil too. And all their works.

But that's not going to happen. Because liquidity masks insolvency; and inflation disguises deflation.

The feds are providing liquidity and inflating the money supply with the only thing they have left - paper money. And as long as the money flows...they can pretend that everything is okay. Things are quiet. Everybody is happy. Confident.

"...experience suggests that quiet periods do not extend indefinitely," wrote Reinhart and Rogoff in their history of monetary crack-ups.

Meanwhile, smart investors are buying gold...and hoping the price falls so they can buy more.

And more thoughts

Yesterday, we began telling you about our visits with our strategic advisors...that is, people who advise us about what to do with our family money.

One of them runs a fund that focuses on India. The other runs a fund in Germany. Both are looking for bargain stocks - one in the Old World. The other in the New World.

Yes, Asia is the New World now...America is part of the Old World.

And both of our strategic partners told us the same thing: it's gotten a lot harder to find bargains.

So what do you do, we asked. "Just keep looking..." was the answer.

We were explaining the difference between investing for yourself and investing for your family. If you're investing for yourself you usually have fixed objectives - often retirement financing. Since you know when you will need the money, you need to focus on investments that will pay off in the allowable time.

Trouble is, the trends that pay off most tend to be very long term. And very hard to time. Gold, for example, is probably going to pay off in a big way - some day. It has been in a bull market for a decade. It is hard to imagine such a powerful bull market ending in a whimper... Most likely, it will end in a Big Bang...as the price goes vertical.

We've been saying for a long time that the Dow and gold will probably come to the same number, sooner or later. Maybe around 3,000. Maybe 5,000.

Whatever it is, it will be a big payday for people who've stuck with gold. But what if you need money next year...or the year after? And what if you buy gold today and it drops 50% - as it did during the early '70s...in the middle of a huge bull market? Bummer, right?

But if you're investing for the family, you can take the long view. You can buy gold, bury it...and forget it. Maybe the next generation will need it.

Just don't forget to tell someone where you buried it!