Fellow Resource Prospector,

*****Here’s the stereotype of a gold investor, as portrayed by most non-gold investors.

Someone who lives in a remote region, somewhere “off the grid.” This person probably also has a beard and possibly a well-worn prospector’s hat.

Said investor owns a variety of firearms and a stockpile of ammunition for both self-defense and for hunting food in the inevitable apocalypse that will come to pass.

Someone who believes the government is most likely spying on their every movement, and preparing for some kind of wholesale slaughter of the general populace under the auspice of protecting the state from homegrown terrorism.

Such a person also believes that the entire system of trade, manufacturing, agriculture, finance, transportation, energy, and every other facet of civilization will melt down, and come to an abrupt and terrible end.

This person is afraid, paranoid, possibly insane, imbalanced and out of touch with reality.

This ridiculous stereotype serves as a legitimate excuse for some otherwise intelligent folks to forego precious metal investments. They say things like, “Well if things get THAT bad it won’t matter much one way or another - we’ll all be screwed.”

*****The thing is, there’s a large swath of human existence between total collapse of civilization and where we are today. And in that swath, up to and possibly including the point of all of us being screwed, precious metals will continue to serve an extremely valuable function.

This function is nothing fancy, and it’s so elemental and at the same time counterintuitive to the modern mind, but this function is the preservation of capital. It’s a function that precious metals have served admirably well for thousands of years.

The world doesn’t have to end in order for gold to make sense as a tool for capital preservation. In fact, the dollar doesn’t even need to fail. Some folks, gold investors included, believe that there’s a black and white balance between gold and the dollar. In other words, they believe that the dollar can’t exist in a world where gold remains, and visa versa.

It’s not a black and white exercise. There are almost as many scenarios for gold vs. the dollar as there are dollars and ounces of gold combined. But holding dollars in the face of what the Treasury, the President and the Fed Chairman are all telling us, implicitly if not explicitly, is folly.

The dollar doesn’t have to disappear in order for precious metal owners to prosper.

Okay, here’s a quick portrait of a REAL gold investor.

This person is probably middle aged, Asian, hardworking, prosperous, thoughtful about the markets and cognizant that central bankers use their currencies like literal Kleenex.

This person believes in saving. They believe in fiscal responsibility. They believe that nothing in life is free. They believe that owning physical precious metals protects that portion of their hard-earned capital from liabilities on anyone’s balance sheet.

They know that keeping their physical precious metals in a safe place, close at hand, gives them insurance protecting against the likelihood that central bankers will continue down the path they’re on.

And why shouldn’t they do so? President Obama just told us in his State of the Union address >Ben Bernanke got on 60 Minutes and told us that the Fed isn’t printing money, just under two years after http://listapp1.bfpnewsletters.com/track?type=click&mailingid=982800&messageid=499800&databaseid=38800&serial=1211238035&emailid=abstacey@i-zoom.net&userid=11071&extra=&&&2005&&&http://www.cbsnews.com/stories/2009/03/12/60minutes/main4862191.shtml">he got on 60 Minutes and told us the Fed is printing money.

These people are so stuck in their ways, and trapped by reality that they can’t even lie to us effectively or convincingly.

*****So here’s my stereotype of someone who isn’t buying precious metals:

They tacitly and absolutely believe that everything will turn out okay for the dollar. They have faith that our leaders’ lies and obfuscations will become true, or at least less untrue. They believe that some unseen black swan will swoop into the picture and fix everything. They believe that deficits don’t matter. They believe that there’s no problem with high unemployment, increasing energy and food prices, and a GDP to debt ratio of 1:1.

They have beliefs and hopes that everything will be okay, and they see it as a personal failure to prepare for the alternative.

Well, I wish them the best.

Good investing,

Kevin McElroy
Editor
Resource Prospector