Gold Still Outshines All

America's Most Popular Investment is About to Hit Its Use-By Date It's been 17 years since the man who correctly predicted the Fall of Communism released his last video. In his latest special report, James Dale Davidson warns that Capitalism could be the next to go. Click here to watch this urgent video now. Why Gold is Still the Best Bet By Andy Hecht, Senior Commodities Editor Dear Sovereign Investor, The decade-long rally that has taken the price of gold from $255 an ounce all the way up to almost $2,000 last year is far from finished. Holding gold as an asset is nothing new. Over the course of history, this shiny, yellow metal has intoxicated many. Even though gold went out of vogue in the 1980s and 1990s, it has now reasserted itself as the premier currency in a world of paper nothingness. Advertisement The Man Who Predicted the Fall of Communism is Now Predicting the Fall of Capitalism He's dined with the Rockefellers…hung out with the Clinton's…banged heads with the Beltway…and meddled with the media monopolies…He was the biggest name of the '80s and '90s investment newsletter world. And he is back once again with his first controversial video presentation in 17 years. In it he reveals news of a landmark development, which he believes will set off the most violent economic reversal in history… one that carries the power to bring down not just the American financial world, but the entire capitalist system… Details here… The Big British Folly Sometime prior to 1999, the United Kingdom decided that gold was a relic. The U.K. held about 700 tons of the precious yellow metal in 1999. Today, it holds around 310 tons. Gordon Brown, the former Prime Minister and then the Chancellor of the Exchequer, was responsible for selling 60% of the country's gold reserves at an average price of $275 per ounce between 1999 and 2002. In February 2001, gold traded at a low of $255 and traders in the gold market appropriately dubbed the low as the "Brown Bottom." No sooner did the U.K. stop the gold sell-off than the market began to surge. The U.K. was pretty much alone when it came to selling off its reserve asset and ultimate store of wealth. As it turns out, the U.K. left more than $19 billion on the table, at the last count, by deciding to sell the bulk of its gold reserves. True Value of Paper Money Exposed The value of a fiat currency – money that gets its value from government laws or regulations; i.e. money without intrinsic value – depends on the full faith and credit of the country that prints it. Today, given the enormous levels of debt, the U.S. and the European Union are printing more and more paper currency. The process of adding liquidity to the system has created a farce. By any conventional accounting standards, these countries are so indebted that their paper currencies are worth only the value of the paper they are printed on – which is why gold has moved higher for a decade and why it will continue to appreciate. It is not that the intrinsic value of gold has gone up – it is the intrinsic value of currency that has been unmasked. Central banks no longer sell in the gold market. If any government out there wishes to follow Gordon Brown's example, there are scores of buyers that will gladly oblige. In fact, in 2011, central banks and governments around the world purchased a staggering 450 tons of the yellow metal. Indeed, 18% of all of the gold mined in 2011 found its way into central bank vaults. Central banks now realize that owning gold as a reserve asset beats low-yielding U.S. dollars or debt-riddled euros any day. The central bank of Korea, the world's eighth largest holder of foreign reserves, bought 15 tons of gold in November 2011 after snapping up 25 tons in June and July. And Korea is not alone. In 2011, China, Russia, Kazakhstan, Colombia, Belarus and Mexico, among others, all added to their gold reserves and have plenty of room to add more. Demand is Still Growing The pace with which central banks and governments are buying is not slowing down. Swiss banking and financial giant UBS noted: "Purchases of as much as 450 tons in 2011 may be repeated next year as Asian nations and emerging economies diversify their reserves." That's at least 450 reasons why the price of gold will continue to climb. The demand for gold from individuals and investors is also rising. Chinese jewelry demand alone is around 13% higher year-on-year at some 131 tons. China's growing appetite for gold as a means of investment saw demand for gold bars and coins expand by 24% from year earlier levels to 60.2 tons. And, all this as the price of gold rose to new highs. An Opportunity to Buy Cheaper Gold! The gold price has recently moved lower. Continuing issues around European debt, the election of a socialist president in France and a rising U.S. dollar has caused the yellow metal to shed 14% in a little over two months. The gold price has tumbled from $1,795 to $1,540 in less than three months. Most blame the rallying U.S. dollar and an environment of de-risking. It may be true that some weaker holders of gold have sold. But, as for the dollar, it's only rallying because the euro is so weak. The greenback will remain plagued by the almost-$16 trillion deficit and out-of-control government spending. It has become the best of the worst paper currencies because of the euro's continued debasement. U.S. dollar interest rates remain at the lowest levels seen in decades, and that is fuel for the gold price to make new highs – and it will. The Bottom Line The demand for the shiny yellow metal continues unabated in the current global economic environment. The bottom line is this: Gold is in demand and that promises to continue over the course of the coming months and years – primarily because it remains the most stable asset and currency in the world. Gold is the closest asset to a sure thing that exists today, and its price is nowhere near the top. Your eyes and ears in the commodities market, Andy Hecht P.S. I just finished an interview with my colleague, former Congressman Bob Bauman. We spoke for almost an hour about the yellow metal. It was a great discussion, which is just now being prepared as an audio link and transcript for subscribers of Bob Bauman's Offshore Confidential. I hope you can listen in. 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