Is gold a valid hedge against today's competitive currency devaluation?
''There have been five paradigm shifts in the last century on the definition of money. And it is not unusual for central banks and governments to make a shift when the problems become so big that they can't resolve them within the financial system they created.''
''The last major one was the Nixon Shock of 1971. President Nixon closed the gold window, and that ended the convertibility of dollars into gold at a fixed price of $35 per ounce. From that point on, we went into a free-floating exchange-rate system with fiat currencies. That was a dramatic change from anything that occurred in the history of the United States or even in the history of the world. Ultimately, though, the supply of money that is being created by the Fed is creating an imbalance between the number of dollars in circulation and the value of assets. Either asset prices across the board will have to adjust upward in a dramatic way or we will have to find a way to shift the definition of money in a way so that it doesn't appear that, essentially, our currency has been debased. That occurred back in the 1940s with the establishment of the Bretton Woods system that linked all the currencies together and then ultimately made the dollar exchangeable into gold for central banks. Something like that or akin to the Bretton Woods system is a possibility. Policy makers are putting out a lot of feelers for the IMF [International Monetary Fund] to become involved and create a solution to end the competitive currency devaluation that is going on today. When the Fed faces its ultimate crisis of removing all of this liquidity, it will force a change in the paradigm of money. It is hard to predict exactly how that will work. But it certainly makes the paper money that we are using today look like a fool's game in the end, and that's why there is so much demand now for hard assets such as precious metals, art and collectibles.''
''I actually think this decade is a great opportunity for investing -- that is, for people who buy high-quality stocks and investments in select categories of fixed income, especially areas like high yield, and in commodities. The bull market in gold, as George Soros has said, is the mother of all bubbles, and we are still in the early stages of a bull market that will probably go on for another decade. So there are lots of opportunities for people to make money. But in most of the asset classes where people could make money, investors are afraid to get involved.''