The Mogambo Guru has picked up on a quote from Stephen Platt at Archer Financial Services, who says: “There really is no other place to hide. Gold is about the only real currency out there that might hold value.”

“Might” hold value? Hahahaha! Mr. Platt is this week’s winner of the Mogambo Award For Understatement (MAFU)! Hahaha!

I could tell that Mr. Ash is suddenly envious of Mr. Platt getting the coveted MAFU, and decides to go for the Mogambo Award For Surprising Statistics (MAFSS) using (obviously, to get on my good side and try and influence the judge giving out the award, namely me), gold as the example.

So how high can gold go? My usual answer is to first demand an estimate of, “How low can the dollar can go?”, which is the same as asking “How low WILL the dollar go?”, which is the easiest question on the whole mid-term exam; the answer is that it can, and will, go to zero.

How do I know that the dollar will go to zero value? Because it is a fiat currency, and all of the other thousands of fiat currencies tried by different countries over the millennia have ALL gone to zero! All!

So the height to which gold can go, in dollars, is infinity! And “infinity” is the answer to another question on the mid-term exam, namely, “How much is the market price of gold in dollars if the dollar is worth zero?”

Mr. Ash shows no interest in my stupid mid-term exam, but seemingly agrees with me when he says, “Even after trebling in price from the low of eight years ago, there may be plenty of room for gold to rise from here.”

I was pretty unimpressed at such an unsubstantiated estimate until he quoted Peter Bernstein in his classic book, The Power of Gold, who wrote, “In 1959, the amount invested in gold was about one-fifth of the market value of all US common stocks. In 1980, the $1.6 trillion invested in gold exceeded the market value of $1.4 trillion in US stocks.” Wow! The fact that gold went from 20% to more than 100% of market value of financial assets is a very interesting precedent, reached when gold reached the pinnacle of its previous high of $850 per ounce!

In fact, it’s all even MORE unbalanced today, as they go on, “The sum total of gold investment lags far behind the value of stock and bond markets today. Indeed, a 2005 study from Tocqueville Asset Management noted that, if taken altogether, ‘the market cap of all above-ground gold – including central bank reserves – [now] equals about 1.4% of global financial assets.’”

Once gold held for investment was worth more than the U.S. stock market, and now total gold in less than 1.4% of financial assets? Wow! The inescapable conclusion is that there is a lot of room for gold to go higher and higher and higher, just like history predicts it will! Whee!

The historical record of monetary policies as regards fiat money sure makes investing easy, as it does not even involve using a calculator, working, or even thinking! Buy gold, silver and oil! Whee!

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