There's an old adage that "haste makes waste."

In a world dictated by politicians and bankers looking for a quick solution to solve decades of greed, we are now left with nothing more than a world full of debt - a growing debt that will remain beyond the lives of our children's children.

It is a zero sums game. Only the other end of the profit side will always remain with the bankers and those who can print a limitless supply of money. That is the trap that we have fallen into and it is a trap where we will remain. And they'll keep doing it because we'll keep taking their money.

As much as we can blame the bankers and politicians, we have to blame ourselves.

There is a reason why my grandparents have no debt and why my mom still tells me to save my money. There is a reason why she cooks at home and I eat out practically every meal. That is the world that they once lived in: a world where you make before you spend.

If you wanted that new baseball bat, you had to work and save up for it. It may have taken a year to save, but when you finally had enough money to buy that bat, you appreciated it. You wiped it down every time you finished using it. You put it away in a safe spot when you weren't. And every hit you made with that bat felt like a homerun.

But times have obviously changed. You want a bat? No problem. Fill out this piece of paper, sign your name on the dotted line, mail in an application, and within a few weeks you'll have your money to buy your bat - and then some. If you broke your bat, don't worry - you can always fill in another piece of paper.

When the time comes and the pieces of paper are running out, you can just throw some borrowed money into the stock market and make it all back. Heck, everyone else is buying stocks in hopes of paying their debt. The more stocks they buy, the higher the stock prices will go.

Now we're gambling with borrowed money in a system that favours the house, or should I say, the bankers. Now we're signing pieces of paper for borrowed money, then using those pieces of paper to buy more pieces of paper on the stock market. At the end of the day, the profits will go back to the bankers and our world is left sitting on a mound of debt that will be recycled, but not erased.

For years we have been living on the premise that we could do whatever we wanted. If we couldn't pay the tab ourselves, others would be willing to lend us the balance.

It's not just here in N. America. The crisis in Greece and the financial difficulties in other European nations are proving the world is greedy. Even China, whose mentality is to save first and buy later, are beginning to use credit to buy TV's and Microwaves ( target="_blank">see Smaller Than You Think). But for over 5000 years, gold has been a sign of wealth. That won't change - regardless of what Ben Bernanke tells you.

In a past

Ron Paul: Even if it's been money for 6000 years and somebody reversed that and eliminated that economic law?

Bernanke: Well, it's a..it's an asset. I mean, would you say treasury bills are money? I don't think they're money either, but they're a financial asset.

Ron Paul: Why do central banks hold it (gold)?

Bernanke: Well, it's a form of reserves.

Ron Paul: Why don't they hold diamonds?

Bernanke: Well, its tradition. Long term tradition

Ron Paul: (Chuckles) Some people still think its money.

It's funny how a man that scored near-perfect on his SAT, and a man that is in charge of running the world's reserve currency, doesn't know the definition of money.

Gold may not be money in Bernanke's eyes, but to the rest of the world...it's better.

The Rising Tide

While the price of gold is rising, its merely rising against the dollar. Don't forget that the price of gold is still denominated in - you guessed it - the world's reserve currency, the dollar.

While the dollar may look to strengthen amongst other world currencies such as the Euro, it is highly unlikely that the trend will continue. A strong dollar is great for standard of living, but a weak dollar is better for aggregate demand and digging yourself out of a deep hole. For the US, that hole leads to the centre of the earth.

I am not saying that the US dollar is doomed, as many would have you believe - at least not in the short term. It remains the world's reserve currency. In addition to that, the alternatives don't look very promising: the euro has obvious problems of its own, the renminbi is not convertible (yet), the Swiss franc is backed by too small an economy, the Indian and Brazilian currencies might in the future qualify for limited diversification but are no match to the dollar, and so on. International trade is still largely invoiced in dollars and this is a powerful incentive for central banks to hold dollar reserves...for now.

All of these conditions may, and probably will, change. China has already been making moves to trade with surrounding nations in their own currencies, skipping the US dollar. (

As such, many nations are moving away from the pieces of paper that we call Federal Reserve Notes (dollars) and turning to gold as the preserver of their sovereign wealth. Practically every one of top and rising nations have been buying and hoarding gold: China, India, Russia...( target="_blank">Equedia Letter, I talked about why gold stocks lagged gold prices and why the imbalance will eventually lead gold stocks to outperform gold itself - as it did between the 70's and 80's. This week, our friends over at Casey Research published an article regarding the lag in prices titled, "

Last Week

As I mentioned target="_blank">(see Beware the April Fool). If you had dived into the VIX, you would be up over 130% - with 30% gains in the last week alone. Despite being right, these are the types of calls I hardly like to make. Volatility implies uncertainty. Uncertainty generally leads to a bearish market - especially after 2008.

Despite the setback, I think the world will work together to prevent the next major financial world crisis. Whether their solution works for the long term or not, I really only care about the short right now. The economy will take a long time to experience any true growth - growth not infused by debt.

Investors are now looking for value and stability. In these market conditions, these attributes can be found in very few companies. Historically, stocks within an outperforming sector generally move higher than stocks that are climbing in an underperforming sector. If you're looking for value, there's no other overall sector that beats gold.

When the major gold producers come out with their earnings and forecasts over the next year, investors will realise that these are the companies that are stable and growing. These are the companies that will be making money regardless of consumer demand.

Gold stocks took a beating last week. I think this is temporary. I took some profits early in the week, but I will be using these profits to buy on dips. The harder they get hit, the more I will be looking to buy.

The juniors have also been beat up pretty bad. As such, I will be looking at even more buying opportunities and using vehicles such as the

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Until next week,

Ivan Lo

Equedia Weekly

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While the answer will depend as much on the individual investor as it does the market, let's look at some historical patterns to get a hint as to how similar or different our situation is to past bull markets, as well as what realistic expectations we can hold about the future.

The first thing I wanted to know is if there is historical precedence for gold stocks to underperform gold during a bull market. If so, then maybe what we're experiencing isn't out of the ordinary, and more importantly, wouldn't necessarily mean they are destined to continue lagging. And that brings us to our first historical observation...

Gold stocks underperformed gold for two years prior to the 1979-'80 mania. What many frustrated investors don't realize is that leading up to the blow-off top in gold in 1980, gold producers lagged the metal for two full years. From January 1977 through the end of 1978, gold rose 58.4%. But gold stocks, as measured by Barron's Gold Mining Index, were up only 11.7%. The metal outperformed the producers by a margin of four to one, despite it being the middle of a bull market.

Today, gold is up 26.5% year-to-date (through September 19), while gold stocks (GDX) have risen only 3.2%. This is a similar pattern to the pre-mania behavior of the last bull market; it tells us that the current relationship between gold and the equities is not abnormal.

Let's look at the mania itself and see what else we can learn. Here's a chart of gold and gold stocks in 1979 and 1980:

src="http://www.caseyresearch.com/sites/default/files/resize/GoldStocksOutperformedGoldButNotUntil10MonthsLater-490x355.png" vspace="5" border="0" alt="Gold Stocks Outperforming Gold Chart" width="410" />

Once the mania began, gold producers returned roughly four times the money. From January 1, 1979 through their peak in October, 1980, gold stocks rose $293.6%. The metal gained 274.8% during its part of the mania, hitting its pinnacle of $850 on January 21, 1980.

The big action was with the juniors and explorers; the average return of 15 companies we sampled was 2,313% during this 22-month period. What's ahead could be truly spectacular.

Gold stocks peaked nine months after gold. The April Fool's joke in 1980 was on those who thought the bull market was over at that point. What's important to realize is that the public's biggest shift from gold to the equities occurred after gold's blow-off top.

Regardless of the extent to which the public may be buying gold today, it's clear gold stocks aren't on their radar screens. If history is any guide, they will be.

Gold stocks did well in spite of the world being a tumultuous place. Inflation was over 12% in 1980 and interest rates hit 13.5%. Two recessions occurred in the late '70s and early '80s. An oil crisis hit in 1979, and Iraq invaded Iran. In the midst of all this, gold stocks soared.

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Auguries - Globalists Bearing Gifts Sept. 16, 2011

A Collection of Gold Insights from Around the Web

- By Kevin Michael Grace

The Ben Bernanke's "Operation Twist" was DOA yesterday, and the market erupted in chaos today. The Dow fell 455.65 (-4.1%) to 10,669.19; the S&P/TSXV fell 107.30 (-6.3%) to 1,596.48; gold fell $63.10 (-3.5%) to $1,745; and silver fell $4.11 (-10.2%) to $36.36.

In response, a shell-shocked Peter Hillyard, ANZ head of metal sales in Europe, told Reuters, "The textbook ideas, the things we follow, the things we believe to be so are being shot to pieces for the moment." For today, there is apparently only one thing investors believe in. "Everyone says they're concerned about economies everywhere, but I suppose it's dollar strength. That's what I'm putting it down to." He doesn't seem convinced, but in a world whether nothing financial makes sense, Hillyard's reason is as good as any other.

Foremost among the textbook ideas governing our lives is that globalism induces stability. If this is true, why should anyone give a toss about overweening debt in the birthplace of souvlaki? In the Sydney Morning Herald, an angry Paul Sheehan Feel instructs us to "Feel no sympathy for Greece." It is a country whose "national sport" is cheating: "The Greek government lied its way into the Economic and Monetary Union in 2001, presenting false data, and ever since Greece has been a cancer in the euro zone."

Perhaps so, but so what? "Greece may be far away, it may be a small economy, but it is dragging down the value of your superannuation [pension] because its problems are a drag on the global sharemarket." Canadian Finance Minister Jim Flaherty agrees: "A global banking crisis will erupt unless Europe properly deals with Greece's debt problems."

The Brookings Institution warns of Greece, "What started in the fall of 2009 as a fiscal crisis in a smaller European economy" now threatens "not just to melt down" the Eurozone but also to destroy nothing less than Europe's "social and political fabric." The US will do its part to ensure that doesn't happen, according to Treasury Secretary Timothy Geithner. He explained today that "European countries are using the Washington-based IMF 'for a transitional role' because it is a 'mutual arbiter of the economics of reform both in designing and monitoring the compliance of those things."

Would this be anything like the efficient, globalist "reform" that enabled a situation whereby Greece, a country with a piffling GDP of $318 billion, came to threaten the economies of Australia (GDP $1.24 trillion), Canada (GDP $1.57 trillion), the European Union (GDP $16.28 trillion) and the United States ($14.78 trillion)? This wouldn't have anything to do with the terrible prospect of bankers losing money, would it?

That prospect doesn't scare Brian Rogers of Fator Securities. "Let the banks blow up, let the equity holders get wiped out and the debt holders take haircuts," he thunders. "Guess what? The sun will continue to rise. Sensible, solvent players will move in to pick up the pieces and the real business of healing a horribly broken economy can finally begin but not one second before we force real capitalism down the throats of the current crop of pseudo-capitalists running the world."

Gerald Warner strikes a similar note. "Whatever this La La Land economic charade is, it is certainly not capitalism," he declares. "On the contrary, we are paying the price of ubiquitous state intrusion into economies. The US subprime crisis was created by government social engineering intruding into the housing market, to the extent that banks were required to accept welfare cheques as mortgage collateral. The manufacture of the Euro was similarly a political initiative."

The protestations of Messrs Rogers and Warner bring to mind something Robert Conquest once wrote. The pre-eminent historian of the Great Terror reported that he was often assailed by people complaining that the Soviet Union and the Eastern Bloc were not "real communism." On the contrary, he replied, these countries demonstrated communism as applied by experts.

Capitalism used to mean saving. Garth Turner complains, "Prudent, conservative investors with money in the bank, [or] in a GIC...get 2% when inflation is 3%. Then the government taxes them on the interest. This is wealth confiscation." True enough, but this is what capitalism means now. After all, who can claim greater expertise in the subject than Professor Doctor the Ben Bernanke?

We have seen these transformations before. "Liberalism" once meant something quite different from what it has meant since the 1950s. As recently as the last decade, we have witnessed "conservatism" subsumed by something once called "neoconservatism," which was, again, quite different.

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