Gold miners are actually facing a very dangerous headwind, unlike last year.

Gold production has expensive cost inputs: energy, steel, and unionized labour. All these may be about to skyrocket in price if we're entering a period of high inflation, which is entirely likely with all the money-printing going on in the Western world combined with the high growth in China and India. Once those cost inputs start to increase, cash costs will therefore also increase, and all of a sudden gold miner fundamentals don't look as good as before.

I've been told that in a high-inflation environment, gold the metal will grossly underperform other metals like silver and copper; in that case, there may be better mining sectors to be involved in than gold. But then, even base miner fundamentals will get hurt.

A funny thing we might be seeing again is the beginning of worldwide revolution. The high inflation already attested to in the 3rd world is hitting the peasants where it hurts: food and energy prices, which make up almost all of their living costs. Worldwide revolution also hit in the 1970s: the Shah of Iran was deposed, as well as other leaders we never hear of. It even spread to western Europe - Baader Meinhof, Red Brigade, and so on. If we see that happen again today, that might be one catalyst for a strong gold price increase (as gold is great insurance against political risk, as the presidents of Tunisia and Egypt show us - if you believe the stories of them loading bullion onto their private jets before fleeing).

A collapse may come in China in the next 2 years, as well, as inflation (or revolution) stresses build. If Chinese GDP collapses, it may drop hard, maybe over 50%, and that'll also destroy miners and metal prices.

Perhaps the best places to invest, in a high-inflation environment, are the "knowledge" and "service" sectors, as they have fewer inflation-sensitive cost inputs.

The end game of the coming high-inflation environment probably isn't the "hyperinflation" of the tinfoil-hatters, but rather wage and price controls, like those of Trudeau and Nixon. That can also clobber miners. A commodity guru like Jim Rogers will predict that by about 2015-2016, we'll see most stocks trading at a P/E of 6 or less, and only hard commodities will be perceived as having any value. (Rogers says that's when we should all get out of commodities and buy stocks.)

Anyway, all just opinion. But I'd trust the analysis of someone who invested through the 70s instead of any young whipper-snapper. If you believe in long cycle economic theories, it makes perfect sense to listen to the old people, as they've been though all this before. Best never to believe any one person, but to synthesize the few statements that you feel make sense, and never let the big picture theorizing distract you from the job of making money.

In any case, it seems to me we've left the happy days of 2009-2010, and are approaching a high-speed high-volatility end-game. It's better to be a guerrilla in this environment: stay agile, read the terrain, never believe what you're told, always know where your exits are, exploit opportunities with lightning speed, and never be a stationary target. The coming few years will make us all either heroes or zeroes.