Good afternoon all,

I am just wrapping up a book entitled, "Buy Gold Now". It is written by Shayne McGuire, the Director of Global Research at Teacher Retirement System of Texas, one of the nation's largest pension funds, managing $115 billion. I, first, bought the book because of the simplicity of it's title. I know, 'you can't judge a book by it's cover', however, in considering the title, I came to the conclusion, that this individual must be convicted. Based upon the unambiguous nature of the title alone, this man's credibility will either be uplifted or smashed. He will either be proven right or wrong.

As in many investment books there are many ideas that I categorically disagree with, and those ideas that I find either relavent or at least very thought provoking. He feels that we are headed for a massive deflationary recession if not depression. I tend to agree with JP and EK that we are likely headed for a hyperinflationary depression, that over time will morph into a deflationary spiral. My willingness to agree with his assertions is not really that important. However, to read something that very thoroughly lays out ones reasoning for a deflationary depression, which I admit, is very convincing, while at the same time having studied multiples of experts and writers that lay out the prospects for a hyperinflationary depression, and knowing that both arguments/positions come to the same conclusion, (a dramatically higher gold and silver price), I am convinced of one nugget of truth. Regardless of how we get there, there is going to be partially defined by much higher PM prices!

Is $900 gold sustainable? Do we even comprehend $900 gold? Well, we do, but most do not. Hand a 1 ounce gold coin to the average Joe and ask if he would pay $900 for it, and he will guffaw. Mr. McGuire, makes one very intriguing point regarding his reasons for a much higher gold price and the near term sustainability of the current price. He states that, and I paraphrase, China is the third largest consumer of gold behind India and the US. He further explains that this is mostly a result of communist government law that prohibited Chinese citizens from owning gold, in any form, since 1982. It was not until 2007, (25 years later), that private citizens could buy and sell gold bullion. Up until that point, only professional licensed traders could do so. China as a nation, and it's citizens, have valued gold as true wealth for thousands of years. Because of the laws up until 2007, the only way for Chinese citizens to accumulate this wealth was through purchasing jewelry or real coinage, (most which held some numismatic value). His point is simple, 3 billion of the Chinese populous, is very well used to paying a huge premium to accumulate gold as wealth. At the bullion spot price and with the creation of a Chinese ETF for gold, these people, even at $900 an ounce feel like gold is on sale.

This next thought is of my own and not attributable to Mr. MCGuire's book. How about India? Not a day passes that there isn't an article published somewhere, regarding there decreased gold purchases. Mr. Nadler of KITCO, frequently references decreased Indian demand. The bulk majority of gold purchased in India is in the form of jewelry for adornment, however it's purpose is without a doubt for the accumulation of wealth. India has recently opened it's own Gold ETF. Is there or will there be a sentiment change? May Indians decide that wealth is the most important reason for holding gold, not adornment? Might they seek out bullion investment, or digital gold, to accomplish this wealth accumulation at a rate that is more palatable, than paying the price not only for gold, but for craftsmanship, labor etc.?? Not all will, but many just might.

Seeker