Carp, The example isn't really apples to oranges, I don't believe. The 2008 collapse took everything including Goldcorp, Newmont and Agnico-Eagle with it, as did the collapse of 29 take everything with it, including Homestake. As stocks continued down in the early 30's, Homestake and Dome Mines stabilized and moved up tremendously.

The issue isn't one of credit availability anymore, involving gold. It's an issue of desirability of gold as an alternative currency. Gold is remonetizing, as it continues to do so, everything related to gold will rise even in the worst conditions for the overall economy.

When the public re-discovers the truth of gold's true worth, it will truly decouple with all markets. This is how companies like Homestake rise by great percentages while the Dow is falling 90+%.

When the next downturn in the broad markets happens, gold and gold stocks could turn down sharply with it. My reasoning involving this is not based on what should happen to gold, however. My reasoning is based on my awareness that the public is still not aware of what will ultimately have to happen to gold.

Let's face it. The way we are going to make money with Kimber is by other people giving it to us. Even people with very little money, when they realize what Kimber represents, will hand it over to us in exchange for our Kimber shares.

Even during the depression, people paid a great deal of money for certain things. It wasn't that there was no money around in the depression, it's that there was just not much of it. That's deflation.

The idea that things are different this time because we are not on a gold standard, is, in my view, untenable. Of course we ARE on a gold standard. We have been on a gold standard since before the Book of Genesis was written. If most people don't know this, that really makes no difference. Most people, it has been my experience, remain mostly clueless as to the nature of the realities that surround them for most of their lives. They are born crying and die whimpering.

Whether 99% of the population maintain that gold is NOT money makes no difference in relation to the fact that gold is indeed money. By the same token, if 99% of the population vote that the laws of gravity don't apply to them, it makes little difference. The laws of gravity still apply. We all need to get over our arrogance. There is nothing special about us. The reason why the gold standard looks and seems so strange to us right now is not because it is strange. It is because we are strange, and we need to understand that.

I am pasting a piece of Richard Russell's most recent letter. In yet another brilliant series of observations, he points out that to those who understand the true nature of gold, it wins in a deflationary or inflationary environment and illustrates why. I would place silver in the same category as gold here also. Not platinum. Not palladium.

In closing: I don't know where Kimber is going to go if the market collapses again. I do know that there are too many dollars in existence and that things that there are too many off DO NOT go up in value. I do know that there is not enough gold in existence to act as money at the price that it is at. Therefore, if gold must ultimately acts as money, which it must, its price will have to rise. If gold's price rises, even as everything else falls, which, by definition MUST happen with money, then Kimber will have to rise.

A company that can mine the most precious metal on earth will always be lucrative in the absence of market manipulation. This must be so. We are living in an imaginary financial world, made possible by the machinations of the Federal Reserve for close to 100 years. When those machinations cease, gold has nowhere to go but into the thousands of dollars.

Severe deflation would actually be very good for us. Labor gets cheaper. Oil gets cheaper. Food gets cheaper and gold gets more valuable. I can't think of a better combination for Kimber investors. And we will have deflation! I just think we'll see hyperinflation first. Either way, we win.

Richard Russell's Commentary follows below:

January 14, 2010 -- Section 10. Constitution of the United States: "No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility."

I've been pondering over the following strange situation. The Dow is actually lower today than it was ten years ago. What does this really mean? To me, it means that the market over the last ten years has been discounting "no growth" ahead. When you take an unbiased look at the picture, compared with gold almost everything today is cheaper than it was a few years ago. Since gold is theuniversal immutable standard around which everything else (including the dollar) fluctuates, this means that the price of literally everything has been going DOWN against the standard which is gold.

This is deflationary. Of course you can say that a loaf of bread costs more now than it did a year ago, and this is inflationary. True, it's inflationary in terms of dollars, but the dollar is lower in terms of gold. So in terms of gold, everything is deflating.

This deflationary trend is continuing, and what's more it's continuing against a veritable ocean of central-bank created currencies. Subscribers know that I believe this bear market will end, as most others have, with stocks selling at extreme great values -- dividends high, price/earnings low. And you ask, "How can this possibly occur?"

This is the question I've asked myself. And the answer I come with is that stocks will be hit by brutal world deflation. That's what the miserable performance of the Dow is telling me. That's what the poor performance of everything else against gold is telling me. I'm not talking about the performance over recent months, but their performance over the years.

Yes, I know that the conventional wisdom is that we're heading for all-out inflation. This forecast is based on the thesis that the only way to handle America's deadly multi-trillion debts is to inflate them out of existence. But suppose the Fed is unable to engineer inflation? Look how hard they've been trying over the last year to restart inflation. And what's happened to housing, the chief object of the Fed's inflation target? Housing prices have gone nowhere, well maybe they're less weak then they were six months ago. But inflation in home prices? It's just not happening.

And now political pressure is on the Fed to cut back on stimulus, money-creation and at the same time raise interest rates. This, if it happens, will definitely be deflationary, and it will hit housing and the economy.

Ever since World War II the Fed has been on the inflation path. Leverage, rising debt, speculation, and higher prices have been the "law" of the land. Now, I believe we have hit the inflection point; we are just entering the huge deflationary spiral that will unwind six decades of leverage and inflation.

In the big picture what I see is that China and Asia will become (they already are) phenomenal producers. The developed nations will not be able to compete with them. The result will be a crushing decline in the price of manufactured goods, which, in turn, will impact on all goods including foodstuffs and services and medical services. In a vain effort to compete with China, India and Asia, currencies will be devalued across the board.

Currencies will sink in the face of competitive devaluations (think Venezuela), and whatever can go bankrupt will go bankrupt. Debt will become a dirty word again, as it was during the 1930s (if you can't pay for it with cash, live without it).

The one item that will withstand this crushing force of deflation will be gold. Whereas most items have been sinking against gold. If the deflation that I foresee arrives, items will be plunging in price against the standard -- gold. This will be the great deflation that nobody foresees and nobody understands and nobody has protected themselves against.

The reason nobody foresees deflation is that for years the world has ignored or failed to understand the real meaning of gold. The world has been thinking in terms of dollars for generations. Let's take an example. You bought a loaf of bread five years ago for a hundredth of an ounce of gold. Today you can buy three loafs of bread for the same hundredth of an ounce of gold. Bread has deflated in terms of gold since now you get far more bread for the very same amount of gold.

When you're willing to agree that gold, not the dollar, is the universal immutable standard, you can see that the forces of deflation are taking over.

For the sake of argument, let's just say that I am correct. Then as the great deflation envelopes the land, all things (merchandise, stocks, currencies) will sink against gold. So gold then becomes the single item that is not declining, because gold is the standard, and the standard can't go down against the standard. In that case, everyone will opt for the safety of gold. Gold will be seen as the final and ultimate protection against deflation.

Question -- Russell, let me play the devil's advocate. Suppose you are dead wrong, and suddenly all the money that the central banks have injected into the system "catches on." Then what?

Answer -- In that case gold surges higher. It goes higher because the amount of fiat currency being produced is far greater than the available amount of gold. The sheer amount of new currencies overwhelms the relatively fixed amount of gold.

Question -- Then, Russell, you're saying that gold is the place to be whether inflation or deflation materializes.

Answer -- Yes, that's the way I see it. Gold will be "the last man standing," as it is now in Venezuela and Zimbabwe.

Question -- Russell, if you are correct about deflation, then why is the Dow now pushing higher?

Answer -- The answer is optimism and super-liquidity. But remember, that's the near-term picture. In the big picture, the Dow is still below where it was ten years ago!

Question -- You have often described the stock market as an evil animal who is trying to frustrate us and separate us from our money. What do you think the stock market is doing now?

Answer -- A decade ago everybody was optimistic, and it was good times ahead as far as the eye could see. What happened was that we were facing a decade where nothing went anywhere, and this includes the economy, the nation and the stock market.

Now I believe everybody is thinking in terms of "a return to normal, a higher stock market and big inflation ahead." But few people are prepared for tough times, a rotten stock market, and deflation ahead. What the public (the crowd) is thinking and what it prepares for doesn't' usually happen. If it did, most Americans would now be in good shape and rich, which is certainly not the case.

Ironically, people are still thinking in terms of the stock market. If you invest at all, you must invest in the "right area" of the stock market. But the key to a successful future may not be in the stock market at all. The real key to a successful future may be in the item that very few Americans own. That item is gold (most Americans have never even seen a gold coin).

Last week I went to a local restaurant, and after a meal I pulled out an American Eagle gold coin. I asked the cashier if I could pay the bill with the coin, which I dropped on the counter with a loud clank. The answer was, "Sorry, sir, we only take cash." I took back the coin and paid with a few Federal Reserve notes.

Coincidentally, USA Today has a major article in today's paper entitled, "How do we dig out from under $12 trillion in debt? Hint, in the past it took some sacrifice." Russell Comment -- And what was the sacrifice? Cutting back on government spending and much higher taxes. In 1944 the top bracket tax was 94%. The "solution" according to the article -- The final option is to grow the economy fast enough -- and grow the debt slowly enough -- that debt becomes a smaller portion of GDP."

Russell Comment -- Great solution, but what are the chances that US growth will accelerate and that US debt will slow down? Russell opinion -- The chances of the above are zero or less. The net result if they even try the above solution; there will be deflation.

The P&F chart below shows gold going back to 1999. What I see is a huge base that has been built below 1000. The upside breakout came when gold hit the 1030 box. From there gold shot up to the 1220 box -- next gold suffered a steep correction. The correction halted at the 1080 box, and since then gold has been consolidating. It's going to take quite a bit of time and rallying and declining to build the next base. The upside breakout will come if gold can hit the 1230 box. Until then we wait, and maybe buy some more gold, which I just did. I think CEF is interesting since this Canadian fund holds roughly 47% in silver and 53% in gold. Plus my old friend, Ian McAvity is a director of the fund and Ian is both honest and very smart, a great combination (Ian, put that gold brick down).