"By continuing process of inflation, government can confiscate secretly and unobserved an important part of the wealth of its citizens. There is no surer, no more subtle way to overturn the existing basis of society than to debauch the currency. It engages all the processes of economic law that come down on the side of destruction, and does so in a manner that not one person in a million can diagnose."

Paul van Eeden writing in the International Speculator recently noted what anyone in South Africa or Brazil could tell you – the greatest defense against their weak currencies and mediocre governments was gold. “Gold has been in a bull market for more than 5 years… on average the gold price worldwide has increased 70% and no one knows it because most people are too fixated by the US dollar denominated gold price.”

The International Speculator model suggests that gold was actually worth $700 an ounce in 2002 and van Eeden expects the gap to close as it has in the past – by gold rising in dollar terms.

“The inflation of the dollar, the debunking of the American economic miracle, the arrogance of American Foreign Policy and, perhaps most importantly, the detrimental impact that the War on Terrorism is bound to have on American Liberty – not to mention the misallocation of capital and increase in debt that go hand-in-hand with war – are all virtual guarantees that the dollar is going to lose some of its superhero status.”

Back in April, van Eeden was expecting the dollar to give up a further 50% which “would free the dollar denominated gold price to find its way back towards its true value of $699 an ounce (as of 2002).” That was a very good forecast given what has happened with the dollar and gold in the last few days.

From now on, International Speculator says there are only two options. Either gold is headed to $700 an ounce or the US money supply is going to shrink 50%. The latter is impossible which is why the newsletter is betting on a sharp increase in the gold price.

“Buying gold now is the lowest risk investment you can make. And the upside is an once-in-a-lifetime opportunity,” van Eeden concludes.