You have read my interview with Sam Parks. He thinks that gold is going to $5,000 an ounce.

For this to happen, there would have to be a disaster in the international currency markets. The dollar would have to lose its reserve currency status. Is this possible? With an annual deficit in the balance of payments of $500 billion a year, of course it's possible. The dollar cannot maintain its reserve currency status with this level of imbalance of trade.

Less radical but still off today's radar screens is Richard Russell's prediction of Dow 3,000, gold $3,000. Russell is a master investor. His newsletter is close to half a century old. He has made so many subscribers so much money that he doesn't advertise his $250/year letter, yet rumor has it that he has 2,500 paid subscribers. I have tracked his advice for two decades. I know of no one any better.

Two decades ago, Russell went into print with a prediction: gold might suffer a two-decade bear market. It fell foe 21 years. So, for Russell to become an overwhelming bull on gold and a bear on the stock market is a two-fold reversal. He is not a gold bug. He is not philosophically committed to gold. But he sees a disaster coming for the Federal Reserve System. He has said for as long as I've read him that the FED has only two options: inflate or die. He has always said the FED will inflate.

To dismiss Russell's predictions as the nightmare of a madman is to dismiss one of the most gifted market watchers of the second half of the 20th century.
 

LEVERAGE

I have covered the story of leverage, why North American gold mining shares will outperform the appreciation of rise in the dollar price value of gold, at least in the early stages of the move upward. This is because the mines are marginal producers. A $50 rise in the price of gold has an enormous "kick" effect for the share price.

Now think about a $2,600 rise in gold's price.

Of course, that high an increase would reflect (not create) havoc in the currency markets and all markets related to the currency markets. But if you're going to go through havoc, it would be better to be sitting on profits of twenty to one in dollars than sitting on dollars that are stuck in a bank account at 1% interest before income taxes.

It's not that I want to see the disruption of markets that gold at $3,000 would reflect. I much prefer stability. But I am not in a position to manufacture stability. But I am in a position to hedge myself against havoc more profitably by being in gold and gold-related assets.
 

WILL YOU RIDE GOLD'S WAVE?

I wish every subscriber to this newsletter make money from the information that I have already published, let alone from the information I will publish. But I have been in this business too long to believe that this wish will come true. Pareto's 20-80 law teaches otherwise.

I would settle for 80 gainers, 20 losers. But even that is too much to hope for.

When I decided to begin publishing this newsletter, I had misgivings. My goal is to help readers make money -- or at least not lose money. But because of the way human nature works, I may wind up losing a lot of money for most of my readers. Here's why.

One group of readers will be old time gold investors. They own gold coins. They keep gold as a reserve against the disaster of monetary inflation, which eventually will turn into price inflation. They subscribe in order to keep up on gold, which includes the logic of gold. For them, this is an ideal newsletter: not only free but written by a long-term gold bug. It will confirm them in what they decided to do years ago.

There are not many of these people.

The next group, even smaller, is made up of newcomers who have only recently heard about gold as an investment. They have read that the price bottomed in 2001 at under $260. Maybe there is money to be made here. So, they sign up. They have read the Sam Parks interview. They have ordered the bonus report on what stocks Parks recommended, beginning in 2001. They are "cutting edge" investors.

I assure you, there are very few cutting edge investors in any market. These are the people who tend to make big money in stocks. They spot a trend early and put their money -- not too much, but some -- on the trend. Then they sit back and let late-comers make money for them.

The largest group on my mailing list -- Pareto's 80% -- will provide the largest number of people who lose big: the "NASDAQ, 1999" people. Why? Because they found out too early for them to take action, psychologically speaking. They want to wait and see. They want confirmation from others who are more innovative and who will make the most money. They think, "I'll look at this for a while." They look. They read. They ponder. Then they read some more.

If gold's price falls, they will not get hurt. But what if gold's price rises? When it does, these "wait and see" readers will think, "I should have acted. If gold ever goes back down, I'll buy." They are asking for the improbable. They are waiting for confirmation. The whole idea of confirmation is that confirmation must confirm upward. Procrastinators don't respond to setbacks, i.e., unconfirmations downward. It's confirmation that drives the price up.

If gold rises does, they'll say to themselves, "It's a good thing I didn't buy. Gold is going even lower." If it reverses and goes back up, they will say, "I knew it! If it goes back down again, I'll buy."

They prefer life on the see-saw's axis. They are in the middle so that they see the price go up and down, but they don't actually participate in the ride.

The key is their refusal to take action. It is possible to buy any investment asset by placing an order to buy at any price. This order is placed in advance. A person can specify a purchase at a price 20% lower or above the current market price. He can place a pair of orders: at a lower and higher price. So, of the price falls, he buys, but if it never falls, but instead rises, he buys. Only if it doesn't hit the trigger price does he not become an owner.

Both approaches are economically rational. Both offer a prospective investor a logical reason not to act now. He thinks it may go lower, but he fears that he might miss out if it doesn't, so he places an emergency "don't let it get away" order at a higher price.
 

SELF-DECEPTION FIRST, FRENZY LATER

Few people ever place buy specific advance orders with a broker. They prefer to deceive themselves into believing that they really do intend to take action "one of these days." Their opposite arguments -- "I'll buy if it ever goes lower" and "I'll buy if it starts to move upward" -- are in fact illusions. People are really saying, "I don't intend to buy at all, but I'll pretend to myself that I can predict the future. I'll pretend that I won't put off making a decision, no matter whether the price falls or rises."

The problem with self-deception comes when the emotionally paralyzed person stumbles onto an investment that is poised to go sky-high. He refuses to buy. He thinks, "If it ever goes lower, I'll buy." But he won't. The proof of this is that he refuses to place a buy order with his broker at the specified lower price. He is justifying his own inaction. He pretends that he will buy when it goes lower, but the fact that he refuses to place a buy order testifies against him.

In falling markets, it doesn't matter. He never buys. But in booming markets, it does matter, because he had fair warning in advance that this asset's price would rise. So, he sits in awe as it rises. He kicks himself all the way up. "I knew! I knew! If only I had bought!" He plays another round of "if it ever goes back to [$x], I'll buy." But it doesn't. It just keeps going up.

At some point, he will be unable to stand the self-recrimination. He will buy. That is the point at which the experienced investors, who bought when it was low, start unloading. The self-recrimination buyers get in at the top of the market.

The pain of having missed the opportunity of a lifetime is what drives the procrastinators to their final, desperation move. In contrast, those many millions of people who never heard about the particular investment until it made 80% of its move don't pay much attention. They heard about it too late. They don't get into self-recrimination mode. But this is not true of the handful of people who found out early, pretended that they would buy "if it ever drops again," and watch in agony when it keeps rising. They are the people who come in at the top of the market because of the pain of having known early, having done nothing all the way up, and deciding at last to get in.
 

NOT JUST GOLD

What I'm describing here applies to every investment that becomes the focus of a mania. As the mania increases, the early comers who did nothing become the most frenzied buyers at the end of the bull run.

I believe that gold mining shares will become mania-driven as the dollar falls and gold bullion rises. The North American gold mining market is a very thin market. When the mutual fund industry finally spots the opportunity and moves into this thinly capitalized market in a small way, the leverage will be spectacular.

At the same time, I also believe that it's better to buy gold coins than gold shares if you are unwilling to own both. There is less leverage with the coins, but there is a steady market. The U.S. government mints gold coins. There is stability here, though less leverage.

But it is not the gold coin market that will drive early comers/procrastinators into their final, top-of-the-market buying frenzy. That will happen to the people who found out early about North American gold mining shares.
 

KNOW THYSELF

There are good reasons and bad reasons for subscribing to this newsletter. If you're interested in learning more about gold for philosophical reasons, you've come to the right place. If you subscribed to find out how to make money, you have come to the right place. But if you subscribed as a bystander who wants to see other people get rich by taking action, while you sit on the sidelines and watch, it is best that you click the link at the bottom and get off the list.

I know: no editor is ever supposed to ask subscribers to unsubscribe. But that's what I'm asking you to do. Otherwise, you'll get hurt. The mania will hit you, no matter what you think. You will kick yourself all the way up. Those horrifying words, "I knew!" will lure you into a late investment.

As long as you don't really care when other people will make a lot of money from information that you knew about, then this newsletter will be safe for you. There are good reasons to learn more about gold other than making money with this knowledge. There is more to gold than making money. Gold serves as one of the pillars of our economic liberty. It's good to know about gold even if you never invest in it. It's like the Second Amendment: you don't have to own a gun in order to benefit from the Second Amendment. (But it helps if you do.) So, some of my reports will be so informative about gold and monetary theory that they will positively boring to thousands of subscribers.

As an editor, I want subscribers. It's as easy to send out a newsletter to 10,000 people as 1,000 or 100, thanks to new software that I use. But, as someone who wants to help people, I don't want subscribers on this mailing list who are likely candidates for the "I knew! I knew!" syndrome.

Here is the deal: if you want to make money from gold, you must own gold or gold-related assets. I know that it sounds silly to say this. I mean, I would not bother to tell a person who dreams of winning the lottery that he has to buy a ticket. He knows. But with gold, people really don't know. They say they know better, but they don't. They think they can make more money later by buying in later. They don't recognize the fact that they won't buy on the way down. They will always wait for another dip -- like the one that took gold from $380 to $321 earlier this year. They will buy only on the way up -- way, way up.

I spoke to Franklin Sanders in early June about his gold coin business. He said things were slow. He could not get clients to buy when gold fell into the $321 area in April, and now they were paralyzed with gold at $370 because they had missed the boat . . . again. "It's human nature," he said. He was right. It is.
 

The logic of gold stays the same. The supply may change, due to government dumping (called gold-leasing). Or demand may change. But the logic of gold stays the same. I will cover the logic of gold in this newsletter.

I want subscribers calmly to decide to buy gold coins and hold them, and also to buy gold shares and eventually sell them. I just don't want my readers who refused to buy to wind up buying from my readers who did buy and who are now selling into the mania.

You must know yourself. You must assess the effects of a gold mania on your future investment decisions. You must take steps now to head off any mania-induced investment strategy. I don't want you to get hurt because of this newsletter.
 

CONCLUSION

Your action steps today include these:

1. Decide why you want to read this newsletter.

2. If you want to make money, find out about North American gold mining shares. Click here:

http://www.publishers-management.com/store/remnantreview

3. If you want to learn more about the economics of gold, stay on the list.

4. If you aren't ready to buy gold or gold shares, decide a buy price -- below today's market or above -- and place an order with a broker.

5. If you are not convinced yet, but you want to learn more, stay on the list.

6. Finally, if you want to make money in the gold market, but you are not willing to buy until the price goes back down to [$xxx], and you are also unwilling to place an automatic purchase order with a broker at this price, then it really would be best if you click the unsubscribe button. I don't want you to get hurt in the mania. Trust me: you are playing with emotional fire.

I don't want to lose you as a subscriber, but I'd rather lose you than hurt you. Know your limitations. If tremendous profits that you almost had -- "coulda, woulda, shoulda" -- will drive you to buy when you should stay on the sidelines, don't stay on this list. Get off the sidelines now.