As the New Year begins soon both gold and silver will continue to offer investors promising gains for the long term. There is a lot of pressure now to drive the gold price under 600 as we enter the New Year as evidenced by recent price action, but gold is going to enter the New Year solidly entrenched above 600 dollars an ounce. 

I really wouldn’t sweat these moves down as 2007 will see these moves reversed significantly to the upside. Now is the time to buy before the New Year begins. The price of uranium is doing exactly as predicted as the price continues to climb higher and higher.

Largest Weekly Spot Uranium Price Jump in History

‘Feeding Frenzy’ Sends Weekly Spot Uranium Price to Record $72/Pound

“For the week ending December 15, the weekly spot uranium price indicator JUMPED BY $7/POUND, OR MORE THAN 10 PERCENT, to $72/pound per pound U3O8.” “Clearly, the spectacular price rally of 2006 will continue into early 2007…” 

Want another reason uranium is becoming more and more important today?

“Electricity defines our civilization. It powers our society and shields us from anarchy. Take that power away, and the thin veneer of civilization begins to erode almost immediately.” “For now. In the years to come, America's ability to generate enough electricity will be severely tested. Decreasing natural resources, combined with increased demand, is a lousy way to run headlong into your own future. What would you do if the lights went out? How would your life change? (And let me tell you, it would change.)” 

As I have said before I am fascinated by history, but not just the collection of sordid dates and events. What fascinates me is the “turning page.” What fascinates me is the ever constant change that is occurring at every moment. And what intrigues me most is how we usually do not even see this page turning. Even now the pages are turning but few see.

“Is an end of an era looming in the foreign exchange markets? The dollar has been depreciating against the euro for weeks.” “The US currency's role as a lead currency isn't as important as it used to be…” click 

We are surely always looking at the past and we judge the events of the present in terms of how things used to be. That is what nostalgia is all about…a yearning for the good ole’ days. How things used to be not so long ago. But I have news for you folks as never is time ever standing completely still. Time is always rushing right by us and bringing with it all kinds of change. The stars at night appear fixed, but before the night is over every last star has moved to a new location. 

Remember those plastic phones everyone today is sticking in their ears? I have written about these before. Sorry if I offend you here, but I will never get used to seeing someone with a blinking blue light flashing in their ear while standing at the counter waiting for a cup of coffee. 

To me nothing defines better our changing economic picture today than these plastic phones with the blinking lights sticking out of ears. When I see someone wearing one of these I see a servant bound hand and foot who has zero freedom but must forever remain on beck and call for someone. We are indeed a “service” economy today so the servant must keep in constant touch with those he or she serves.

I think all these folks must be working for BMW, Michelin or some US company dependent on foreign money. When I see this blinking blue light I see an iron collar encircling a neck and I don’t care how much that person may be making. If a person cannot go to the bathroom to pee without having a live phone glued in their ear then something is definitely out of whack.

Where I am going with all this? For the most part everyone today believes we live in a different and unique age with proven financial laws that cannot fail. This present economic system was only born a little over 30 years ago. And yes, it appears that the bankers and politicians so far have been able to successfully tweak this financial system to keep it balanced. But for how long? If you examine the scales closely today you will notice it is no longer in balance.

“The gradual decline of the dollar in the foreign currency markets in recent weeks could pose a threat to the economy.” “Experts have been predicting for some time that the dollar would eventually go into a nosedive, and now that time seems to have come. The US currency has lost five percent of its value against the euro since late October, and 13 percent since the beginning of the year.” “…Ben Bernanke, the chairman of the US Federal Reserve, has done nothing but look on as the dollar plunges.” click

Just how stable is the world we live in today? It may be that 1,000 years from now future historians will view the 20^th century as a barbarous era still a part of the Middle Ages. And let’s ask ourselves. How far have we really progressed the past 2,000 years? In making comparisons of different civilizations I think it very proper to judge the basic civil services that were available for the general population at the time. 

So let’s see how far we have really come in the past couple of thousand years. Just 60 years ago the following was true in the United States.

“…the 1940s, when almost one-third of the nation's 37.4 million houses had no running water…” click

Did the cities of the ancient world have running water?

“The Mesopotamian Empire states of Assyria and Babylonia marked great advances in civilization during the second millennium BC. The ruins from Mesopotamian cities contain well-constructed storm drainage and sanitary sewer systems. For example, the ancient cities of Ur and Babylon, located in present day Iraq, had effective drainage systems for stormwater control…” “The systems contained vaulted sewers and drains for household waste and gutters and drains specifically for surface runoff…” “The Babylonians were partially motivated to construct urban drainage systems by their desire to remain clean. The Babylonians, like other ancient civilizations, viewed uncleanliness as a taboo…” click 

Our western culture in this country just a century ago did not even bath.

“It was said that no house in Quincy, Mass., had a bathroom before 1820. When the temperature of a bedroom dips below the freezing point, there is no satisfaction in bathing. Most Colonial bathing consisted of occasional dips in ponds or streams. Typical was a quote from Elizabeth Drinker, the wife of a highly-placed Philadelphia Quaker. She had a shower (probably a bucket arrangement) put up in her backyard for therapeutic use in 1799. She said, 'I bore it better than I expected, not having been wett all over at once, for 28 years past." click

Let me explain where I am going with these comparisons. I want to drive home that just the last century western civilization was still living in the dark ages with a middle ages mentality. As strange as this may sound running water is still new to our present day culture here in America. If we just go back to our grandparents or great grand parents they didn’t even have running water and much less a toilet based on rudimentary plumbing methods that have been understood for over 4,000 years of recorded history. 

“…fantastic engineering feats rivaling those of today were achieved throughout history. For example, several ancient civilizations built magnificent cities of stone, brick, and wood and equipped the cities with sophisticated infrastructure systems including roads, water supply and distribution systems, wastewater collection, and stormwater drainage.” click 

And the United States only got its first hotel with an indoor bathroom 177 years ago. Humbling ain’t it?

“In 1829, the brilliant young architect, 26-year-old Isaiah Rogers, sent ripples of awe throughout the country with his innovative Tremont Hotel in Boston. It was the first hotel to have indoor plumbing…” click 

And as you continue to examine our comfortable world today we really do take for granted the fact that all of this really is a fairly new development for us personally. Makes you wonder about the status of our financial economy as structured anew in the early 1970s.

“We are especially intrigued because antiquity has taken what is, to us, a basic and prosaic function and elevated it to the level of a cultural and recreational act, a civic institution for which there is no real counterpart in modern Western civilization.” Fikret Yegul, BB&ICA, 1992

These public facilities were open to all and basically acted as cultural and gathering centers for every one of all economic classes. But as the dark ages crept forward these places rapidly closed because the governments could no longer afford to pay for their upkeep.

“Elsewhere in the Roman world, the gymnasium faded fast as an educational and athletic center…” Fikret Yegul, BB&ICA, 1992

Our western culture today really is in many ways playing catch up to the far distant past. In the Roman society of 2,000 years ago its homeless could get a free bath each day and stay clean. 

“…even the poorest could escape the dusty streets for a few hours a day and share the empires wealth and, perhaps, ideologies. Baths gave the Romans the world they wanted, a world in which one was pleased to linger.” Fikret Yegul, BB&ICA, 1992

The homeless people I see on our streets today have no government provided facilities to bath even once a week. But 2,000 years ago?

“Few citizens were so poor that they could not afford the trifling entrance fee.” Fikret Yegul, BB&ICA, 1992

And have I even mentioned yet that these public facilities were heated with a central heating system?

“The development and success of Roman baths owe much to breakthrough discoveries in heating technology at the end of the second century B.C., particularly the form of radiant floor heating known as the hypocaust.” Fikret Yegul, BB&ICA, 1992

And these municipal services were not limited just to the capital city, but extended among literally every city across Europe, Northern Africa, Modern day Turkey, Iraq, Iran, Syria, Judea, Egypt, Libya, Spain, England, France, Germany, Romania, the Black Sea, Asia Minor, every where a decent size town sprang up. This was the world that existed before the dark ages fell.

“The sewers implemented in Europe following the fall of the Roman Empire were simply open ditches…” click 

And these open ditches existed in the U.S. not very long ago. Hey! Yes, let’s take a moment to talk about our sewer and drainage systems just a hundred years ago.

“The beginning of modern urban drainage practices was initiated in European cities during the nineteenth century (around 1850 just 150 years ago!)” click

“Developments were similar in N. America, the Roman lessons having evidently been forgotten. Even the idea of publicly-owned water and sanitary systems did not come into effect here until about the mid-19th century (1850)…” click

So what do we have today over our ancient ancestors of yesterday? What do we have that our ancient civilized ancestors did not have? We drive shiny cars we don’t own and live in big houses we struggle to pay the mortgage on. Our middle class has unstable jobs and wonder what we will do when this job is transported over seas. And we work 50 hours plus every week just to continue paying on our debt and all. But at least we probably have more time to enjoy life than our ancient ancestors, huh?

“Bathing (essentially a daily visit to the ‘club’) was important to the Roman society because it was a daily habit. The structure of the Roman day reserved the afternoon and evening for leisure, to balance morning hours devoted to hard work and business. Already, by the beginning of the empire, spending the larger part of the afternoon in the public baths and palaestrae (gym) had become a tradition, an unquestionable part of national life and identity.” Fikret Yegul, BB&ICA, 1992

Can I read this again please? 

“The structure of the Roman day reserved the afternoon and evening for leisure…”

Yes, our society has definitely come a long way today. In the ancient world the gymnasium and the baths were the two most important services that brought a level of culture and sophistication. When these disappeared so did everything.

“The collapse and disappearance of the gymnasium…from the life and culture of the Classical city, ‘more than any other single event,”…”brought about in the Middle Ages.” Fikret Yegul, BB&ICA, 1992

And this is the culture we are still playing catch up to after 1,500 years. 

“Following the fall of the Roman Empire, cities in most of Europe and parts of Asia began to shrink considerably as residents migrated away from the urban centers…” “The population reduction of the cities resulted in the abandonment of municipal services, e.g., sewer systems, running water. The neglect of these systems contributed to their deterioration.” click

What I am describing here is the world we just exited from 150 years ago. And you want to trust the present fiat money system here in the US? 

“Another factor that contributed to the demise of urban drainage systems during this time period was the general apathy and indifference of urban residents during the Dark Ages time period. If people neglected their own cleanliness how could they be expected to be concerned with the cleanliness of the community? During the Dark Ages few technological advances were made, let alone implemented, in Europe. Consequently, urban infrastructure elements including urban drainage systems were not being improved. The prevailing public perspective of urban drainage during this time period was an unneeded service. In Medieval Europe, urban drainage practices were limited because most people lived close to streams, rivers, or other bodies of water. Residence close to waterways was required because water was not commonly brought into the urban area via aqueducts or pipes as had been done in antiquity.” click 

Again, my purpose here is defining the reality that our western culture is fairly new today and arising from a foundation of anarchy and chaos. Did I even bring up that just a short 150 years ago the United States of America practiced slavery? Yes, there was slavery 2,000 years ago but a kind of slavery where by the slave could hope one day to buy his freedom and his respect. That never existed with slavery in the US.

Today, our middle class system is rapidly deteriorating at its center, but 2,000 years ago the Romans had a multiple class system where each class could at least hope of climbing the social scale ladder on to the next level. That opportunity here is rapidly fading.

“These were five in number (classes), and represented the economic divisions of property- owning or steady – income – earning Roman citizens.” Fortunes Favorites, Colleen McCullough

What do we have today that is different? We have a high level of technology that in our ignorance we think makes us superior to previous generations. Far be it from the truth. In my opinion western culture is closer to the roots of barbarians than the ancient sophisticated cultures of the past. In truth as Western Europe descended into the dark ages all culture and academia had already long ago fled farther to the east. Consider what we dreamily idolize today in our movies and our fascination with castles and moats of the middle age era. I would rather dwell and think on that part of our past that was highly educated and culturally sophisticated.

And there is not a doubt in my mind that the Asian mind understands this today as they continue to build their mortgage trap encircling the western world. It is important to remember that the wars of the 21^st century will be fought over cultural differences and each culture's mad grab to acquire resources.

Over these ages gold has always retained its value. Sure, the price of gold has ebbed and flowed over time. Sometimes worth a little more and sometimes worth a little less. But never, never in all of recorded civilized history has gold not retained a premium on its value. Yes, there have been years when gold’s luster shined a little less brightly. Such was a time between 1980 and 2000. But mark my words well. Even during gold’s darker days from 1980 to 2000 the price of gold never collapsed.

“A sea change appears to be taking place on the international financial markets. For years, global capital flowed in only one direction, with $2 billion going into the United States every day.” “This phase seems to have come to an end…” click

So… Where is gold at today? Well, that big ole ship at sea is turning. Maybe the turn is slow but believe me when I tell you that the big ship at sea is turning. And consider the following text very well and carefully. Do not judge gold’s future performance by its activity during 1980 to 2000. This is a new century today and for the next 20 years plus we are going to see a tremendous amount of change and volatility.

But never forget that for the investor it is this act of change and volatility that provides opportunity to accumulate vast wealth. The future always belongs to the visionary and not to those poor souls still rooted in the soil of yesterday. In other words don’t judge the future on what has happened in the past 25 years.

Can you do this? We’ll, how you answer this question may just determine the quality of life your family has in 10 years. As I have said over and over and over the great bull market of 1980 to 2000 is merely an entry in tomorrow’s future history books. 

"There are fundamental weaknesses in the American economy. This could not continue in the long term," says Alfred Steinherr, chief economist at the German Institute for Economic Research (DIW). Investors worldwide are becoming skeptical and starting to pull their money out of the United States. They have realized that a people and a country cannot live beyond their means in the long term. The US dollar's exchange rate is starting to crumble as a result of this withdrawal.” click

So, to sum everything up I am here to tell you that gold and the resource stocks are the place to be for the foreseeable future. Gold Letter emails reviews of undervalued gold, silver, uranium and other resource stocks that are under valued. 

Send me an email if you have time to write over the holidays.

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David N. Vaughn
Gold Letter Inc.
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