TGR: If we could have a do-over of Bretton Woods, is there currently even enough Gold anywhere to be able to tie it the world's currencies?

Bob Moriarty: Everybody makes the mistake of thinking that you need a lot of gold for a gold standard. The only thing gold does in a gold standard is give the currency discipline, but that's why it's so valuable. If you have discipline with the currency, you don't have the kind of chaos we have today. Without discipline, you end up with $596 trillion worth of derivatives and nobody in either finance or government saying, "Hey, by the way, that's a really bad idea."

TGR: If it's not tied to physical gold and we rely on people to show discipline, aren't we setting ourselves up for the same thing happening again?

Bob Moriarty: To restore confidence in the system, you have to use gold. But let me give you an idea of how out-of-control the system is today. If you took the 80 tonnes of gold that the US supposedly has on deposit in Fort Knox and West Point, that would be $200 billion worth. We have created $3.2 trillion in paper money, 16 times as much, in just the last month. That means it might take a Gold Price of $50,000 to $250,000 an ounce to actually clear the system, but we do have to clear the system. We have to go back to honest money. If you've ever played poker, and somebody sits down and pulls out a Sears credit card, he'll bet on every card because he isn't playing with real money.

TGR: And that's effectively what's been going on. So you're saying you see a rally coming in the Dow, which strangely enough we're hearing from other people, too, but it's a short-term rally.

Bob Moriarty: We're not going to go to new highs. The problem with variable-value currencies is the value of the currency changes every day. The Dow won't go to new highs in real-Dollar terms. It will go higher just because it's way oversold right now in terms of gold and gold stocks. Historically they are the cheapest they've ever been. Gold stocks are trading at the same value that they would trade if gold was $200 today.

TGR: Do you like ETFs at this point?

Bob Moriarty: Actually, I'm anti-ETF, whether gold or silver. The financial situation is so dangerous that it's no longer an issue of market risk, nor of whether they have the physical metal. It's an issue of counterparty risk; that's the danger today. Is the institution issuing the ETF going to exist if gold goes up $100 a day? Physical gold in hand, not where governments can get their hands on it, is an insurance policy. It's still working today even though Gold Bullion is cheap. Resource stocks and physical holdings are what you want as we head into hyper-inflation.

TGR: When do you see gold climbing? You say it's at the bottom now, so it could go any day.

Bob Moriarty: I believe so. It's going to surprise everybody because it's been hammered so much, but it's totally artificial. The price of gold has nothing to do with supply and demand. It's been hammered by the hedge funds closing their positions and buying dollars to pay off their loans. As soon as the hedge funds let up in their buying, the Dollar will tank and Gold will go up. A lot of money sitting on the sidelines is looking for a safe place to go. When people start understanding you can buy $100 million worth of mining company for $50 million, they will start doing that.

TGR: So that's the specific catalyst? It's not that the hedge funds will stop buying, but will stop selling.

Bob Moriarty: Correct. I think they will do that. The last couple of trading days in October tend to be very positive, so it looks as if we sneaked through the worst of it. If we're not at the bottom yet, we're very close to it.

TGR: Some are speculating that the downtrend will continue through the fourth quarter as people readjust for 2008 results.

Bob Moriarty: The reason there are horse races is everybody has opinions. I'm not giving you fact. I didn't walk down a mountain with it. It isn't carved on tablets. It's my opinion and I could be wrong and I've been wrong in the past. Just not very wrong. And not very often.

TGR: When we talked a few months ago, looking forward to see what sectors would emerge or survive, you indicated energy and focused specifically on oil. What do you think today, and where do renewables and alternative energy fit in?

Bob Moriarty: Alternative energy is viable. I had mentioned oil only because our entire system is based around oil. Like natural resources or gold or Silver or metals, any energy investment should be safe for the future. Peak oil is very real and the Chinese are expanding like crazy and using more energy all the time. Natural Gas is good, Coal is good, nuclear is good. Renewables, unfortunately, are a 3% solution. Wind power's another 3% solution. It's never going to be anything but a 3% solution. Guys like Boone Pickens can spend millions encouraging people to invest in wind power, but our current infrastructure will not support it. It's not just a question of investing in the wind power; you have to invest in the infrastructure as well and nobody ever wants to talk about that.

TGR: Where's a comfortable range for oil?

Bob Moriarty: Somewhere in the $80 to $110 range. But that will be increasing because peak oil is, in fact, very real. Oil production peaked in May of 2005 and peak oil also means peak food.

TGR: So you'd say this is a time to hunker down?

Bob Moriarty: Yes, but I would also like to say there are some very encouraging things. The Fourth Turning, written about 10 years ago, actually forecast this chaos that's coming. And the fellow's point of the book was that better times are coming. You go to absolutely insane extremes – which I think everybody can agree we have – and then you go back to sanity. Even during the Depression, families came closer together because they had time for each other. They may have not had money to do things they were doing before, but it did bring the families closer together. Money is the journey; not the destination.

By arrangement with: www.theaureport.com

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