By David Vaughn
Barrick Gold says the world gold supply has run out. Wow! Isn’t that what some have been predicting for the past 10 years? The president of the largest gold company in the world, Barrick Gold, has just recently announced that gold production peaked in the year 2,000.

It is becoming increasingly more and more difficult to find significant deposits of gold ore. And as the tide has turned the central banks have now become serious buyers of gold and no longer sellers. China has doubled its gold reserves these past 10 years. Asia is turning those worthless US dollars into gold.

Will someone please tell Sarah Palin to get a haircut and take a class in rhetoric?

Rhetoric is simply the art of learning to speak well. Persuasive speech without the mouthful of peanuts. And through the power of effective speech your life begins to develop a sense of purpose and you can influence the thoughts and dreams of a nation.

Sarah’s recent appearance on The Oprah Winfrey Show rocketed Oprah’s show to its best numbers in 2 years. Guess someone’s listening to her. The world awaits your destiny, Sarah.

Ever wonder why Adam decided to share with Eve that forbidden bite? Adam considered Gods wrath. He considered his wife’s wrath. It’s easy to conclude whose wrath he was most afraid of.

And what about investing in those mining companies producing gold and exploring for new deposits? A lot of money to be made here as long as you remember you're dealing with speculation.

I like that word.

Let me say it again. Speculation. Has a soothing comfortable effect on the tongue. Technically, there is a difference between the term speculation and investment. Investment supposedly promises safety and speculation in the past has always been defined as risk. If there is any one thing investors have learned these past 10 years is that no investment is without substantial risk.

Remember Uncle Bernie?

Bernard Madoff? For years known as Wall Street’s most successful money manager. It is really best to classify any and all investing as speculation. There are no guarantees where ever you place your money. That’s a hard pill to swallow for 401K participants who were counting on 30% annual returns until retirement. And back to Uncle Bernie. I understand that about 50 billion still remains unaccounted for.

What about speculating in mining stocks?

There are those who promise significant profits in just a couple of weeks. Nostradamus couldn’t do better. Somehow I feel a chapter needs to be written about gold speculation. So here we go.

When you hear any one touting a particular gold or silver mining company as a sure thing then head for the hills. The following terms below are good warnings to look for. When you hear the following terms below run.

“the next big thing” “elephant country” “new improvements in mining technology” “enormous land position” “no cash” “no permits” “may prove up” “should” “…quick and cheap to drill exploration holes.” When you hear this kind of language it sure whets your greed.

And the following crap below is a favorite.

Someone touting an existing property having over 90 million ounces of gold before the first drill hole has been drilled. Give me a break. Or how about? “There's no limit to the potential size of this deposit!” And the following is a good one. “Volume of ore is somewhere between huge and enormous.” “Past exploration confirms…”

And the best probably. “A great deal can be learned with just a FEW drill holes.”

A few drill holes? What a load of bull. A mining company can never drill too many holes. Who knows what’s under that ground? That’s what determines what’s under there…lots of drill holes.

There’s an old saying. Know how to make a quick 20,000 dollars? Invest 50,000 in a gold mine. There’s a lot of truth in that. Actually, a lot of truth.

If none of this makes sense then Google Bre-X. Bre-X provides a good education. And Bre-Ex is not a soap cleanser. The mining business is complicated. The geology of a site is always difficult for even professional geologists to interpret. Assay results often are not right on the money.

Precarious business.

The following names below are worth following. Lot of gurus out there worth reading. A few?

Doug Casey. John Doody is a master craftsman. Kenneth J.Gerbino has brains. Jon Nadler always has a grip on reality and emotions. Kind of like Spock. You’ve never heard of these? Well, you need to acquaint yourself with these guys. If you do you might just make money.

The following fellow below may just have been a successful speculator in gold mining stocks. And maybe not. Who knows? But the story sounds good.

”We talked about Gods grace and all the hell we raised” ”Then one sunny day, I saw the old mans face” “Front page Obituary, he was a millionaire” ”he left his fortune to some guy he barely knew, his kids were mad as hell” ”But me, I’m doing well” “And i drop by today, to just say thanks and pray, i left a six-pack right there on his grave…” Billy Currington

And back to good analysts to follow? Don’t forget Dennis Gartman. Brains there too and perspective and objectivity. There are others not mentioned, but in due course they make themselves heard. Information is always valuable. Almost forgot to mention Jim Sinclair! Been in this business for 30 plus years. The one and only gold prophet.

Is information important?

The founding father of international finance, Meyer Amschel Rothschild believed in information. Though born in a Frankfurt ghetto he had the ability to realize the importance of information. It was Meyer who put to the test that information can represent the difference between poverty and wealth.

What leads to poverty or wealth is volatility. What we are seeing today. Instability and volatility generally contribute a great deal to the direction of a share price...whether up or down. Jesse Livermore lost more money when the markets were “flat.” But with the depression of 1929 and volatility that went crazy. He went on to make 100 million dollars.

Volatility is always the friend of speculation.

Information is proving in the world markets today that gold is being recognized as real currency. More central banks around the world are increasing their gold reserves. Physical gold and physical silver represent insurance and shares in mining companies will always be speculation. Gold will probably continue its climb. 2,000 per ounce looking more like a reality down the road.

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