Doug Casey has been in or associated with the gold market as long as I have, which will be 34 years next month. He is presently associated with several investment newsletters. His books have made The New York Times best-selling list.

With Casey, you never have to wonder where he stands. He as confident, sometimes arrogant, as anyone you will ever hear speak. Resourceinvestor.com published a recent “advertorial” with Casey about his views on gold, the dollar, and the credit crisis.

Casey has a really pessimistic outlook for the dollar, which means, of course, he has a bright outlook for the precious metals. Below I’ve posted some of Casey’s statements. I recommend the whole article be read.

The U.S. dollar will eventually reach its intrinsic value; it’s simply a question of time.

The dollar is a hot potato. There are trillions - nobody knows exactly how many - floating outside the U.S.

At some point there’s going to be a panic out of the dollar.

I’ll be surprised if the U.S. is able to maintain its present geographic boundaries for this century.

We’re now experiencing a lot of monetary inflation, which eventually will be reflected in price inflation. What’s really going to tip this over the edge, however, is the rest of the world deciding to get out of dollars.

I’m sure the government, directly and indirectly, did everything it could to keep the price (of gold) down. The last thing they want to see is a gold panic.

I think we could see gold going over $1,000 within the next 12 months, and maybe even before year-end.

A few comments on the gold market (mine, not Casey’s):

The August 16 huge price drops in gold and silver brought big, really big buying to gold and silver. Krugerrands, the best-known gold coins in the world, are now in short supply. Premiums on Rands are now about $8 to $10 higher than they were before the drop. All secondary market Gold Eagles, which were selling about $4 below new Gold Eagles from the US Mint, were bought up, and now Gold Eagle buyers have to pay the full premium for new 2007-dated coins. Past price drops always brought in buying, but this one wiped out the inventories of precious metals dealers and wholesalers alike.

Buyers wanting cheap gold should consider Austrian 100 Coronas or Mexican 50 Pesos, which are selling about $7/oz less than Krugerrands.

We saw the same increase in premiums for silver bullion products, some of which are now in short supply. Junk 90% silver coins still have the smallest premiums of the silver bullion products.

More people are starting to see the handwriting on the wall. As Casey said, “It’s just a matter of time.”

According to analysis of a Gold Field Minerals Services (GFMS) release, gold purchases in India are up to 300 tons this year, more than double the gold purchased in India this time last year. India is the world’s largest consumer of gold, using 600 to 700 tons a year. However, Indian production of gold is only about two tons a year, which means India pulls a lot of gold off the world market.

Also bullish for gold, according to a resourceinvestor.com article, “there are 34.2 million ounces left in forwards, loans and options, with a negative mark-to-market of $8 billion” still left to be unwound. GFMS said that the net gold de-hedging in the second half of 2007 will be between 1.5 million and 2.5 million ounces globally. Newmont Mining, the world’s second largest producer, is one of the major players in the on-going de-hedging. Annual gold production is about 80 million ounces. See GFMS release for a detailed report on de-hedging.

For years, gold producers were delighted, even bragged, about being short gold. Now they are closing out their short positions, a move that puts upward pressure on the price of gold.

In another resourceinvestor.com article, Gene Arensberg, in his biweekly Got Gold Report, paints a really bullish picture for gold. One observation:

Fundamentally gold remains on very solid ground. Want some examples? Well, the Chinese have a love affair with yellow gold. A little less than two billion Chinese can legally own gold again and can even buy it through their government-sponsored banks. They may not buy much per capita, but there are a bunch of “per capitas” in China. That’s probably going to end up being demand on steroids in the not-too-distant future.

Arensberg makes other interesting points about the gold market. His Got Gold Report looks at many aspects of the gold market and is excellent reading for investors who want to be closely attuned to the gold and silver markets.

Meanwhile, Gary North has written a piece on the Fed. For persons trying to grasp the idea of central banking, it is a good read. I noted my thoughts on Gary North’s qualifications to write about the Fed and money in my August 24 post. In today’s economy, it is nearly impossible to invest successfully without understanding the functions of the Fed. As North sees the Fed, it is an “immoral hazard.” Murray Rothbard called the Fed a counterfeiting machine. When you understand the workings of the Fed, you know why Rothbard was so critical of the Fed and central banking.

Finally (I couldn’t pass up this one.), lewrockwell.com has posted a 1959 National Review article about “funny money,” as a visitor to the Chase Manhattan Bank Museum of Moneys of the World in New York Rockefeller Center describes the exhibits. This is a humorous and an enlightening piece on money.

So far, it looks like the world’s central banks have been successful in averting a meltdown of financial markets. However, there may be more work (money to be printed) by the central banks as more problems surface. The latest to report problems in the market include China’s second largest bank, the Bank of China, which reported a $9.7 billion exposure to sub-prime loans. A consensus seems to be developing that the Fed will lower the fed funds rate at its September meeting.

Gary North has written for lewrockwell.com an insightful look into the Fed’s role in the subprime mess. North also discusses the ramifications of the Fed continuing to print money to bail out the holders of the subprime debt. If not immediately, then certainly later, the price of gold will be affected by the creation of more fiat money.

Now, before a bunch of readers jump all over me for having recommended a Gary North editorial, let me say that despite him having been one of the major voices behind making drastic preparations for the Y2K debacle that did not materialize, it does not tarnish North’s understanding of the financial markets. When it comes to money, North is one of the most erudite writers of the times.

One of the interesting things in North’s piece is a table showing the entities that own the subprime debt. Note how many governmental entities own it. Note also how many are supposedly sophisticated financial organizations, which are run by persons with MBAs, even PhDs. If these guys are so smart, why could they not have seen that lending money to persons without the financial ability to repay it was not a good idea?

Other supposedly sophisticated persons, perhaps the same, warn against investing in gold. Are these people you really want to listen to? Frankly, when it comes to money and gold, Gary North is a much better voice.

An often heard knock on gold and silver is that they do not pay interest. Consequently, many investors eschew the precious metals and seek to achieve asset appreciation by compounding interest, a proven path to wealth, assuming things remain normal and the interest and the funds loaned are secure. However, today “things are not normal” as the subprime mess spreads.

Cameco Corporation, which boasts of being the “world’s largest publicly traded uranium company and a growing gold producer,” has indeed been successful, so successful that it had funds to invest. Monday, however, Cameco (NYSE: CCJ) announced that funds it had invested in asset-backed commercial paper market paper were not forthcoming.

Further, according to resourceinvestor.com, other Canadian miners are exposed to the asset-backed commercial paper market and could get hit hard if banks and trusts prove unable to pay. No wonder the gold mining stocks sank as the subprime mess spread. (See the August 15 post Financial meltdown averted.) We can expect, because of the Cameco announcement, a plethora of disclosures by other mining companies as to whether or not they are exposed to similar investments.

Investors tempted to invest in gold shares instead of gold bullion or gold bullion coins, need to learn from the Cameco situation. Management can make mistakes, and gold mining shares carry risks beyond holding physical gold and silver.

Investors who like to “earn interest” need to keep in mind that interest is something you receive for doing without your money, for taking the risks of lending it. When you hold gold and silver, you are not entitled to interest because you are not doing without your money. Further, you are not taking the risks that are inherent in “interest earning” investments.

“Understanding money is the key to restoring a sound economy,” wrote Congressman Ron Paul in Mises and Austrian Economics, his personal view on the great economist and the theories of Austrian economics that Mises helped formulate. Likewise, understanding money is the key to being able to withstand the chaos of currency debasement and inflation.

It seems odd that one would state that “understanding money is the key.” After all, doesn’t everyone know what money is? Actually, no.

Those who sat through college Econ. 101 may remember that money is a medium of exchange, a store of value, and unit of value used to measure relative worth of goods and services. But, I can almost guarantee, that the average person does not know why gold and silver are the ultimate forms of money. Wikipedia, the free online encyclopedia, while discussing why dollars are poor money, provides little insight into the importance of basing a monetary system on hard assets.

The best writings on money and the importance that gold and silver play in sound monetary systems are by students of the Austrian School of economic theory, many of which are affiliated with the Ludwig von Mises Institute, Auburn, Alabama. Visitors at the Institute’s website will find a plethora of publications about money and economics, so many that their heads will spin trying to figure out which to choose.

Luckily, Bob Murphy, a holder of a Ph.D. in Economics from New York University and an Adjunct Faculty Member at the Institute, just wrote an excellent piece for lewrockwell.com about money and the Federal Reserve System. (You really can’t get away from discussing the Fed when discussing today’s money.) In his piece, Murphy lists some of the excellent books on money and economics, with links to sources where they can be purchased.

Murphy’s piece is well worth the time it takes to read. Further, read a few of the books recommended, and you’re on your way to becoming educated about money. Then, you, too, will know why “understanding money” is the key, not only to a sound economy but also to avoiding losing “the fruits of your labors” to currency debasement and inflation. At CMIGS, we like to think we do our little part by explaining why gold bullion coins are the best investments for the times.