This might surprise some of you, but the world's best-known sound money advocate ain't down with the BitCoin. In the following video, Ron Paul explains that, while it should never be made illegal, BitCoin is just too complicated to ever actually work. Plus you can't put it in your pocket, which is apparently important to the septugenarian libertarian hero. He also touches on some hot button issues like the Boston Marathon bombing and how the old guard of the GOP is going the way of the dinosaur. Good stuff:

Paraphrasing Winston Churchill, gold is a "riddle, wrapped up in a mystery inside an enigma", at least as far as I am concerned. I don't understand what moves the gold price and I have never held gold in my portfolio. That does not mean, however, that I am not fascinated by the price of gold and immune from its movements. That was brought home last week, when the price of gold dropped by 9% on April 15, 2013, the biggest one day drop in thirty years. Not only did the prices of other precious metals (silver dropped 12%) and industrial metals drop, but stock prices took a tumble as well. While the attention has focused on the price drop in recent days, gold has had a good run over the last decade.

I've been having the discussion on the title lately with a client, coworkers, and last night, with Certified Users in the WSO chat.

The discussion stems from the fact that since about June 2008, the return of GDX vs Gold Spot has deviated significantly.

For those of you who don't know, GDX is the Market Vectors Gold Miners ETF. (You can find the Factsheet of the ETF Here) From the Factsheet:

Whenever the U.S. markets have a significant negative move like what we saw on Friday (DJIA -2.22%, S&P 500 -2.46%), we are used to hearing that money is being allocated to “safe havens”, most notably the United States Treasuries. But with ten year treasury rates hovering around a percent and a half, parking your money there will lose you purchasing power to inflation, which is undoubtedly likely to accelerate as the lagged effects of the QE 1&2 programs are kicking in and as a potential QE 3 is on the horizon.

I frequently hear that the precious metals markets, most notably gold, is a safe haven during inflationary times, but I personally have a hard time believing that a brick of yellow metal will do me any good in the event of an economic collapse. Now I did see a recent sixty minutes story about the value of gold in India and how society is completely infatuated with gold ownership (I highly recommend watching this if you haven’t yet), I just do not see that in the information age that gold bars will be an effective form of currency, especially when society is moving towards having payment options through smart phones rather than plastic credit cards or bills. I have a hard time imagining people carrying around a backpack full of gold bars around to pay for their daily expenses.

Gold may have blown away stocks,
bonds, and practically ever other risk asset for the past few years, but if you were late to the party, chances are you got shafted pretty bad - in May alone it dropped 6%.

With yesterday’s climb however, goldbugs and skeptics have fueled debate once again.

What do you think monkeys? Is this time different? Will this rally grow legs? Or is this just another blow-off?

In today’s uncertain market, it’s important to devote a portion of your portfolio to safe investments.

This is an obvious statement for most of you. Some have different opinions regarding how much of a portfolio should be devoted to risk mitigation, but most agree that safe investments are necessary to hedge against economic downturns.

We have so many options, but what exactly is the ideal “safe” investment? This question was explored in a recent article in The Atlantic, which can be read here.

So what’s the safest type of investment? Below I’ll lay out a case for each of the most common answers, and I’ll leave you to decide:

Bloomberg reports today that India’s gold imports may be cut dramatically this month, from about 75-80 tons same time last year, to 25-30 tons. This, as a result of higher import taxes which have slowed demand, and which were intended to slow demand as most gold purchased in India is imported.

Jewelry stores have closed down to protest these new taxes.

India is the world’s largest bullion buyer and consumer of gold, both in jewelry and bars and coins. It holds 32% of the global demand for gold. Half of it is bought as jewelry. In India, instead of banking on brick, like i recently wrote about Argentina, people bank on 22K gold. Instead of putting their rupees in a savings account in a bank, Indians buy gold. I have to say that in the last few years, this has been nothing to sneeze at. And as gold prices continued to climb, the Indian population, fueled by higher prices, keeps buying more.

Dikembe Mutombo’s finger wag always deserved a tip of the hat, but with all the revelations about his gold trading schemes finally coming to light, the man probably deserves a taste of his own medicine.

Dennis Gartman was on CNBC earlier today laying out his case against gold and aside from him saying that the bull market is dead, I can’t help but agree. Price action for the precious metal has been very erratic lately, bullish news followed by short rallies are telling me that the big guys are either out or cashing in to the late longs and despite the probability of more money printing (or whatever bullish case you might have) to come, the bulls seem to be nowhere in the order flow.

Granted, I haven’t been following gold that much these past weeks so I could be dead wrong on this one, but either way I can’t help but feel that unless something big happens, the gold market could end up pretty ugly.

What do you think monkeys?

Is the gold rush over? Or is it just taking a breather?

Video after the jump.

Fuh...what???

It's no secret that hedge fund giant John Paulson has had a rough year so far. He took an absolute reaming on Sino-Forest, and his two largest funds are down 44% and 29% for the year, respectively. Maybe that's why his latest 13F (filed Monday) discloses what appears to be a massive year-end Hail Mary pass.

Paulson sold a staggering $2 billion worth of GLD, the gold ETF. This move in and of itself is not entirely surprising. After all, gold has been a huge winner for him, one of the only bright spots for him this year really, and he's getting out at the high. You'll never go broke taking a profit.

So what did he do with the proceeds? He bought BAC.

Yeah, you read that right.

He bought BAC.

Hugo Chavez might have one foot in the grave and the other one on a banana peel, but that hasn't stopped him from causing what is shaping up to be a massive short squeeze in physical gold. The (democratically elected) Venezuelan dictator began the process of repatriating over 400 tons of the yellow metal last week, most of which is held for safekeeping abroad.

Gold went over $1,900 an ounce yesterday.

The U.S. holds a massive amount of foreign gold for safekeeping. So far it looks like only JP Morgan is exposed to the Venezuelan repatriation, with an estimated $807 million of Venezuelan gold in their vaults. But what if this is the beginning of a trend? What if more countries ask us to ship their gold to them? It's no secret that the Fed monkeys with the gold in storage, lending against it and so forth. But there hasn't been an audit of the gold in storage in decades.

What if there's no gold in Fort Knox?