As you know, we are in midst of the worst economic downturn since the Great Depression, with unemployment hovering at around 8% nationally, and much higher in states such as California, Nevada and Florida. In August, 2011, the US, for the first time in its history, saw its credit rating downgraded. Of course, Wall Street and stocks have never been sure things. Real estate is a burst bubble on only the first step to recovery.

When the US officially went off the gold standard in the 70's, and gold and paper money went their separate ways, the dollar ceased being backed up by precious metals and continues to decline with the passage of every year, having already lost 30% of its purchasing power. For the last half-century, this has been the reality of fiat currency. Inflation is the price we have chosen to pay in order to sever the bond between paper currency and gold, and to allow the two to fluctuate independently of each other. Simply printing money to cover U.S debts floods the market with weaker dollars.

But gold maintains its purchasing power. The value of gold has not changed significantly during the past 50+ years. In 1961, when we were still on the Gold Standard, one troy ounce of gold was worth $32.25. Ten years later, after we had abandoned the Gold Standard, it had risen to only $40.62. By the late 80's, gold reached a temporary high of $447, only to fall back to $271.04 by 2001. In recent years, however, we have seen another upswing: in 2006 gold prices rose once more, this time to an astonishing $603.46. By 2011, this figure had more than doubled. As of August 20th 2011, one troy ounce of gold sells for about $1,800. The gold-to-dollar ratio grows smaller and smaller as more money is needed to buy less gold. As the dollar weakens in comparison to other national currencies, we can expect gold to climb even further upwards.

Precious metals are not bubbles. For the past 50 years, gold and silver have proven their value to the investor. True, their price today is at a record high, but this is no reason to delay buying in and beginning protecting yourself against an increasingly ravaged dollar. In fact, it is better to buy in now before prices climb higher, as they are expected to do for quite some time. No one knows how much lower the dollar and stocks will fall, but historically the gold-to-silver and dollar-to-gold ratios are good indicators of gold price. One day gold will plateau and start to go back down in price. In the long run, however, history has taught us that gold will always be a dependable "crisis commodity": holding its value and resisting volatile market forces. If and when gold prices begin to fall, you can rest easy knowing that they can never fall the way the dollar does.

We are still in the middle of a long climb upward. Protect yourself against financial uncertainty: diversify your portfolio with a precious metal component.