Montreal, Canada.

With Eric in transit today, I will take the opportunity to write about one of my favourite topics in his place: gold. It's no secret that he and I consider ourselves very much as gold bugs. And why not? In a world where fiat currencies are supported by countries burdened by incredible debt, it only seems natural to want to own a "real" currency.

It always astonishes me when I check the number of the U.S. national debt. The current total is now $11,601,859,998,598.50 and is increasing at an average rate of roughly $3,900,000,000.00 per day! The number is so astronomically large that it is hard to get one's head around. To get it down to a more fathomable number, the amount of debt per U.S. citizen would be $37,839.65. The scariest part is that under the current monetary system, the sky is the limit with regards to how much the government can raise that debt number. And so it does, issuing debt that will, inevitably, put incredible inflationary pressures on its currency.

Facing the possibility that inflation could lead to hyperinflation which can easily destroy a country's economy, governments of the world could be easily looking at debt default as viable alternative. With this in mind, I would much rather be holding gold than currency or bonds backed only by government "best efforts".

The fundamental reasons for owning gold as a permanent part of one's portfolio are clear. Eric has always suggested a minimum 10% one's portfolio be allocated to owning gold. But we also like to trade gold on occasion, be it physical gold or gold stocks. In performing a simple technical analysis on gold's price movement this year, now might be one of those times.

Since the end of January, prices have managed to stay firmly above the 200 day moving average even after coming down to test the moving average line on several occasions in early spring . What's more, 2009 has brought about a symmetrical triangle consolidation pattern on the gold charts. We should be watching carefully to see if prices break out above the trend line, at approximately $980. A breach to the upside could see an easy $100 dollar increase in the price of gold and, therefore, a worthwhile trade.

- Dugald Malcolm