Montreal, Canada

The International Monetary Fund (IMF) is likely to rain on the gold parade as it seeks to unload almost 200 tons of the metal to raise capital for this week's eurozone bailout. Investors should use the upcoming correction – which should be quite sharp but short-lived – as another opportunity to accumulate gold.

Gold opens this morning at $1,240 an ounce – an all-time high. Earlier this week, the June contract broke into record territory easily taking out the early December nominal high of $1,216 an ounce. In 2010, gold prices have gained 13% in dollar terms, 26% in EUR and 12.7% in yen.

What's even more impressive about this latest phase of the rally is that it's occurring at the same time the U.S. dollar is appreciating against most European currencies in 2010. Gold and the dollar can run together; the pair also rallied in unison in 2004. But this year, gold and the dollar are deemed to be safe-havens amid a currency and debt crisis in Europe.

Gold is in a secular long-term bull market. Those investors that fail to recognize or appreciate the primary trend also fail to understand gold's role in a post-credit crisis environment of escalating government deficits, central bank debt monetization and the adverse long-term implications of these policies on paper money's purchasing power.

Nowhere is Joe Public's psychological perspective more apparent than on CNBC. I rarely watch this network because it represents Mainstream America and almost serves no purpose for investors – the programs exudes hype and, for the most part, offers no concrete long-term building blocks to global asset allocation or how to protect investor capital. Gosh, in the midst of the credit crisis and stock market crash in late 2008 these guys were consistently plugging stocks!

After I returned from work yesterday I spent fifteen minutes listening to some supposedly savvy hedge fund guy explaining why gold is in a bubble and how it serves no purpose as an investment. Obviously, this gent has missed the bull market. He also misses the point.

The European Central Bank's (ECB) admission on Monday to bailout weaker peripheral countries at all costs in order to preserve the EUR adds another lid on the coffin as it pertains to government money printing.

Most people on the street – and the majority of individual investors for that matter – still don't understand what's happening to their paper money vis-à-vis gold and the future implications of rapid debt monetization and the high inflation these policies are likely to bring over the next several years once central banks finally defeat deflation.

But as gold continues to break important resistance levels this week and marches higher, the odds favour a significant correction as central banks in the West look to temper the rally.

The IMF, or International Monetary Fund, a conduit of U.S. foreign economic policy, isn't finding any buyers for its remaining 191.3 tons it wants to sell – equal to about 5% of annual global demand. So although this suggests that central banks aren't looking to build gold reserves at $1,240 an ounce for now, I think that will change ahead of the next currency crisis – probably in Europe or the United States.

China, of course, is the one to watch. The government last May revised sharply higher its official gold reserves, shocking many investors. China, however, doesn't have to necessarily go to the IMF to buy gold. Instead, it can purchase what it needs directly from domestic producers; China became the single largest gold producing nation in 2008. Truth is we really don't know how much gold China holds. Yet it would seem logical and prudent that China is on a long-term gold accumulation plan to supplement its hoard of decaying U.S. dollars and now, EUR.

Beijing is the sixth largest bullion holder in the world at 1,054 tons — if you believe that number.

The World Gold Council recently reported that net gold sales by central banks are now at their lowest levels in 20 years. Selling by European central banks slowed to a crawl following the renewal last September of the Central Bank Gold Agreement, which regulates the sales. Only two tons have been sold since September 2009.

Whereas central banks dumped bullion en masse in the 1990s, many are now either holding on to their bullion stash or, in many cases, as it pertains to the emerging markets, accumulating gold. India was the largest central bank buyer in 2009 following a late October purchase of 200 tons from the IMF at roughly $1,050 an ounce. Sri Lanka and Mauritius quickly did the same but at far lower numbers.

The IMF doesn't have to sell gold. The United States is its largest shareholder and can simply transfer the money it needs for bailouts electronically. But it would seem like an opportune moment for the IMF to sell gold now in order to depress this rally, which compromises paper money and its legitimacy.

Use any short-term pullback as another opportunity to buy gold. This will probably mark the last time investors will get a chance to buy bullion before the final phase of this bull market takes prices to at least the 1980 inflation-adjusted high of $2,309 an ounce.