I was talking to my brother this past Sunday, and I explained how gold and other natural resource plays won't make you super rich, nor how owning physical gold will.
Why? Because the power of all governments is based upon an oligopoly of creating wealth. If I have 1 billion gallon of oil below my house, I can't use it to buy a car, or a 99 cent burger. It's as useful as a rock for day to day purchases.
But if gold was to regain luster as a medium for wealth, instead of cash, the very solvency of every government would occur. Therefore, logically speaking, this cannot happen.
So how can the oligopoly of money printers stop from losing their power? In 1933 Roosevelt ordered police to go into banks and take all gold from it's citizens, replacing the taken items with paper money. This time around, the protection actions taken will be in the form of taxation.
What will happen is physical metal sales will be assigned a sales tax of 25, 50, even 99% if needed. This will in effect rout the "other" form of wealth storage, and protect money printing. But that is the final step, not the first.
Australia is taking the first step, by raising a tax on resource profits to 40 percent . Bah, 40%, why not just jump to 90%? Oh well, I guess we need to wait for time to pass to get there. Of course Australia is paving the way for what I suspect will be a wave of similar taxes across the globe, and the article complaining about the uncompetitive effect will be relatively short lived.
But taxing mining companies instead of adding a heavy sales tax will raise resource prices, not suppress them. The cost of mining gold goes up, the price of gold goes up. Also the heavier the taxation, the less incentive to add mining capacity.
The bottom line, investing against the currency oligopoly may be a great hedge, but don't think for a minute your wealth will explode as world currencies become more volatile. The oligopolies won't allow it.