The Long-Term Fundamental Case for Gold: Opinion

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheGoldAndOilGuy.com) -- Looking at most of the headlines over the weekend leads one to believe that investors' primary focus seems to be either calling a near-term top in domestic equities or the Greek debt situation.

But why is anyone even paying attention to what is going on with Greece? Until the International Swaps and Derivatives Association declares a default where the underlying credit default swaps are triggered, it is all just noise.

The European Central Bank has broken the rule of law by placing itself as the senior creditor ahead of private creditors, the Greek government is trying to pass retroactive legislation to trap private sector creditors holding out of the private sector involvement, and the leader of Greece was not even elected by the people of Greece -- how much more manipulation and insanity do we need to monitor?

Similar to the price action since 2008, central banks around the world control everything from financial markets to the ascent of political leaders. These same political leaders help central bankers and planners control policy and decision-making at the highest government levels in Europe and around the world. It would seem that the U.S. should change the motto from "We the People" to "We the Bankers."

However, there is one particular asset class that even the central bankers have a hard time controlling. Although they can affect short-term price action through direct currency manipulation initiatives, in the longer term, gold is likely to move in only one direction: higher.

The price action on Tuesday reminded market participants that actions such as the Greek bailout come at a cost. Quantitative easing and/or printing money (depending on what one wishes to call the practice of producing fiat currency out of thin air) has a direct impact on the price of gold.

Many financial pundits argue that gold has no utility, but what they fail to recognize is that gold is the senior currency to all other fiat currencies. Silver is also a form of currency and is senior to all other fiat currencies as well. While one can draw the utility of gold into question, the idea that gold is the senior currency to all other fiat currencies is not new.

The Constitution of the United States of America, which is more than 200 years old, refers to gold and silver as forms of payment. Looking back thousands of years the Romans used gold coins as a form of currency. The idea that gold and silver are currencies is certainly not a grandiose thought or a stretch of historical concept. Trying to depict gold as a worthless asset depends on your view and consideration of fiat currency.

There are those that would argue that the Federal Reserve of the United States is not actively manipulating economic conditions domestically or abroad. For those that view gold as a poor investment or hedge against currency devaluation need to consider the charts illustrated below. The chart below was produced by Thomas Gresham of Gresham's Law.