Gold Bugs: The Revolution Will Not Be Monetized

At the Hard Assets Investment Conference in New York on Monday and Tuesday, rare-and-precious metals prospectors and gold bug investors were out in force.
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NEW YORK (TheStreet) -- The bugs were out.

Gold bugs, that is.

Bullion bulls. Yellow-metal nettles.

"I own an arsenal, and I own a lot of gold," said one. "And I have a place I can go to in the woods, if I ever need to."

He paused.

"I don't think that's gonna happen! But I'm

prepared

to if our government ever becomes oppressive."

Gold Prices Can Hit $1,500

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The gold bugs were wandering the fifth floor of the Marriott Marquis hotel, between 45th and 46th Streets on Broadway near Manhattan's Times Square, not far from the site of the attempted car bombing in late April. Lined with booths manned by metals prospectors and explorers -- in town to gladhand with investors and on the prowl for money to fund their fortune-seeking -- the floor was given over on Monday and Tuesday this week to the Hard Assets Investment Conference.

The annual gathering draws Wall Street money managers and Long Island retirees alike. What all had in common was a certain confidence in the fact that natural resources -- rare-earth and precious metals especially -- represented the best place to stash one's cash.

A certain Greece-inspired euro crisis wasn't exactly on everyone's lips, but the old gold-bug philosophy, which calls for bullion to explode in value as the world's paper money collapses, certainly brought the recent events overseas into new relief here among the gold seekers at the Marriott Marquis. It was perhaps natural that

gold prices

hit another all-time high Tuesday, the final day of the conference, eclipsing the previous record, set in early December.

Of course, at the Hard Assets Investment Conference, very few of the presenting companies had yet to remove any metal at all from the ground. There were no gold majors in attendance here: no

Barrick

(ABX)

, no

Goldcorp

(GG)

, no

Newmont

(NEM) - Get Report

, no

AngloGold Ashanti

(AU) - Get Report

.

Most of the entities searching for investors at the show -- "company" might be too elevated a word -- were purely exploratory, entirely speculative. All sported megabytes of geologic data suggesting the presence of gold or silver or uranium laced inside one ore body or another somewhere in the world, but most had yet to prove the fact beyond a reasonable doubt.

Thus, most of the companies' stocks traded on the so-called "Venture Exchange" of the Toronto Stock Exchange, a euphemism used to describe Canada's version of the OTCBB. It's also the descendant of the old Vancouver stock market, merged out of business in 1999 and notorious for its Wild West nature, as full of promotion and fraudulence as a dime museum.

A small elderly man approached the booth of a company called

Visible Gold Mines

, a Quebec-based outfit searching for gold in the Abtibi gold belt of Northeastern Canada. He said, "You have no feasibility?"

The representative at the booth said, in a French-Canadian accent, "No." He had dark hair and a dark suit. His nametag read "Sylvain Champagne."

The gold bug asked, "So production may be five years down the road?"

"Yes," said Sylvain Champagne. But, he added, sample drilling would begin in the next few weeks. "So, you never know."

Later, having taken his leave of Visible Gold, the gold bug said, "I'm interested in the whole area of gold and precious metals. I know that the regular stock market -- even though it's been going up -- it's being pumped and dumped by Obama."

Elsewhere, around the corner, was a booth purchased by one James Dines. Five very tall young women, lifted higher still by their very tall shoes, stood behind the booth's table. On the table was spread a sampling of James Dines' oeuvre: copies of his most recent newsletter, instructional tapes and videos, books, including his volume,

The Original Gold Bug

.

James Dines himself was not around. He was about to give his 2:30 keynote presentation, though no one at the table appeared quite sure of the subject of the talk, exactly.

Said one of the assistants, "He's conquered everything in this whole spectrum of things." Asked if she or any of the others could say any more about Dines, they suggested reading one of the newsletters on the table, or listening to his speech. "We sell his merchandise," said one of the assistants.

A man named Arnold Bob said this year's Hard Assets confab marked his fourth in a row. He had wide eyes framed by large eyeglasses. He looked to be in his fifties and a former 7th grade chemistry teacher. He held up a dollar bill and said, "The Chinese are gonna say, 'We've collected the whole set of these and we don't need them anymore.'" He said, "I'm not sure what the right thing to do with my money is, but I sure as hell know it's not keeping it in hard dollars."

Ralph Rushton, a Brit, is an executive at the

Gold Group

, a series of affiliated precious-metals exploration outfits, founded by Simon Ridgway, a longtime prospector who got his start in the Yukon 30 years ago, "playing poker and staring at maps," as Rushton describes it.

As romantic as that may seem, Rushton noted that, like a good gambler, a serious metals investor needs to remove emotion from the equation as much is possible. "You can't be emotionally attached in this business," he said. "You've got to know when to cut your losses and walk away, whether from a project, a company, a person, whatever."

"We've drilled 'em and we've killed 'em," Rushton said. He meant that Ridgway and his companies have at times needed to abandon projects midstream if they thought they'd end up losing their shirts, like a card player forcing himself to fold.

One of Ridgway's companies,

Radius Gold

, will spend millions of dollars to drill samples in the Yukon this summer, on the hunt for the fabled mother lode. If ever Ridgway was emotionally attached to a region, it would be this. But, Rushton said, "If we don't see anything in the next twelve months from the drilling, then we should move on."

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.