By Kevin McElroy

NEW YORK ( TheStreet) - Fellow Resource Prospector, I'm sitting in my home, and I get an email from my cousin Tom, a gold investor, with the subject line "gold prices!"

I look over the assortment of news feeds on my laptop, and sure enough, gold prices have fallen by half -- and they're showing no signs of slowing.

Before I can even pick up the phone, gold is bottoming out at $250 an ounce, a multi-decade low.

Without hesitation, I dial my precious metal vendor of choice, and have my wife call up the backup vendor.

I tell her, "Cash out all of the bonds we have, and buy as much gold as you can!"

I panic, as my gold vendor's line is busy. I redial once, twice, 10 times, trying to get a hold of anyone who will take my dollars in exchange for more physical gold.

While I dial, I think "why is gold tanking?" and then I take a step back and start searching for a valid reason. Did Federal Reserve Chairman Ben Bernanke announce some unthinkable deflationary policy? I don't understand. How could gold fall so far, so fast?

I'm racking my brain for any phenomena that would cause such a massive devaluation in gold prices: a huge new discovery of easily mineable gold? No, there hasn't been a major gold discovery in at least a decade.

Maybe it's a new gold-recovery technology that officially lets any outfit mine tons of gold from the ocean with little energy input? Hmm, nothing in the news about that, either.

A total wipeout of the Federal Reserve's balance sheet as part of some kind of new-world-order reset of the banking system?

Even if that did happen, it wouldn't seem to be very bearish for gold prices.

And then I realize: I'm dreaming. Only in a dream would gold devalue so quickly and for no reason.

Back to reality: gold will likely experience some massive devaluation, but it's not likely to happen anytime soon. You'll be likely to buy gold on 5% dips -- so forget a 50% drop or a 95% slaughter.

The point of my story is to avoid making my dream-world mistake: You shouldn't be waiting for some calamitous and highly unlikely event to make gold purchases. You should buy regularly, on substantial dips for as long as world banks act in a way that favors currency devaluation.

Even with gold's meteoric climb over the past decade, it's still my firm belief that we're more likely to see $5,000 gold than we are to see $250 gold in the next decade. When gold does re-set to a more normal trading range, it probably won't get too far below $1,000 an ounce.

And, sure it would be awful to take a haircut of more than 40%, but there's just nothing on the horizon that makes me long-term bearish on the price of gold.

So don't wait for a dream-world scenario. Buy gold on dips until something changes about the world in which we live. For now, there's not a single person in power at a central bank who's willing to pursue policies that will strengthen world currencies.

Good investing,

Kevin McElroy, editor of Resource Prospector
At the time of publication, McElroy was long silver, gold. Wyatt Investment Research, founded in 2001 as a publisher of newsletters, offers independent investment research of financial markets, stocks, bonds, ETFs and mutual funds to about 250,000 individual investors. The company is led by founder Ian Wyatt, who serves as publisher and chief investment strategist.

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