Some things are transparent; you can see right through them. In the world of finance the word transparent has been construed as good: the inner workings of institutions can be discerned and dealt with. But I wonder just what it is that many are "seeing through" and ignoring these days. Because sometimes what you choose not to see can hurt you more than what is not visible. The most dearly kept secrets are often best hidden in plain sight.

Waiting in a doctor's office recently, I grabbed a dated magazine to read: Money magazines 02-2004 mutual fund review. And there was an article titled My Precious (metal): The same title as my most recent essay, but the content was certainly not to my thinking. It was a hit piece on gold bugs: Prominently positioned up front with a big beautiful picture of gold bars and cute little digs: "What is it about gold bugs that sends otherwise sane investors over the edge;" "On gold bug message boards, day-traders join forces with the conspiracy buffs;" "certifiable lunacy;" "a subspecies of investor happy only when every thing is going to hell;" "online regulars natter ominously about the evils of fiat money." The author provides the argument that gold investors should be looked right through. But he does acknowledge that "less fervent fans can offer perfectly logical reasons why gold could keep rising if the US dollar weakens." After all if you flip a few pages to the top stock fund listings the reader might note the dominance of precious metals funds: 15 the top 20 in the three year performance table.

So "goldbugs" are somehow less worthy than, say, other human beings? Not in financial terms lately. However, the gold investor's superior economic performance these past five years seems a lesser virtue to the Keynesian financial analysts. Nor is buggish zealotry appreciated in the face of the financial damage caused by usury and corruption. It all it conflicts so tediously with secular ideology and collectivist thinking. So goldbugs are, at best, transparent. The picture of the nondescript fellow singing and dancing Cellophane in the movie Chicago comes to mind. But that image quickly morphs to a more clever character: a WC Fields personality dancing among a flock of Keynesian sheep while picking their pockets. Being invisible has its advantages.

So what is this invisibility secret that the goldbug holds? Hard to say as gold investors have become a diverse lot. The goldbug stereotype is becoming increasingly difficult to maintain. Certainly, there is the hard core gold investor that has been permanently bullish on an ideological basis. But with every ebb and flow of the market these past few years, there have been changes. The zealots have joined by currency traders and commodities traders. All along the way increasing numbers of individuals have become precious metals investors. Attracted initially by performance they listen patiently to the zealots and notice, quite profitably, that savvy miners have been front running this trend by de-hedging. But many investors continue to follow the example and advice of the financial giants. However, more and more there is little in the opinions or advice of these giants that conflicts with the gold zealots. So the ranks of the gold investor are becoming increasingly populated by recent initiates. Those that have come to realize that the Austrian perspective on debt tells us that during a specific period in the debt cycle the gold zealot will be right as rain.

That period occurs when central bank holdings cease to ebb and begin to flow. That tide, while still exceptionally turbulent, is inexorable at this point in the cycle. And could be approaching full flood should Japan follow up on remarks that they may consider switching part of their massive reserves into gold. If they were to seek parity in gold holdings with other central banks, this would be epic as they have virtually no reserves at present. The BOJ has also announced that it will stop its losing policy of intervening in the currency markets. Much of this is due to the embarrassment that their current policy of purchasing dollars to devalue the yen is a hugely loosing proposition and as such has considerable political opposition. Not so gold. But the Ministry of Finance denied the assertion saying that excessive volatility and disorderly movement are undesirable. Obviously as Asian nations in general increase gold's share of their reserves there would be a huge and sustained impact on the bullion market. But "orderly" remains the operative word of central bankers when it comes to currencies and gold. So they will keep it orderly, until for some unforeseen reason or due to some unforeseen event they can't. And the central bankers themselves reluctantly become goldbugs. Then the goldbug's invisible secret, like that big picture of gold bullion in the hit piece, will jump right off the page into plain sight.