The Punch-and-Judy distraction of Glenn Beck vs. Brooklyn and Queens' finest...

IT WAS CERTAIN to happen at some point. Because we all have a choice - "a choice between the natural stability of gold and the honesty and intelligence of the members of government," as the playwright and early Socialist George Bernard Shaw put it.

"With all due respect for those gentlemen, I advise you, as long as the capitalist system lasts, [to] vote for gold."

The humor is Shaw's, the italics ours. Because a little over a century later, gold is performing as advertised...surging to untold records as politicians worldwide refuse to be honest or intelligent about anything much. But capitalism - or at least, the right to property, which is where it begins - needs to persist for gold's "natural stability" to retain any use.

Hold that thought as we take a trip to the circus...

"Goldline formed an unholy alliance with conservative pundits to drive a false narrative," alleges Anthony D.Weiner, Congressman for New York's 9th district, in his extraordinary attack on Fox News and the major US coin dealer recommended by the apparently $32 million-per-year Glenn Beck.

Never mind that, according to Weiner's own website, he was last seen on the House floor asserting that "The Republican Party is a wholly-owned subsidiary of the insurance industry." This isn't about Weiner's tabloid metaphors. It's about the "false narrative" put about by Beck - and thus Goldline, according to Brooklyn and Queens' man in Washington - to sell gold at horrible mark-ups by "playing off public fears" of inflation.

"On numerous occasions, Glenn Beck has dedicated entire segments of his program to explaining why the US money supply is destined for hyperinflation with Barack Obama as president. He will often promote the purchase of gold as the only safe investment alternative for consumers who want to safeguard their livelihoods. When the show then cuts to commercial break, viewers are treated to an advertisement from

Goldline..."

Gasp! Horror! There's a salesman on American TV...!

Whatever the rights or wrongs of one self-promoting showman attacking another in a formal presentation stamped "House of Representatives", it was only a matter of time before the rabid anti-rabid-right of rabid US politics took issue with Beck's foaming-mouth advertorials. And luckily for the watching media, the sideshow makes a great distraction - "Look! Punch and Judy!" - from the very live, very threatening politicization of all investment decisions.

Australia's absurd "super profits" tax of 40% on mining firms, for instance, looks horribly contagious, even if it's the axiom of George Bernard Shaw's tip. Because if the world's second most expensive cost-per-ounce gold producers can bear it, why not lower-cost regions as well...?

The need to grab cash from captive producers is universal, and unlike hedge funds, mining projects can't relocate. Claimed as some kind of primeval patrimony by tax-hungry politicians - even pasty Anglo-Saxons down under, like prime minister Rudd - the last decade's surge in raw material prices clearly invites "resource nationalism". Indeed, it's a major risk worldwide reckons Evy Hambro, son of British gold-mining magnate and banking heir Peter, and manager of BlackRock's $14bn World Mining Fund.

Yes, Hambro's got vested interests here, just like Glenn Beck. But does that make him a shill, merely voicing a view to extend his own income...?

"Equities aren't the only source of revenue governments will seek to tap," writes Alen Mattich in his Wall Street Journal blog. "Any assets that can be valued relatively easily - and any income flows, whatever their source, that governments can get their hands on - will be a temptation for the taxman.

"Is, say, a levy on gold - everybody's favorite safe haven - impossible?"

Mattich says a globally-agreed sales tax on gold could prevent money from slipping through government hands. Which would be true, if only he didn't underestimate London's grasp on global gold trading. VAT on gold won't make a comeback here any time soon. Not in the wholesale bullion market. Not with China now the world's largest gold-mining nation, fifth largest central-bank holder, and second-largest consumer market. The UK has none of those things. It owns the gold market, and thus taxes the trading revenues earned in London, by historical convenience alone. So while the new Lib-Con coalition looks set to be as dishonest and stupid as every other government since George Bernard Shaw and before, it's unlikely to be quite that unintelligent just yet. Surely.

More broadly, however, a special tax on private gold-owners' gains may soon appeal pretty much everywhere. Long-time holders were early and right in spotting the financial crisis ahead - and nobody likes a smart-arse, remember. Even more recent buyers are also showing notable gains, and most notably against the fast-sickening Euro, too. So while "It was probably a mistake to allow gold to rise so high," as Paul Volcker, chairman of the Federal Reserve when gold peaked at $850 an ounce in 1980, once famously said, it's German and Greek politicians who must now be wondering why Europe's central-bank gold sales ended without having a gold tax ready and waiting to keep milking the metal.

Yes, the honest and intelligent thing would be to make like Volcker and raise interest rates. Defending the value - and thus use - of money would ensure the vital liquidity it brings to life's everyday choices. Seeking to devalue it instead, however, government will increasingly lose votes to gold. Expecting some kind of political fight-back is only prudent. But what?

Vietnam's 2008 ban on gold imports merely spurred smuggling, plus new record highs in domestic gold prices. India's increased gold tariffs early this year did the same for Nepalese smugglers. Most idiotically, a tax-grab was attempted - but foiled - in Europe last summer, when Rome turned on the Bank of Italy's national gold hoard!

Worded to catch all non-industrial holdings, but solely aimed at the central-bank vaults, Silvio Berlusconi's "Anti-Crisis" Gold Law met unflinching opposition from both the Banca's chief, Mario Draghi, and his big bruising friends up in Frankfurt at the European Central Bank. Now the ECB is just one U-turn away, however, from printing money to finance government debt, making the current record-high gold prices sharply ironic, not to say prophetic. The Bank of Italy, meantime, has joined France and Germany in ignoring losses on those government bonds held by commercial banks - losses that would otherwise force them to raise cash to boost their capital reserves.

Things are growing quietly desperate, in short. Your personal finances are set to become very political, not least if you have something to lose. Sorry, something to share. For the good of the state, you understand. Sorry, for the good of the country...if not the world.