An analyst at GFT Global markets said: "Even traditional havens such as gold are deemed too risky in
this climate."

When has gold ever been deemed "too risky"? That made me stop and think.

The Old Testament recounts how, in about 600 B.C., one ounce of gold bought 350 loaves of bread. As of today, one ounce will still buy 350 loaves of bread in the United States.

Yet despite the sudden worldwide aversion to all things "risky," investors seem to prefer U.S. government promises (bonds) in place of gold.

To some, this makes little long-term sense. The dollar has consistently moved in one direction over the past 60-plus years. A 1940s dollar is worth only roughly 5 cents today.

Regardless, the global economy still depends on the fact that the dollar acts as the standard world currency. And the United States Mint, exclusive of what any other truly sovereign nation may deem prudent, has the right to print as many dollars as the United States deems fit.

We print a currency backed by only the worldwide confidence in our economy, its resources and our innate ability to successfully manage the subtle intricacies of Keynesian economics.

Perhaps one day the world will call our bluff. An American lawyer, lecturer and author, Rene A. Wormser once wrote: "No government can operate with a monetary system consisting only of fiat money without sustaining gross economic turmoil and eventually facing a tragic day of reckoning. A fiat money system prompts legislative profligacy and inevitably produces inflation."

So if traditional havens such as gold are deemed "too risky" in this climate, where do we turn?

By hard money I mean gold. J.P. Morgan once said: "Gold is money, and nothing else." And he should know.

But gold has some drawbacks. Let's take a cue from Barton Biggs. As an investment, Biggs has shunned gold for some very sound reasons. He cites the negative yield associated with storing the actual metal. He also points out that gold does not enhance the purchasing power of its owners.

He deems gold to be Apocalypse insurance, not much more. I tend to agree. And I don't believe we're anywhere near an Apocalypse.

There is still a tremendous amount of liquidity chasing deployment. According to The Economist, some estimate these funds combined will control $2.5 trillion by the end of this year alone (in contrast, hedge funds are thought to have a mere $1.6 trillion). And assuming forex coffers keep growing at this remarkable pace, the amount could balloon to $12 trillion by 2015.

The era of asset appreciation, especially in the arena of international equities, will maintain a very, very bright future.

But owning just any equities won't do. Buying good businesses (with economic moats) at the right prices should see us through perfectly predictable market corrections like the one we're currently seeing in the American mortgage market.

As the subprime mortgage collapse rolls on, investors keep whistling in the dark for the Wall Street firm immune to this nasty little cold. But so far, we have no takers. No one really seems to know how far this can go.

So as the Fed eases and things get tight and a small blip down in gold prices occurs the dollar will weaken due to inflation and gold relative to the dollar will increase in value.