I haven’t always liked gold as an investment. In fact, until a couple of years ago, I had never actually bought a gold stock, ETF, or mutual fund, and never even considered buying gold bars and burying them in my backyard.

But around this time two years ago, that all changed. It was around the time when the sub-prime crisis was beginning to hit the mainstream news. It began when I read an article by Canada’s leading mutual fund manager Eric Sprott of Sprott Asset Management.

The November 2007 article entitled Surreality Check…Dead Men Walking (referring to companies such as GM, GMAC, Fanny Mae, Freddie Mac and Citigroup) was an eye-opener. But this was only the beginning, as the article inspired me to look into his archive of previous articles.

As it turns out Mr. Sprott had been writing about the housing bubble, and its impending collapse since 2005. And finally, in October 2007 it was his article entitled Keep it simple…BUY GOLD! The Financial System is a Farce that converted me to a small ‘b’ gold bug.

Since then gold has experienced somewhat of a rollercoaster ride, hitting over US$1,000 per ounce in early 2008, before collapsing (like almost everything else) to under US$800 before the end of the year.

But, unlike the stock market, which is still far from its previous peak, gold has fully recovered and has set new record highs — approaching $US1,100 as this article is being written. I’m glad I kept the faith and wish that I had an ounce of gold for each time I advised someone “don’t sell your gold.”

Why am I still bullish on gold? I won’t get into all the details here, other than to say that it has something to do with Eric Sprott’s latest article – Surreality Check Part 2…Dead Government Walking.

This week the International Monetary Fund announced that it sold 200 tonnes of gold to India, a country with huge reserves held mostly in U.S. treasury bills. They were only too happy to shed several billions of U.S. dollars in exchange for gold.

In an effort to raise money to help bail out countries suffering from the financial crisis, the IMF plans to sell another 200 tonnes of gold this year. Rumour has it China is very interested.

There are a number of ways for retail investors to invest in gold if that is appropriate to your situation. For more information please feel free to call or e-mail.

For PDF versions of this or previous articles please e-mail jim.grant@raymondjames.ca.

Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). This article is for information only.  Securities are offered through Raymond James Ltd., member CIPF.Insurance and estate planning offered through Raymond James Financial Planning Ltd., not member CIPF. For more information feel free to call Jim at 752-8184, or e-mail at jim.grant@raymondjames.ca. and/or visit www.jimgrant.ca.