Prices should continue to rise for "many, many years"

Khaner Capital Management partner Lloyd Khaner thinks that gold is undervalued and could well double in price over the next 12 months. He also thinks looming inflation is more of a problem than deflation, particularly globally.

"With gold, the supply-demand imbalance is now just starting," Khaner tells Bloomberg Television. "It will stay out of balance for a very long time - many, many years. But the bottom line is really the global reserve currencies should remain weak. If they remain weak, gold should get stronger. ... It's investment demand that is driving the price of gold."

Khaner also dismisses fears of deflation. "Headline inflation is understated," he says. "And going forward, India is talking about a 10 percent inflation rate. China also sees wage inflation. ... When you think about inflation, you've got to go outside the United States for the short term."

Note: Khaner later recommends that individual investors start out with an ETF - a position with which Blanchard and Company, Inc. firmly disagrees. Why? Just look at Khaner's initial argument that a "supply-demand imbalance" will drive gold prices. This imbalance also exists when one invests in most ETFs. Basically, the ETFs lack the physical gold they purport to have. A gap exists between their supposed supply of gold versus the number of claimants to that gold, as multiple analyses have revealed. ETFs can be subject to manipulation, and in a crisis situation, your "paper gold" might not be there when you need it.

Therefore, while Khaner's statements on gold's supply-demand imbalance and the global debasement of currencies are correct, remember that physical ownership of coins and bars is the only type of gold you can count on 100 percent.

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