It seems to be common knowledge that inflation is on the rise and the U.S. Dollar will fall.  Just ask around.  Most educated people have an inkling that the economy is not doing so well.  Investors, I feel, are in the same camp.  Heck, even Warren Buffett said it in his letter to shareholders:

"As our U.S. trade problems worsen, the probability that the dollar will weaken over time continues to be high."

Perhaps what is not common knowledge yet is the ensuing aftermath.  Once the dollar falls, there will be a rush to gold, silver, and foreign currencies.  History has proven this over and over again.  Why else do you think Warren Buffett is buying foreign currencies?  The writing seems to be on the wall, but I don't think anybody is reading.

They are probably reading articles like this one in the WSJ last week which I couldn't help but laugh at.  The article questioned gold's status as a safe-haven.  It even went so far as suggesting that gold was possibly another risky asset because it went down with the market correction.  Coincidentally, a friend made a similar comment to me: "Funny how gold and oil stayed still and did not move up.  You have to wonder about them."  Indeed, things that make me go hmmm…

People are just confused right now.  This is what makes the situation a great opportunity.  Everyone is thinking short-term - which is an overpriced market, commodities have had too much of a run to keep going up, and treasuries being the sure thing - but nobody is registering the bigger picture.  Once they do, everyone will be crying bling-bling.

True short-term my gold and silver stocks are in the red.  (My timing has always been lousy.)  But I would not want to take the risk of not holding gold.  I am confident I will be standing on the right side once the dollar unfolds.  This could happen tomorrow or a year from now, but more likely than not it will happen.  And it will be spectacular.

Onto my individual stock picks.  After analyzing the reserves of a handful of Canadian gold and silver companies, I realized pretty much all of them are selling at around $500/oz of gold and $7/oz of silver using Fleckenstein's method.  Meanwhile, gold is around $650 and silver $12.82 today.  (In fact, I was quite conservative by dividing Measured & Indicated reserves by 2, Inferred Resources by 4, and when I couldn't find production cost numbers per ounce, I used $400 for gold and $4 for silver.)

Goldcorp (GG or G.TO) is by far the safest large-cap gold company judging by the amount of proven reserves and low cost of production.  Their reserves are worth about $423/oz and they have a lot.  Silver Wheaton (SLW or SLW.TO) is the silver equivalent of Goldcorp.  Of course small-caps are usually where the bigger risk/rewards are (not to mention volatility as you can see in my portfolio) and there I have picked Bear Creek Mining (BCM.V) and will be adding High River Gold Mines (HRG.TO) in a couple of weeks.